Pakistan Economy - News & Updates - Archive

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ISLAMABAD (April 18 2006): Pakistan has agreed to exempt three Chinese banks (Export Import Bank, Agricultural Development Bank and State Development Bank) from taxes on their interest income.

"The government has accepted the request of Chinese government to amend Article 11(3c) of 'double taxation avoidance agreement 1989', to exempt three more banks from tax on interest income," official sources told Business Recorder.

At present, Article 11(3c) of the agreement gives exemption to the State Bank of Pakistan (SBP) and the People's Bank of China on their interest income, sources said.

They said that the federal government had consulted SBP on the Chinese proposal, before conveying the assurance, and added that the SBP administration had no objection to the inclusion of these three banks in the agreement.

According to sources, both countries would amend Article 11 of the agreement through a protocol, expected to be signed during the forthcoming visit of President Pervez Musharraf or Prime Minister Shaukat Aziz to China.

"Such a protocol will encourage Chinese investment in Pakistan and further strengthen the existing bilateral economic relations between the two countries," sources added.

They said that the Cabinet had cleared the proposal, in accordance with the terms of Rule 16(1) (h) of the Rules of Business 1973, the amendment in article 11(3 c), and authorised the concerned Division to finalise the protocol with Chinese authorities.

 

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KARACHI (April 18 2006): Pakistan received $3.228 billion as workers' remittances during nine months of the current fiscal year, against $3.050 billion received in the corresponding period of last year, showing an increase of $177.70 million, or 5.83 percent.

The amount of $3.228 billion includes $10.69 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

Pakistani workers remitted record $423.56 million in March. In previous eight months they had remitted $313.14 million, $348.41 million, $341.10 million, $372.50 million, $308.81 million, $371.24 million, $391.32 million and $358.13 million in July, August, September, October, November & December, 2005 and January & February, 2006, respectively.

The highest inflow of remittances during the nine months was $893.54 million from USA. However it showed a decline from the amount received in July-March period of last fiscal year.

The inflow of remittances from Saudia Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $515.59 million, $491.25 million, $429.32 million, $305.35 million and $87.62 million respectively as compared to $448.96 million, $507.83 million, $382.15 million, $270.38 million and $72.09 million during the corresponding period of last fiscal year.

Remittances received from Canada, Australia, Norway, Switzerland, Japan and other countries during July-March of 2005-06 amounted to $494.85 million as compared to $409.57 million in the corresponding period of last fiscal year.

The monthly average remittances in the said period come out to $358.69 million as compared to $338.95 million during the same period of the last fiscal year.

The country-wise break-up of inflow of remittances into Pakistan in March 2006 shows that remittances from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $108.13 million, $72.50 million, $71.96 million, $57.96 million, $38.63 million and $9.79 million, respectively. Remittances received from Canada, Australia, Norway, Switzerland, Japan and other countries during March 2006 amounted to $64.47 million.

 

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KARACHI (April 18 2006): President General Pervez Musharraf on Monday invited investors to take advantage of investment-friendly economic policies of the government and abundant skilled cheap labour in Pakistan. He was speaking at a reception hosted by the American Business Council (ABC).

Sindh governor Dr Ishratul Ibad, chief minister Dr Arbab Ghulam Rahim, city nazim Syed Mustafa Kamal, naib nazim Nasreen Jalil, former State Bank governor Dr Ishrat Husain, Pakistan Rangers Director-General, Major-General Javed Zia, US ambassador Ryan C. Crocker and a large number of ABC members were also present on the occasion.

"There is no dearth of skilled, qualified and cheap labour in the country," the Prescient said and added privatisation, deregulation and liberalisation pursued by the government had given a big boost to our economic growth.

The President pointed out the country had achieved a record 8.4 percent economic growth last year and every effort will be made to sustain this growth in future.

The President said foreign direct investment has recorded an upsurge of 3 billion dollars this year.

He said he was personally presiding over meetings to address problems faced by investors. He said the boost in economic activities would help generate job opportunities, reduction in unemployment and poverty elevation.

"We intend to have access to US markets to boost our exports," the President said.

The wheel of economic activities in the country is moving faster which is evident from the fact that today hotel occupancy rate in Karachi and Lahore was more than 100 percent, he added.

He pointed out investors were like pigeons who go back en bloc but return only one by one. "By creating an investment-friendly environment, we are encouraging investors for maximum investment in Pakistan."

