Pakistan Economy - News & Updates - Archive

[Neo]

ISLAMABAD (updated on: August 08, 2006, 23:10 PST): Cellphone operators in Pakistan are investing nearly $100 million in order to meet the October 2006 deadline laid down by the Pakistan Telecommunication Authority (PTA) for the implementation of mobile number portability (MNP).

The PTA last month asked all the Cellphone operators and PTCL to speed up the process of upgrading their switches for the early implementation of MNP, a system which enables a mobile phone subscriber to carry the same number while changing the cell phone operators, Asia Plus reported.

 

[Owais]

Iranian steel import stopped due to higher prices

KARACHI (August 09 2006): Importers of Iranian steel have again stopped bringing in Iran's material after a five-month break as the commodity exporters have refused to slash steel prices despite drastic decline on the international front, importers said.

They said that steel trade with Iran had come to a standstill and the importers had stopped importing Iran's steel as its exporters are still offering their hot-roll coils at $560 per ton, which can easily be bought at $480-$490 per ton from the international market.

"Not a single consignment has reached here from Iran during the last 60 days," said an importer, adding that steel import from Iran had completely halted, and the importers had once again turned to Ukrainian material.

"We have completely diverted towards Ukraine's material and orders for a handsome quantity had been placed during the last two months," the importer said.

He said that Ukraine material is being regularly imported as its rates are affordable.

Citing reasons behind the refusal of Iran, one importer said that Iran is one of the biggest steel suppliers to different countries and those countries could not compel Iran to cut its prices because they import 'prime quality' material.

"Dubai, India and Japan are among the biggest consumers of Iranian steel and importers of these countries mainly import 'prime quality' material. That is why they are still paying higher rates for superior quality product," he remarked.

"We, in fact, import both 'prime quality' and 'average quality' steel from several countries, of which the biggest chunk is of 'average quality'.

However, Pakistani importers are still looking towards Iran as they want to resume trade with Iran keeping in view the shorter transit time.

"In January this year, the trade got halted for the first time just because of this price factor and even in those days we had consistently insisted with Iranian exporters to bring their commodity prices at par with the international rates," the importer said, adding that the private importers are still waiting for Iran's green signal to resume trade.

"We are ready to import Iran's hot-rolled coils but for that the price should be decreased to below $500 per ton," the importer said.

Importers have dispelled the impression that Iran is being faced with any sort of trade restriction, saying that a number of countries are still placing orders in Iran as 'forward deals' which would be fulfilled after some time.

 

[Owais]

Reko-Diq copper project: two foreign firms to invest over $1 billion

ISLAMABAD (August 09 2006): Two foreign companies will invest over $1 billion for developing Reko-Diq copper project in Balochistan. Sources in the Ministry of Petroleum and Natural Resources told Business Recorder on Tuesday that the Reko-Diq copper project has about one billion tons copper reserves, with heavy deposits of gold.

Chilean Mining Company had invested $75 million for the development of Reko-Diq copper project in Balochistan in training local people at the project site and in Chile, sources said.

They said that the company, after the initial investment, would make further investment of $500-700 million to develop the copper mines on fast track basis.

The other overseas company is Canadian, which would only develop gold mines with an investment of $500 million. Both these projects would create over 2000 jobs during the next 3 to 5 years.

The Reko-Diq, which is in the neighbourhood of Saindak, is four times bigger in copper ore deposits tonnage than Saindak and ranks among the biggest in the world, containing over 4.8 million tons copper and 9 million ounces gold, worth more than $11 billion at current metal prices.

 

[Neo]

KARACHI, Aug 8: Carrying an investment fund of Rs116 billion, the Employees Old Age Benefit Institution (EOBI) operators are desperately exploring new avenues of investment to improve their income levels to an extent that should ensure monthly insurance payment of Rs1,300 to about 2,54,000 retired employees who are 60 years of age and above. Most of them belong to low income and disadvantaged sections of the society.

“The stock exchange carries a casino image where investors look for capital gains rather than companies’ profitability and is, therefore, unpredictable”, quipped a senior officer of the EOBI who said that National Saving Schemes are now a no go area for the institution and the only avenue is government securities that offer relatively low rate of return.

