Pakistan Economy - News & Updates - Archive

[Owais]

Food inflation up at 7.44 percent in July

ISLAMABAD (August 16 2006): Though, the general inflation measured by Consumer Price Index (CPI) is declining: yet, the rising food inflation is still snatching the purchasing power of the low-income group, which is a challenge for economic managers.

The State Bank of Pakistan (SBP) on Tuesday released the inflation indicators, which reveals during FY2005-06, average annualised CPI inflation was 7.92 percent and food inflation, 6.92 percent. While in the first month (July) of 2006-07, general inflation declined to 7.63 percent and food inflation increased by 0.52 percentage points to 7.44 percent.

Food inflation, having 40.34 percent weightage in CPI basket, unevenly affecting the purchasing power of the low-income group, increased by 2.62 percent during July 2006 over June 2006.

In one month, general inflation increased by 1.61 percent; food inflation by 2.62 percent; non-food inflation by 0.89 percent; and core inflation increased by 0.46 percent in July 2006 over the previous month.

Inflation indicators provided by the bank since 1998-99 reveals annualised CPI inflation was highest during FY2004-05 at 9.28 percent, of which the food inflation was highest (12.49 percent).

Majority of population consists of low- and middle-income groups and always suffered most by the increase in food inflation. When prices go up, it hit these groups and squeeze their purchasing power.

It is worth mentioning that non-food and core inflation (excluding certain sectors whose prices are most volatile specially food and energy) was on decline, though. It stood at 6.28 percent during July of the new fiscal year against the annual average of 7.11 percent in FY2005-06.

The other inflation indicators, ie, the Wholesale Price Index (WPI) was satisfactory and indicating decline not only in general but food and non-food groups in particular. This indicates and creates hope that in coming month prices of consumer items would go down and be in the grasp of a common man.

The WPI was at 10.10 percent during FY2005-06, in which the food inflation was seven percent and non-food inflation at 12.37 percent. In July 2006-07, it declined to 8.43 percent with food inflation at 5.39 percent and non-food (10.67 percent).

 

[Owais]

Missing traders fraud: SOP for new tax law shortly

ISLAMABAD (August 16 2006): The Central Board of Revenue (CBR) will shortly issue Standard Operating Procedure (SOP) for implementing a new law--Missing Traders Fraud--under which all partners in the supply chain would be jointly liable to deposit the unpaid amount of tax not paid at any of the stages of supply.

Official sources told Business Recorder on Tuesday that the SOP would be finalised in consultation with the business community. The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and Karachi Chamber of Commerce and Industry (KCCI) are actively in touch with the Board to frame the most viable rules.

Sources said that the concept of the 'Missing Traders Fraud' has been made part of the Finance Act, 2006, but the SOP is yet to be chalked out keeping in view reservations of the taxpayers. All issues pertaining to the practical difficulties being faced by the taxpayers would be taken into account prior to issuance of the procedure.

In the 2006-07 budget, the Board has introduced several strict provisions in Sales Tax Act, 1990 to reject the fraudulent refund claims where the amount has not been actually deposited by the supplier in the national exchequer. Section 8 of Sales Tax Act was amended through Finance Bill 2006 to disallow refund or 'input tax adjustment' in case the tax claimed has not been deposited by the respective supplier.

Similarly, the Board has introduced a new system for checking the refunds claimed by persons whose suppliers have collected tax from them, but not deposited in the treasury. Officials said that the new law is in place, but it cannot be implemented till the finalisation of the SOP on the basis of traders' recommendations. Once the SOP is finalised, the Board would issue instructions to all collectors of sales tax for its enforcement.

When asked about demands of certain chambers to scrap the proposed law, sources said that the 'Missing Traders Fraud' law would not be abolished in toto but would accommodate the viewpoint of maximum number of traders and industrialists.

About the availability of online data of blacklisted units and fake companies, sources said that the list of such units is already available at the CBR website. The Board will ensure that updated data of blacklisted companies is made available to the registered units, they added.

Under the 'Missing Traders Fraud', both the buyer and the seller would be responsible for depositing the amount of due tax, if not deposited. Prior to this, the buyer was not held responsible, even if his supplier had not deposited the tax recovered from him.

 

[Owais]

Petrol blending with ethanol likely to start this week


ISLAMABAD (August 16 2006): The Planing Commission has observed that ethanol blending as fuel would cut down petroleum prices to ensure energy security in the coming years when industrial sector's dependence on gas would increase manifold.