The President said country's exports have touched $17 billion mark and he has set a target of $18 billion which will hopefully be achieved. However, he said, these figures of FDI and exports were not enough and have to be improved further.

The President observed surge in imports was a healthy sign as we are importing value-added goods including machinery to modernise our textiles sector and this would ultimately pay dividends.

"Our direction is good, exports and FDI keep rising while unemployment and poverty keep reducing," he remarked. The President, appreciating ABC's 1.3 billion dollars investment in Pakistan, said economic activities generated through this investment would greatly benefit in reducing unemployment, poverty as well as in fighting extremism and terrorism.

Referring to the performance of stock market, the President said it was doing wonderful and today the Index (KSE) has already surpassed 12,000 points.

The President said policies of privatisation are successfully moving ahead, and so far government has earned Rs 150 billion. He referred to successful transfer of PTCL as an example and said a number of major concerns were in the pipeline for privatisation.

He said Pakistan's per capita income has increased from $435 to $800, which shows the sign of growth in the country's economy. He referred to the strategic importance of Pakistan and said interaction between regional countries will not be possible without involvement of Pakistan.

He said various countries have pledged $12 billion for development of Afghanistan and all these activities would take place through Pakistan. The President said the government was fully alive to maintain law and order and every effort in this direction was made to sustain peace and tranquility.

Referring to the Balochistan situation, the President expressed his determination that the government would establish its writ there. The President thanked the ABC for their contribution for the rehabilitation of quake-affected people.

Earlier, ABC President Zubyr Soomro, in his address of welcome, said the council was celebrating 22nd anniversary of its founding today.

He said the ABC was the single largest group with an investment of 1.3 billion dollars in Pakistan. Zubyr Soomro said the ABC's contribution to the national exchequer so far comes to Rs 35 billion.

He said ABC has 60 members, who belong to diverse business activities and provided job opportunities to 22,000 people. The ABC president further said in the next 12 months our members will bring substantial amount of investment.

He said policies of the present government have restored investors' confidence.

Zubyr Soomro also highlighted problems including Intellectual Property Rights.

 

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KARACHI (April 18 2006): President General Pervez Musharraf said the national economy is on an upsurge and with consistency in policies, the GDP growth rate will remain between 7-8 percent in future, which is among the "best in the world".

"Our credit rating has also improved and prominent Economist magazine that tabulates top economic performers in the world has also put Pakistan in its list which is a big achievement," he noted while addressing annual dinner of Overseas Investors Chambers of Commerce & Industry (OICCI) here, Monday night.

The President urged OICCI members to project "a positive picture" of Pakistan abroad and assist the government in projecting "good image" which will attract foreign investment in the country and thus further accelerate economic growth.

He called for diversifying exports and venture in engineering goods and heavy industry with special emphasis on dairy products. "We are aiming to cross $20 billion annual exports mark by 2007. To achieve this, the government has signed Preferential Trade Agreement (PTA) and Free Trade Agreement (FTA) with various countries to boost exports," he added.

The President said privatisation was going "at a very fast pace with over 50 entities privatised bringing in capital of Rs 150 billion". He spoke of documentation of economy and said revenue will touch Rs 850 billion in current fiscal year as against Rs 302 billion in fiscal 1998-99, indicating 300 percent increase.

"We are conscious that we have to improve law and order situation in the country. We have made a strategy to confront terrorism and extremism and succeeded in curbing those elements that hinder investment process in the country." He assured foreign investors of a level playing field and security of their capital in Pakistan. The legal framework has also been devised for full protection and guarantees.

The President expressed gratitude to OICCI for contributing Rs 5.4 billion to October 8, 2005 earthquake relief and reconstruction fund. He lauded OICCI's members role as one of largest taxpayer of the country and their contribution towards economic development.

Commerce minister Humayun Akhtar and OICCI president Salman Burni also spoke. Chairman & CEO Philips Pakistan Shahid Zaki presented cheque of 300,000 euros to President Musharraf for quake relief and reconstruction fund.

 

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BEIJING (April 18 2006): China sees a very promising socio-economic partnership with Pakistan and greater interaction in regional and international affairs for their common development, this was stated here on Monday by Cai Fangbai, Vice Chairman, Foreign Affairs Committee of the Ninth National People's Congress.

Addressing 'China Fortune Forum' that was attended by around 100 representatives of prominent Chinese companies, he said the Chinese government, while moving towards economic globalisation wished to strengthen its trade and business links with Pakistan.