The EOBI was set up in 1976 under an act of Parliament by the PPP government of late Zulfikar Ali Bhutto as a social security net for the retired, old and poor workers that received a nominal amount as monthly pension. All business establishments with 10 and more employees under the law are liable to get registered with the EOBI and contribute five per cent of their employees wages to the Institution. Since 2002, this contribution of employers has been increased to six per cent and employees now too contribute one per cent.

Under section 9-A of the EOBI Act, the Government is committed to contribute every year the matching fund grant to the EOBI. This was, ironically stopped by late Zulfikar Ali Bhutto’s daughter Benazir government and since then the EOBI Fund thrived on National Saving Schemes, which offered a good return. The NSC schemes have since dried up and the EOBI operators are worried where to park their funds. Actuaries in the insurance market predict depletion of the EOBI funds in the foreseeable future if no remedial measures are taken.

Another change was brought about in the EOBI Act recently through Finance Bill 2006. In accordance with this change, the business establishments having 20 employees and more are now liable for registration with the EOBI, rendering hundreds of those in the business establishments with ten and more employees, vulnerable to deprivation after the age of 60 years. In fact, the business establishments manipulate their organisation structure in a way that even with 100 employees they show it as six and seven different organisations to circumvent the law.

“We managed to earn about Rs16 billion in 2005-06,” Akhtar Zamin informed Dawn on Tuesday to explain that this income was just enough to provide Rs1,300 monthly pension to about 2,54000 retired workers and also to meet the establishment cost of the institution. The income from investment increased by only Rs1 billion in 2005-06 and does not match the inflationary rate.

Bulk of the EOBI’s income came from investment in government securities where rate of return is fixed and too low. As much as more than 84 per cent of investment amounting to Rs94.20 billion was invested in government securities, which gave a return of less than Rs14 billion.

In the year 2003, the government allowed public sector institutions to invest in stock market. That was the time when rate of bank interest was low and stock brokers were wallowing in liquidity and making money in billions. The EOBI too joined the race and made handsome gains. But since at stake was the monthly pension of the old, retired and poor workers some caution was applied and the EOBI investment committee has put the condition of putting money only in those shares that showed 20 per cent return for two consecutive years. In the year 2005-06 EOBI invested about Rs14 billion and earned Rs1.89 billion income. Bulk of this income—-more than Rs1 billion--was from capital gains, while Rs851 million was earned from dividend income.

Real estate is one avenue where EOBI is targeting and has put Rs2.76 billion. Under the rules, the EOBI purchases land from the government only. It has put in place a subsidiary company to manage and run real estate business. The EOBI intends to make rich capital gains from real estate business.

The EOBI has now asked the government to bring privatised banks, other privatised entities, private banks and other business organisations within the registration net so that pension benefits can be extended to thousands of more employees. The private sector directors on the EOBI board have different ideas.

Nazim F Haji, who is one of the four employers’ directors on EOBI board says that many banks and private organisations offer a much better pension and provident scheme than EOBI. But officials of the EOBI argue that law provides registration of all institutions where pension scheme is being practiced. “Let there be a dual pension for the retired employees’’ is one argument.

Brigadier Akhtar Zamin wants to bring seasonal factories (ginning, rice husking etc) within the fold of EOBI. He has an ambitious scheme for lady workers, who work for a period of seven to eight years before their marriage in some school, factories and offices before taking up household as a full-time responsibility. He wants all such lady employees be paid a lump sum amount that commensurate with their period of work and emoluments to help them establish their home after marriage.

Officials in EOBI claim of having brought a large number of establishments, factories, schools and offices mostly in Defense Housing area within their registration network in last one year.

“We have now an ambition to do something for rural labour,” Mushtaq Ahmad Samoon a senior executive of the EOBI said who added that efforts were underway to draw up a precise definition of an agricultural worker and determine a minimum wage calculated from his work in a mechanised farm. “It is too difficult nay impossible to do it,” he said adding that some one has to make a start some day, let this begin now from EOBI.