The Chinese leadership, he added encouraged their entrepreneurs to invest in Pakistan for promoting mutually beneficial co-operative partnership. Pakistan Ambassador Salman Bashir addressing the forum gave a comprehensive presentation on Pakistan's rapid economic growth and reinforcement of Sino-Pak partnership in the recent years. A documentary on investment opportunities in Pakistan was also shown on the occasion.

Cai Fangbai, who is also President of the Association of Former Diplomats in China, spoke highly of the growing Sino-Pak strategic partnership and said their friendship was rooted in the hearts and minds of their people.

"Our friendship withstood test of the time and remained constant over the past five decades, in spite of twists and turns in regional and international arena."

Referring to his visit to Pakistan December last year, he said it provided him an opportunity to personally witness there a favourable and friendly economic environment for the Chinese investors. He hoped that the Chinese entrepreneurs would seize the opportunities further cementing the bonds of traditional friendship.

Cai further said China and Pakistan would continue work together facing common challenges in the regional and international affairs. The two sides visualised a better economic future, while citing the on-going negotiation on Free Trade Agreement (FTA) that would provide massive tariff reduction on a number of trade items. The negotiation on the FTA is expected to be finalised by the end of this year.

Ambassador Salman Bashir referred to the recent visit of President Pervez Musharraf to China and said it laid a strong foundation bringing the two countries more closely to each other in all fields of common interest, including trade and energy.

President Musharraf during his visit offered Pakistan's ports and highways to serve as a trade, transit and energy corridor to China. The president, during the visit held detailed discussion with the Chinese leaders about the geo-economic relevance of Pakistan to serve as energy and trade hub.

Both sides agreed to start the technical studies to make this futuristic vision a reality, the ambassador said and hoped, it would lead to establishment of oil and gas pipeline and possible rail link between the two countries. He said, Pakistan-China Energy Forum, scheduled to take place in Islamabad next week would be a step forward to realise the common goals in the energy sector.

Salman Bashir suggested that the two countries should establish special business orientation and facilitation centers to enhance awareness and interaction between their private sectors. The ambassadors of Spain, Indonesia and Korea also spoke on the occasion.

 

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LAHORE (April 18 2006): One million Pakistanis living in North America, particularly in the United States and Canada, have resources of over 200 billion dollars, which could significantly help in the development of Pakistan's economy.

Pakistan's economy has registered tremendous growth of 8.4 percent during the last year while current year growth is also encouraging which is projected at 7.5 percent in the present fiscal. If overseas Pakistanis living in America and Western countries and also in the Middle East set up joint ventures with the Pakistani entrepreneurs, the country's economy would sustain at the present level also in coming day. The direct investment to Pakistan has left profound impact on the country's economy besides reducing poverty.

These views were expressed by Dominic Pulera, an internationally expert on matters involving race, culture, and diversity while addressing to a seminar on 'Thinking Globally: International Trade and American's Views of the World in the Post 9/11 Era' at Lahore University of Management and Sciences, Lahore on Monday.

The seminar was organised by The Indus Entrepreneurs (TIE) which is a global, non-profit network of entrepreneurs and professionals dedicated to the advancement of entrepreneurship.

Pulera said that because of 9/11 incident, Muslims have been facing lot of difficulties in getting US visas besides increasing the immigration problems. Due to such difficulties, the people have started shifting of their business to other countries. As a result, United States has lost 40,000-45,000 jobs only in its textile sector in post 9/11 era, he maintained. He further said that there is great potential for investment in various sectors including oil and gas. Pakistani tourism industry is also need to be tapped which has 4.5 times more potential than India.

After the 9/11 incidents, many people have started learning about Pakistan and Islam. However, some Americans have misconception about Islam and Pakistan as well. He stressed the need for improvement of Pakistan image in abroad.

During his speech, he addressed a number of issues including the great success of Pakistani Americans, Americans' views of international trade, Americans' views of the world in the post 9/11 era, the linkages of overseas Pakistanis with Pakistan and some reflections on Pakistan's image abroad and how it affects the efforts to attract greater amounts of tourism and foreign direct investment to Pakistan.

Speaking on the occasion, President TIE Lahore Chapter, Dr Khalid Javed Chaudhry said that Pakistan is passing through a transition phase and it needs consistency in its economic policies irrespective of government. He further said that expatriate Pakistani can play an active role in the development of country and added that they should bring investment into the country and avail the opportunity of enabling business environment.

Pakistan is more safe and secure for the investment to yield dividend to the investors, he maintained.

Dr Ishrat Waheed of Centre of Excellence in Molecular Biology, Punjab University also spoke on the occasion.

 

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LAHORE (April 18 2006): Access to clean drinking water was the right of every citizen of the country and it was duty of the government to ensure its provision; moreover, before 2007 general elections all the commitments made by this government would be fulfilled.

Punjab Public Health Engineering Minister Mushtaq Ahmed Kiani expressed these views in a seminar on 'Community based water supply and sanitation,' which was organised by PCWSS here on Monday.

He said that for the provision of clean drinking water, the government started the Punjab Clean Water Supply and Sanitation (PCWSS) project with the backing of the Asian Development Bank (ADB) in 2003. "Under the project, 750 schemes that were focusing on the provision of clean water and sanitation in the province at the cost of Rs 4.5 billion, which would completed by next July," he added.

According to him, out of the 750 schemes, 500 were new, started by the present government, and while 250 were those that were sitting idle; moreover, till now 300 schemes have been handed over to the local communities after a successful run. Moreover, active participation of local communities in running the schemes is the focal point of the project.

He disclosed that they were planning to launch the third phase of the project and talks with ADB in this connection were in progress. He praised the Punjab government was prioritising drinking water; seriousness of the government on the subject could be gauged from the fact it provided additional Rs 90 million to PCWSS, since it has utilised its budget. Under the present government, water related schemes have been completed, he added.

Salman Ghani, Chairman of Planning and Development Board Punjab, stressed upon the active participation of local communities in development projects. He said that the very sense of ownership was the key to the success of such schemes. He further said that in the past such projects had failed due to lack of local communities participation. Raza Farrukh Chaudhry of ADB, Khalid Sultan, Punjab HUD&PHED Secretary, and Zahid Hussain Ch, Project Director, also addressed the seminar.

 

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Tuesday April 18, 2006

KARACHI: Expressing the fear that rising ratio of inflation has not only endangered national economy but also the budgets of countrymen, president General Pervez Musharraf Monday said we will have to take immediate steps to overpower the menace of price hike and State bank of Pakistan has a big role to play in this regard.
"The Bank will have to take immediate and long term steps for resurrecting the situation. The bank must devise a clear strategy to control inflation," he observed this while addressing officers of State Bank of Pakistan during his visit to the head office of the Bank. Governor State Bank Dr Shamin Haider gave a detailed briefing to the president about Pakistan’s economical picture.

However, he pointed out we will have to shed off the dark clouds of extremism from our society to get rid of poverty because it has a clear impact on national economy. We should also work wholeheartedly for economical uplift if we want our country to prosper, he said and added extremism and deteriorating law and order are the main impediments in Pakistan’s development and rising inflation.

"There is no doubt that large number of foreign investors are showing interest in Pakistani market but still we have to do a lot to provide them safer environment where they could thrust more money and it will be good for national economy."

He said I personally want foreign investors to show more interest in Pakistani market.

He said: "we want to transfer the affects of growing economy to the rural population so that they could lead a respectable life and it will be only possible when situation of law and order is better."

In previous governments, bureaucrats, politicians and bankers had embezzled the national exchequer in large extent and usurped huge sums they accumulated under the head of loans but incumbent government has brought an end to their corruption practices, he held.

He said the previous government did not pay heed towards the national problems that augmented our problems but incumbent government is committed to overcome all the problems and has decided to build mega water reservoirs for national development.

Commenting on the tax system, he said as far as tax system of Pakistan is concerned it is better then before, however the base of taxpayers must be expanded and more people should be included in the taxpayers network.

He also highlighted the spectrum of Small and Medium Enterprises (SMEs) and Micro Finance economy and said there is still more space for projecting the SME and Mirco Finance economy in the country particularly in the rural areas so that people of these areas should reap their fruits.

He said Banking sector in Pakistan is also growing whereas overall economic situation of Pakistan is satisfactory.

He said Khushali Bank is performing well and its network should be widened.

Shedding light on Balochistan situation, the president said the problem lies no more, we have resolved the issue ’amicably’ and peace has been restored in the province in latter and spirit.

He said as far as situation in Waziristan is concerned, government is well aware of the overall picture of the area and the issue would be resolved very soon.

"We have decided to introduce administrative reforms in Balochistan and FATA and under these reforms the system of Political Administrator in FATA will be abolished very soon, whereas government has started several development projects in Balochistan so that people of the province should be brought up to par with the other provinces," he maintained.