The EOBI has now 58,210 establishments registered with it which have about 2.5 million employees who are now a part of the pension scheme. The contribution of business organisations increased to Rs3.37 billion in 2005-06 from Rs1.94 billion in 2001-02. Out of the total Rs116 billion fund accumulated since 1976, the EOBI invested bulk of it — more than 84 per cent — amounting to Rs94.20 billion in government securities.

 

[Neo]

ISLAMABAD, Aug 8: The government has decided to develop close contact with top 300 international investors with a view to luring them to make new investments in Pakistan.

In this regard an “Investors Relations Desk” is being set up at the Debt Coordination Office to keep regular liaison with 250-300 top international investors who would also include reputed commercial banks and investment companies.

“The purpose is to create awareness and update international investors about Pakistan and various new investment opportunities that exist today in our part of the world,” Dr Ashfaque Hasan Khan, economic adviser to the ministry of finance, told Dawn on Tuesday.

He said he had just returned from London and Dubai where he had met a number of foreign investors, officials of international rating agencies, bankers and bond investors in order to apprise them of the latest Pakistan's economic situation.

Dr Khan said he held detailed meetings with individual investors, including those of Standard and Poor’s, JP Morgan, ABN Amro, Citibank and HSBC. All the details about them, he pointed out, would be kept in the Investors Relations Desk so that they could be provided instant information on any issue. This desk will be functional very shortly for which the staff has also been hired.

This desk, he said, would function in line with the similar desks that existed in many countries, including India and Italy, the purpose of which would be to keep the international investors informed and abreast with day-to-day economic and financial activities of the country.

Responding to a question, he said in case of any unfortunate incident like bomb blast or any natural calamity, foreign investors would be promptly approached and informed about the latest economic situation through the Investors Relations Desk. “The objective is to ensure that there is no negative impact on the economy due to any unfortunate incident,” he said.

Dr Khan also cited the example of recent bomb blasts in Mumbai where the Indian investors desk immediately took into confidence the international investors and told them that there was no danger to the country's key economic indicators.

In reply to another question, the economic adviser said the government would soon be issuing another Eurobond the details of which were currently being finalised.

The new bond, Dr Khan said, would be issued during 2006-07 and that its timing would be decided soon. He said since the launching of bonds had been a great success, the government planned to regularly issue such bonds -- almost during every financial year.

The adviser claimed that Pakistan’s investment climate had greatly improved that was why foreign investors were approaching the government to invest in different fields, especially in oil and gas, infrastructure, communications, information technology, housing and construction sectors.

 

[Neo]

ISLAMABAD, Aug 8: Pakistan’s exports of non-textile products rose by 11pc to $6.601 billion during the fiscal year 2006 as against $5.946 billion the previous year. Official figures showed that the growth was mainly due to increase in export of primary commodities, leather finished products followed by engineering products. However, export of sports, surgical, cutlery, chemical and pharmaceutical, jewellery and molasses recorded a negative growth during the year under review.

According to official analysis, a copy of which was made available to Dawn showed that the export of all varieties of rice rose by 19.29pc to $1.112bn as against $0.932bn the previous year. Of these, the export of basmati rise rose by 15.46 c.

Among the primary commodities, exports of fish and fish foods increased by 41.17pc, fruits 28.29pc, vegetables 19.08pc and spices by 63.01pc. However, exports of raw cotton declined by 38.70pc, tobacco 42.66pc and oil seeds, nuts and kernals by 48.05pc.

The export of surgical goods and medicinal instruments also declined by 12.47pc, followed by jewellery dipped by 33.34pc, furniture by 18.77pc and molasses by 37.50pc during the year.

The export of engineering goods, however, increased by 14.60pc to $206.555 million during the FY06 compared to $181.984 million the previous year. Of these, exports of electric fans increased by 4.55pc, other electrical machinery increased by 2.48pc, auto parts by 14.90pc and machinery for specialised industries by 20.17pc. However, export of transport equipment declined by 13.48pc during the year under review.

The export of sport goods rose by 13.80pc to $348.225 million during the year under review as against $307.130 million the previous year. Of these, the export of footballs up by 35.49pc and gloves saw a fall of 44.85pc.

The export of footwear items up by 0.21pc to $137.956 million during the FY06 as against $137.666 million the previous year. Of these, the export of leather footwear increased by three per cent. However, exports of canvas footwear declined by 44.18pc.

The export of leather products increased by 32.33pc to $697.057 million compared to $526.774m the previous year. Of these, exports of leather garments rose by 48.60pc and other leather products by 91.34pc. However, the export of leather gloves declined by 12.19pc.

The statistics showed that exports of carpets, rugs and mats decreased by 9.50pc and cutlery by 3.25pc. However, export of onyx-manufactured increased by 49.38pc and gems by 7.51pc.

 

[Neo]

KARACHI (updated on: August 09, 2006, 20:05 PST): President General Pervez Musharraf on Wednesday vowed by 2007 all villages in the Sindh province would be provided electricity.

Instructing to Wapda officials here in a meeting on electricity, water and gas at the Chief Minister House the president said that every village in the province, having ten or more houses must be provided electricity.

"Comprehensive plan to provide clean drinking water, electricity and natural gas in the Sindh villages at Tehsil and Town level by 2007 has been devise out," said the president.

Speaking of the Karachi energy crisis the president said the electricity demand in the city has increased by 40 percent and the new management of the Karachi Electric Supply Corporation (KESC) will be investing Rs 22 billion to overcome this situation.

He assured in next two years electricity production will be increased and by making better distribution infrastructure the KESC will overcome the problem."

The president also instructed officials of utility services to provide natural gas and clean water to every Tehsil and Zilai Headquarters of the province.

He urged the officials of utility services and government departments to work hard for the welfare, well-being and betterment of the people.

The president pointed out that the country's economy has revived and stressed that improvement in this vital area has to be translated into "public gain".

He said the focus should be on poverty alleviation, unemployment control as well as checking the prices and inflation.

Musharraf said the standard of living of the people be enhanced and they be provided with utilities like electricity, gas and clean drinking water.

He also laid stress on bringing about improvement in human resource through quality education and better health facilities.

The president pointed out that the United Nations has also come up with Millennium Development Goals (MDGs) by 2015.

He said we should try to remain ahead of the deadline set by the United Nations for achieving the MDGs.

He said the briefings today in these sectors were also aimed at assessing the achievements as well as ground realities and the future plans in these areas.

Sindh Governor, Dr. Ishrat-ul- Ebad Khan, Chief Minister, Dr. Arbab Ghulam Rahim, federal and provincial ministers, advisers to Chief Minister, members of provincial assembly and nazims of various districts were present on the occasion.

 

[Neo]

LONDON (updated on: August 09, 2006, 22:52 PST): Asia-focused bank Standard Chartered will pay more than $500 million to buy Pakistan's Union Bank in the biggest purchase by a foreign bank in Pakistan, it said on Wednesday.

Standard Chartered has agreed to buy an 80.9 percent stake in Union Bank for $413 million, and under Pakistan law it is obliged to make a public offer for the remaining shares of Union Bank, which would take the total price to $511 million.

Badar Kazmi, Chief Executive Pakistan, Standard Chartered, told reporters in Karachi that the bank will make a public offer for the remaining shares next week.

"We will be looking for the maximum," he said, adding the legal merger of the two banks would take up to three months.

The London-headquartered bank had been expected to this week agree the deal for Union Bank, which is Pakistan's eighth biggest bank, with assets of over $2 billion.

A Reuters report on Tuesday said it would spend $414 million buying an 81 percent holding.

The deal will make Standard Chartered the sixth biggest bank in Pakistan by market share of assets and will make Pakistan the bank's 10th biggest market in terms of income.

Union Bank has about 400,000 retail customers through a network of 65 branches in 22 cities, which will be added to the 46 branches across 10 cities Standard Chartered already has. Union Bank also operates a small wholesale unit.

The London-headquartered bank said the combined group will deliver economies of scale, a more complete product set, a stronger operating platform and a wider distribution network.

Union Bank has grown strongly since being established in 1991, particularly in the retail and small and medium enterprise banking market, where it now holds strong market shares in mortgages, credit cards, personal and auto loans.

Standard Chartered said the deal will be financed through internal funding and it should be earnings accretive this year.