The president government has already allocated Rs 10 billion package for the development projects in FATA and Balochistan and this sum will definitely change the face of the two regions.

 

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Tuesday April 18, 2006

ISLAMABAD: Various initiatives taken by the Textile Industry Ministry to increase the export of textile and improve the productivity and competitiveness of the textile industry were discussed at a high-level meeting chaired by the Prime Minister Shaukat Aziz at the PM House Monday.
The Prime Minister said that the government will continue to take all necessary steps to help the textile industry improve its performance as the sector accounts for 60% of the country’s exports and 38% of its manufacturing.

He said that due to the substantial investment in the textile industry in the last five years it has registered significant improvement in upgrading and modernizing it.

The Textile Industry Minister Mr. Mushtaq Ali Cheema updated the Prime Minister on the various challenges faced by the knitwear industry and the proposed steps to meet them.

The Prime Minister appreciated the Clean Cotton Project launched by the textile industry ministry. He however emphasized the need to associate the provincial governments with it to create ownership so as to benefit cotton growers. He said the project can help facilitate value addition in the textile sector leading to increased foreign exchange earnings for the country.

The meeting also discussed at length various proposals put forward by the Textile Ministry for inclusion in the upcoming budget.

The meeting was also attended by Dr. Salman Shah Advisor to PM on Finance, Mr. Abdullah Yousuf Chairman CBR, Syed Masood Alam Rizvi Secretary Textile Industry and senior officials.

 

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Tuesday April 18, 2006

ISLAMABAD: An expert economic team is working under the leadership of Prime Minister Shaukat Aziz which is eventually bringing gradual betterment in economic situation of the country and tax net expansion is inevitable for strong and stable economy.
This was stated by Abdul Rauf President Islamabad Chamber of Commerce and Industry while speaking in a meeting with Income Tax Subcommittee here in Chamber House. He further said that total 12 million returns are submitted while business community hold its share as only 5 million which is trifling, however commercial consumers of the WAPDA are 40 millions according to their record and these consumers pay monthly advance income tax in the power bills but return is not filled, these consumers could be added in the tax net by coordinating with CBR.

He reiterated that Salman Shah, Umer Ayub, Hina Rabbani Khar, Dr. Shamshad Akhtar and Abdullah Yousuf Chairman CBR are working as a strong economic team and several reforms are practiced including Self Assessment System in income tax which increased the revenue. The government should expand the tax net rather then burdening the same taxpayers, he said.

 

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Tuesday April 18, 2006

GILGIT: The government is taking a keen interest in the socio-economic uplift of the Northern Areas and a huge amount is being spent on many projects to bring the area at par with other developed areas of the country.

A tourism department spokesman said on Sunday that the government had started work on various projects including health, education, communication, hydropower projects, tourism and water supply schemes in the northern areas of NWFP. Giving the details of the projects, sources said that Gilgit-Naltar road was being constructed at a cost of Rs 20 million to link the area to other adjoining areas of the northern region.


Sources said that rest houses and tourist resorts were also being constructed to attract locals and foreign tourists in the area.


They said that the government was spending Rs 88 million for the promotion of tourism in the northern areas. The development projects were being completed at a fast pace under the directives of the Minister for Kashmir Affairs and Northern Areas Makhdoom Syed Faisal Saleh Hayat, sources said.

 

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KHANEWAL, Apr 17 (APP): Punjab Literacy and Non-Formal Education Minister Hussain Jahanian Gardezi said here Monday that government efforts are aimed at achieving 100 per cent literacy rate in the province.
Talking to newsmen in the office of the EDO Literacy, Khalid Haraj, the minister said that the Chief Minister is determined to achieve the "education for all" target.
"In this connection, the government has launched a 4-year education reforms programme in four model districts of the province, at a cost of Rs 1 billion," he said.
Under this programme people of 15 years of age and above will be imparted primary education to achieve the target.
He disclosed that a sum of Rs 350 million would be spent to set up 1000 literacy centres in 100 union councils of district Khanewal.

 

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ISLAMABAD (April 19 2006): The government has attributed dearness of essential commodities to the demand and supply imbalance, claiming the economy had fully recovered from the default-like situation.

Joint opposition in the National Assembly demanded of the government on Tuesday to step down as it failed to break monopolies and restore law and order across the country which, they termed, a pre-requisite to sustainable economic progress.

The opposition accused the government of showing total indifference to financial difficulties of the common man, who are trying to find 'salvation' in self-immolation and suicides.