The tender offer should start around Aug. 12 and close by Sept. 1, and the deal is due to complete shortly after, it said.

The price paid represents about 10.9 times Union Bank's pre-tax profit last year of $47 million, which was up from $25 million in 2004. The price is 5.6 times Union Bank's reported net asset value as at the end of March.

Union Bank's shares rose 1.3 percent to close at 86.35 rupees. Standard Chartered's shares rose 2.2 percent to close at 13.03 pounds, reversing a dip following its half-year results on Tuesday and valuing the bank at just over 17 billion pounds.

The deal is the latest and largest of several deals involving Pakistani banks.

Last July, Singapore state investment agency Temasek tripled its stake in Pakistan's small commercial NIB Bank (NDLC-IFIC Bank) to 72.6 percent, which was then worth about $57 million. Temasek is also Standard Chartered's biggest shareholder.

In February, the Pakistan government said it planned to sell 20 percent of third-ranked lender United Bank Ltd , reducing its stake to 24.5 percent.

 

[Neo]

ISLAMABAD (August 09 2006): The World Bank's lending commitment to South Asian region reached $3.8 billion during the financial year 2006 ended on June. Pakistan was among the 10 major borrowers of the Bank, receiving $1.498 billion or 6.3 percent share of total $23.6 billion commitments world-wide during the year 2006.

The Bank's commitments for South Asia in FY06 accounts for 16 percent of all these loans, grants and credits by the Bank's two closely affiliated entities - the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA).

It is important to note that the Bank's total lending commitments to all its members increased to $23.6 billion during financial year 2006, up by six percent ($1.3 billion) as compared to the previous year. Overall, Mexico and Brazil were the largest borrowers, followed by Turkey, Pakistan, China, India, and Argentina.

India, which also falls in the top-10 ranking, received $1.416 billion or six percent of the total IBRD/IDA commitments.

The World Bank under its Global Environment Facility (GEF) operations provided only $6 million during FY06 to South Asian region. The GEF grants support projects related to bio-diversity, climate change, international waters, land degradation, the ozone layer, and persistent organic pollutants in its member countries.

The IDA was set up to provide interest-free credits and grants to countries with little or no capacity to borrow on their own. Its commitments in the 2006 financial year rose by 9 percent to $9.5 billion as compared to FY05 - the highest in the organisation's history.

The IBRD aims at reducing poverty in middle income and creditworthy poorer countries through loans, guarantees as well as analytical and advisory services, marked a new record during FY06 reaching $14.1 billion rose by 4 percent over FY05 - the highest volume in the past seven years.

The highest percentage of IBRD/IDA lending went to the Latin America and the Caribbean region. It received $5.9 billion or 26 percent of the total lending.

The figures show lending commitments to Africa rose by 23 percent in the past financial year. Africa had 20 percent of total lending commitments with $4.8 billion. Europe and Central Asia had 17 percent with $4 billion; South Asia 16 percent with $3.8 billion; East Asia and the Pacific had 14 percent with $3.4 billion, while the Middle East and North Africa region had 7 percent to $1.7 billion.

 

[Neo]

ISLAMABAD (August 09 2006): The government received Rs 149.05 billion through privatisation of public units during the last five years out of which 90 percent was paid to retire debt and the rest alleviate poverty.

The debt so retired amounted to Rs 7,450.664 billion, State Minister for Finance Omar Ayub told the Senate, adding: "The debt retired is far in excess of privatisation proceeds." The pro-poor expenditure incurred out of the privatisation receipts was Rs 1,402 billion.

In reply to another question, he said in financial year 2005-06 (July-March), the government obtained Rs 108.6 billion (net) as domestic loans and Rs 30 billion (net) as foreign loans to meet the budget deficit, and that the total loans taken during the year were "in line with the annual target."

The house was informed that during FY06 total foreign investment has been $3,872 million, including portfolio investment of $351 million and direct investment of $3,521 million. Main sectors in which *** was made are telecommunication (IT&T) $1,937.7 million, financial business $329.2 million, power $320.6 million, oil and gas $312.7 million, trade $118 million, and construction $89.5 million.

Asked to give figures of export and import from July 2005 to April 2006 against the estimated figures, the commerce minister said exports were $13.5 billion and imports $23 billion, adding the ministry does not compile month-wise figures.

Asked if the State Bank of Pakistan (SBP) had collected funds for beautification of I.I. Chundrigar Road in Karachi, the minister said 'yes', adding the SBP started to collect funds from the stakeholders from January 2005 and by March 2006 had collected Rs 171.5 million. The project was estimated at Rs 162 million, but it did not include cost of shifting the PTCL and the KESC utilities, he said.

He said the SBP was involved when the President directed in 2003 that various organisations should discharge their social obligation and the Bank was assigned the responsibility to take care of rehabilitation and beautification of I.I. Chundrigar Road.

Asked what amount was withheld by the Indus Bank and the number of depositors still deprived of their deposits, the minister said as of September 22, 2000, the Indus Bank Limited had 10,362 depositors with deposits of Rs 551.242 million. Out of the 10,362 depositors of the Indus Bank, 9,641 depositors have been paid in full, and remaining were allowed payment up to Rs 100,000, while 468 depositors having deposits of Rs 219,543,616 are still to be paid.

He said the Supreme Court through its order dated March 24, 2003, had restricted Joint Official Liquidators of the Indus Bank from withdrawing any money. As such any payment to IBL's remaining depositors will be made by the Joint Official Liquidators (JOLs) only after vacation of the above court order. As such no timeframe can be specified for repayment.

Replying to a question by Hameedullah Jan Afridi, Omar Ayub said that no amnesty scheme on cars entered illegally into the country has been announced. However, the Central Board of Revenue (CBR) has amended the SRO. 574(I)/2005 dated June 6, 2005, vide amending notification SRO. 179(I)/2006 dated March 2, 2006 giving powers to the adjudication officers of the Customs to release the smuggled vehicles on payment of 30 percent redemption fine in addition to duty and taxes.

The minister said such vehicles were earlier liable only to outright confiscation. Through this measure an opportunity to owners of the smuggled vehicles to get their vehicles released and get them registered legally has been provided. This initiative is aimed at collecting revenue on vehicles that earlier were being confiscated outright, he added.

A number of 5,227 vehicles (2,341 smuggled and 2,886 involving violation of prescribed import procedures) have been cleared through this measure from March 2, 2006 to date, he said, adding this measure has been notified through SRO.179(I)/2006 dated March 2, 2006 in the official Gazette and publicised in the media as well.

The discussion became a little interesting when Senator Raza Muhammad claimed that the smuggled cars exceed hundred thousands and their owners include many generals and even members of parliament, but the minister rejected the claim.

To another question, Omar Ayub said that a proposal for the waiver of house building and motorcycles advances outstanding against federal government employees is under consideration of the government.

In the unstarred questions listed for the day, the house was informed that there are 216 corporations/autonomous/semi-autonomous bodies under the control of various ministries/divisions.

According to the reply under the same category, at present, there are 37 federal ministers, 24 ministers of state, 2 advisers (appointed under Article 93 of the Constitution), 13 having the status of federal ministers and five with status of state ministers.

Privatisation Minister Zahid Hamid said, in reply to an unstarred question, during FY06 the Privatisation Commission engaged 26 legal counsels to defend privatisation cases in higher courts, while in some cases no fee was paid in others Rs 20.8 million was paid.

 

[Neo]

9 August 2006

ISLAMABAD — The World Bank and the Asian Development Bank (ADB) will not finance development projects which are not economically and financially viable.

Informed sources said that both the donors have particularly urged the government to plan only economically and financially viable development projects, failing which it would be difficult to arrange funding for them.

Wapda has finalised a number of power projects which were not financially and economically viable and their foreign funding could not be arranged so far.

It was in that backdrop Wapda authorities urgently sought Rs2.9 billion from the Centre to start its rural electrification programme in NWFP to provide electricity to 3158 villages (175 villages per month).

"The government of Pakistan has still to arrange finances from foreign donors for this rural electrification project (July 2006 to December 2007 eighteen months programme)," Wapda informed the Planning and Development Division.