Winding up the three-day debate on price hike, state minister for finance Omar Ayub contended 40 percent increase in inflation was because of a sudden rise in prices of daily-use items such as tomatoes and other vegetables. Omar Ayub said model vegetable markets would be established in all big cities to ensure balance in demand and supply of essential items.

The minister pointed out inflation rate in 1990-91 and 1994-95 stood at 12.7 percent and above 13 percent, respectively, and flayed the PPPP for raising hue and cry over current inflation rate that would be brought below 8 percent.

Contradicting the opposition's claim that over 40 percent population lived below the poverty line, he said, in fact the percentage is only 26. He added 5.5 million new jobs were created during the last 18 months.

The minister said foreign debt servicing formed 30.1 percent of the gross domestic product (GDP), unlike 66 percent of the GDP in 1988. The world community's support to Pakistan after the earthquake was a proof of the government's credibility and economic success, Omar Ayub claimed.

About higher inflation rate, he said due to significant economic growth, demand of daily-use items had gone up, leading to demand-supply imbalance, which is causing high inflation. However, he said under a tight fiscal policy, it would be brought down and the masses would get loans on low interest rate as directed by President Musharraf.

The minister said the agriculture sector had shown phenomenal growth and the farmers' community was now finding it easier to go for inputs of their choice. Referring to the opposition's criticism on the government failure to control prices of daily-use items, he said it was primarily provincial governments' responsibility. Why not the opposition asking about NWFP government's inability to check the price spiral, he questioned.

Adviser to prime minister on finance and economic affairs Dr Salman Shah, he added, had taken an assurance from sugar mill-owners to provide the commodity to utility stores at Rs27.50 per kilo. Not only sugar mill-owners are in the government but also in the opposition camp, who did not bring their prices down, he said.

He claimed flour was available at Rs19 per kilo in India while in Pakistan its rate was Rs15. Likewise, diesel was being sold in India at Rs42.35 whereas here its rate was Rs35.25 per litre.

Unlike in Pakistan where fiscal deficit was 3.5 percent, its percentage in India was 10.5, adding the government was spending 4 percent of the GDP on social sector while provincial governments had Rs 98 billion at their disposal for the purpose.

About the yawning trade deficit, he said the main reason was imports of heavy machinery and raw materials for industry. The minister said this year 12,000 villages would be electrified.

 

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LAHORE (April 19 2006): Mian Fahim Qamar of Pak-Canadian Business Council has said that recently concluded visit of Crown Prince of Saudi Arabia Prince Sultan Bin Abdul Aziz Al-Saud would further strengthen the existing bilateral and economic relations between Pakistan and Saudi Arabia.

Fahim said Pakistan and Saudi Arabia were enjoying excellent religious and traditional relations. He said Saudi Arabia extended every kind of assistance to Pakistan soon after the October 8 earthquake, which badly hit Azad Kashmir and NWFP.

Saudi Arabia always helped Pakistan in time of need, he added. He said that presently the Joint Investment Company was working between Saudi Arabia and Pakistan, which needed to be strengthened. To a question, he said Pakistan's economic ties would be strengthened with Saudi Arabia in times to come.

 

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DHAKA (April 19 2006): South Asian nations want to ease tariffs gradually with the aim of establishing a free trade zone in about a decade, experts at a trade meeting said on Tuesday.

South Asia is a vast economic powerhouse in terms of market potential, natural resources and qualified human resources, said Bangladesh Commerce Secretary Mohammad Abdul Karim, at the opening of the two-day meeting in Dhaka.

"The establishment of the South Asia free trade area (SAFTA) is seen as the first significant step towards deeper economic integration," Karim said.

SAFTA will operate within the South Asian Association for Regional Co-operation (SAARC) framework, grouping Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka. Afghanistan will join the group next year.

"With 1.4 billion population in the SAARC region, one of the largest areas in the world, the intra-regional trade is very minimal," Lyonpo Chenkyab Dorji, the secretary general of the SAARC Secretariat, told the meeting.

Intra-regional trade volume among SAARC countries stands at $6.0 billion, or about 4.4 percent of the total trade of member states worth $135 billion, officials said.

But Karim said: "The region can be expected to fare much better than what other economic blocs such as Europe, North America and Southeast Asia have achieved."

Intra-regional trade of European Union nations is 55 percent of the total trade of member states; that of North American Free Trade Agreement members is at 61 percent, and the Association of South East Asian Nations at 25 percent presently, officials said.