"The project is not financially viable when quantifiable financial/economic benefits are taken into account. However, the project is quite justified in terms of value added benefits at the national level," Wapda said, seeking Rs2.9 billion for its new rural electrification programme to be undertaken throughout the NWFP province.

According to the details, a total of 315,800 new power connections will be given in the province which included 284,220 general connections, 12,632 industrial and 18,948 tubewell connections. In 60 per cent of the cases, industrial connections are

proposed to be connected through PVC service connections only from General Sub-Station and the remaining 40 per cent would be provided with PVC service connections and independent sub-

stations.

For every agricultural tubewell consumer, separate distribution sub-stations of 25 KVA will be installed.

Wapda informed the planning division that the project required the expansion of distribution network to meet the target of all types of connections including the construction of 5573 Km H.T and 5018 Km L.T lines.

The project is essentially required to raise the standard of life of rural population and to meet the increasing requirements of electricity for industrial and agricultural development in rural areas.

Wapda maintained that as electricity is the lifeline of the people, the benefits to the national economy due to additional availability of electricity in manufacturing as well as agriculture sector are also required to be evaluated in addition to direct financial/economical benefits attributed to the project.

Wapda estimated that a unit of electricity in

industry gives value added of Rs6.736/KWh in the economic based on vale added in manufacturing sector in 1995-96 at 1980-81 constant price and in agriculture sector Rs2.672/KWh at 1996-97 price.

 

[Owais]

Cars production jumps up by 15 percent

KARACHI: The production of cars in July current year as compared to previous year July increased by 15 percent to reach at 13243 units.

Pakistan Automotive Manufacturers Association sources told that the production of cars in July current year recorded a rise by 15 percent, while 11492 units were produced in July previous year.

Similarly, the sale of cars in July current year swelled by 5 percent as compared to previous year’s same month and pegged up at 12124 units. In July previous year, 11503 units of cars were sold.

 

[Owais]

Suzuki to manufacture 170,000 cars in Pakistan Karachi: Suzuki Motor Corp plans to increase production in its Pakistani factory Pak-Suzuki from 110,000 vehicles to 170,000 vehicles in fiscal year 2009.

Suzuki -- which is also ramping up production in India and Hungary -- said it would invest 60 billion yen (520 million yen) to build the factory in central Shizuoka prefecture, with construction to begin this fall.

The plant will begin operating at the end of 2008, with annual production capacity of 240,000 compact vehicles.

"We had a large back-order situation overseas, with countries in Europe, North and Central America, and Southeast Asia demanding to increase production for our Swift and SX4-Grand Vitala," said Suzuki Motor chairman Osamu Suzuki.

The chairman of Japan's mini-vehicle giant said it was difficult to choose the site for the factory but said there were advantages to building close to existing Suzuki plants in Shizuoka.

Japanese automakers have cashed in handsomely on the global trend to fuel-efficient cars as oil prices keep rising.

 

[Owais]

Galvanised steel prices shoot up

KARACHI (August 10 2006): The prices of galvanised steel coils have shot up by Rs 2,000 per ton during the last 15 days despite declining trend seen in the international market, traders here said on Wednesday. They said that galvanised steel coil prices have gone beyond Rs 59,000 per ton and currently this item is being sold at Rs 61,000 per ton for the last 15 days.

Traders said that it was expected that the prices would surge because international contracts had been booked at comparatively higher rates by local importers as in July the world market prices were in the range of $800-$810 per ton.

However, private steel importers were of the view that only routine demand was witnessed in the market, but delay in arrival of some of the imported material aggravated the domestic scenario, and the prices started climbing.

"Sometimes vessels do not meet their scheduled time and the material gets offloaded a few days late, while on the other hand, the demand remains same or increases, which triggers inflationary trend in prices," said a steel importer. "Some $25 per ton was increased on galvanised steel coils during the first week of July and when the expensive material arrived here, the prices underwent a substantial rise," he added.

He hinted about another price spike in the days to come, saying that the international prices had soared by another $25 per ton during the third week of July, for September shipments, and when the September shipments would land here the commodity would become more expensive. "As a result, local prices of imported galvanised coils would be tagged at around Rs 63,000 per ton next month," importers said.

On the contrary, recently, the international prices of galvanised coils have declined by $25-$30 per ton, as Chinese material is being offered at lower rates.

"Some fresh deals have been made during the last few days with Chinese exporters, who had offered us the commodity at $775 per ton, against $800 per ton which is still prevailing in international market," the importers said.

Importers said that the rise in galvanised steel coils was due mainly to consistent rise in the prices of its essential metal--zinc--and fluctuation in the euro. Market sources said that importers had approached China in April for import of this item as it was offering the cheapest rates among all commodity sellers.

Citing reasons why the importers had placed orders in China, one importer commented: "Actually, the Chinese products have the spangle, which is, in fact, our basic requirement. Therefore, we had stopped importing European products because their prices were very high and the product was without spangle."

Importers say that some 3.5 million tons of steel products are imported every year from South Africa, Japan, Taiwan, United States, Australia, Korea and some European countries. Galvanised coils or sheets are used in cottage industry where small household items are made, like bucket, ducting of air-conditioners, etc.

 

[Owais]

Irregularities of Rs 7.5 billion detected in sales, income taxes accounts

ISLAMABAD (August 10 2006): The Auditor General of Pakistan has detected Rs 7.5 billion financial and procedural irregularities in sales tax and income tax accounts during 2003-04.

The audit report on the accounts of revenue receipts (Direct and Indirect taxes 2003-2004) presented in the National Assembly shows bungling of around Rs 2 billion relating to Direct Taxes and Rs 5.5 billion to Indirect Taxes.

However, the departments managed to recover Rs 1.61 billion on the objections raised by the AG office. Irregular refund claims and wrong adjustment of input tax was detected by the AG office involving an amount of Rs 197,928,851 from September 2003 to April 2004. The non-realisation of sales tax, additional tax and penalties caused a loss of Rs 69.445 million during the period under review. The short payment of Rs 4,052,301 sales tax was unearthed during 2003-04.

Some of the interesting instances quoted in the report show that customs officials failed to timely publish notification pertaining to increase in import duty on sugar from 10 to 20 percent during this period. The printing in the official Gazette was delayed for 33 days, which enabled the importers to clear the commodity at 10 percent customs duty, instead of 20 percent, causing a loss of Rs 15.665 million.

In another case, non-verification of documents on export of POL products caused a loss of Rs 137.048 million. According to Ministry of Commerce SRO 137(I) 2002 of March, 2002, export of indigenous products to Afghanistan against an advance payment convertible in foreign currency attracted zero-rating of Sales Tax rebate on excise duty and normal repayment/drawback of customs duty. The benefit of the SRO was contingent to corroboration within 90 days of export documents by Pakistan Embassy in Afghanistan, in order to confirm arrival of exported products at destination, as no banking channel exists between the two countries to authenticate export materialisation.

The Collectorate of Sales Tax and Central Excise, Rawalpindi, cleared high-speed diesel, premium motor gasoline and JP-I exempt from government taxes to the tune of Rs 137,047,978 for export to Afghanistan by Pakistan State Oil Company during financial year 2002-03.

The collectorate did not follow the law to procure Pakistan Embassy's testified export documents from the oil company, and also did not demand and effect recovery of duties and taxes of Rs 137,047,978, even after a lapse of 90 days, as required under the notification.

This observation was issued to the Collectorate in November, 2003, and to CBR in March, 2004. In January, 2005, the Collectorate enumerated that the goods were transported under bond from PSO, Sihala depot, to PSO, Taru Jabba depot, and exports turned up from Peshawar Collectorate. The DAC directed Peshawar Collectorate to substantiate the export documents to the audit, but the regional office did not respond till finalisation of this report.

The customs officials also cleared assembly kit for the automobile industry at concessional rate of customs duty not covered under the concessional notification, resulting in short realisation of customs duty of Rs 74.456 million. Under SRO 436(I) 2001, the manufacturers/assemblers of automobile industry were allowed to import components at 35 percent concessional rate of customs duty. But, the customs cleared certain items not permissible under the said notification.

The AG office noted that the income tax department had not properly monitoring the deduction of withholding tax from contractors and suppliers, causing loss of Rs 33.281 million.