In its 'energy security plan' submitted before President Pervez Musharraf and Prime Minister Shaukat Aziz, the Planning Commission Deputy Chairman, Dr Akram Shaikh, has forcefully recommended blending of ethanol as fuel. He was of the view that ethanol blending could bring petrol prices substantially down and encourage its use as fuel for vehicles.

He listed the countries, which have successfully experimented the use of blended ethanol to cut down petroleum prices for the end-users, and advocated that Pakistan should take advantage of the locally produced ethanol by at least 10 percent blending.

With the growing petroleum prices in the international market for a long time now its use is shrinking, slowly and gradually. The vehicle owners prefer CNG use for low cost. The Planning Commission said it wanted a change in the proposition. It suggested that the government should make optimal use of energy to take the maximum benefit of its each kind of fuel, including ethanol, and leave gas as much as possible for industrial use.

Sources said that the President and Prime Minister agreed to Planning Commission's proposal that finally led to federal Cabinet's approval some time back.

The Cabinet had approved the proposal, putting aside Petroleum Ministry's strong opposition. The Petroleum Ministry had opposed the idea, saying that with the new kind of blended ethanol fuel the country would be left with more surplus petrol. However, it could not make the Cabinet change its plan.

Source said that the government was going for blending 10 percent ethanol as fuel to make petroleum cost effective as Prime Minister Shaukat Aziz plans to launch the new kind of fuel in next couple of days.

Sources said that arrangements were being made for the Prime Minister's visit to a petrol pump in the twin cities of Islamabad and Rawalpindi for launching of ethanol-blended fuel some time this week.

The ethanol blending with petrol is an old idea of the sugar industry. The Pakistan Sugar Mills Association (PSMA) had time and again approached the government with a proposal that it should allow at least 10 percent ethanol with petrol to cut down its prices for vehicles' use, but each time it met negative response. The Petroleum Ministry always had negative remarks to PSMA suggestion, sources added.

 

[Owais]

US pushes for TAP gas line

ASHGABAT (August 16 2006): Washington is pushing for a new gas pipeline from Turkmenistan to Pakistan and "strongly opposes" a rival pipeline from Iran, US diplomat Steven Mann said on Tuesday after meeting with Turkmen President Saparmurat Niyazov.

Niyazov and Mann met for two hours on Monday to discuss a variety of possible gas pipeline projects from the gas-rich Central Asian state, including pipelines to China and across the Caspian Sea as well as through Afghanistan to energy-hungry Pakistan and India, Mann said.

"The demand is there, but the next step is to look for private-sector partners to develop this line", said Mann, who is the US State Department's principal deputy assistant secretary for South and Central Asian affairs.

Niyazov, a mercurial politician who has been president since Turkmenistan's independence in 1991, said after his meeting with Mann that the country supported "the policy of creating a diverse pipeline system," the Turkmen government news agency reported on Monday.

During the mid-1990s, the United States pushed for a gas pipeline to be built across the Caspian Sea from Turkmenistan to Western markets, but Niyazov eventually backed out of the project, which was opposed by Moscow.

The project to build a pipeline from Turkmenistan to Pakistan came a step closer to realisation recently with completion of a feasibility study sponsored by the Asian Development Bank, but remains in doubt due to ongoing instability along its route, particularly in Afghanistan.

Aside from security issues, building a pipeline through Afghanistan's mountains would be hugely expensive and technically difficult, probably requiring government subsidies, said Chris Weafer, an analyst at Russia's Alfa Bank.

Mann acknowledged that the route posed commercial difficulties, but insisted that "governments do not build successful pipelines ... These pipelines must be attractive to the private sector."

The US also has strategic interests in such a pipeline, Weafer said, including undermining the potential profitability of a pipeline Russian state monopoly Gazprom plans to build from Iran to Pakistan.

Mann on Tuesday said Washington opposed a pipeline from Iran, which it considers a state-sponsored terrorism, as "a matter both of US law and US policy."

 

[Owais]

OGDCL earns Rs 46 billion after-tax profit

KARACHI (August 16 2006): The Oil & Gas Development Company Limited (OGDCL) has declared its income at Rs 46 billion, and earning per share (EPS) Rs 10.69 in FY06 against Rs 33 billion (EPS Rs 7.67) in FY05, depicting a growth of 39 percent.

The company declared a final cash dividend of Rs 3.75 per share taking the cumulative payout to Rs 9.00 per share for FY06. The OGDCL declared its annual FY06 result here on Tuesday and according to analysts the result was inline with the expectation.

Faraz Farooq, an analyst at Jahangir Siddiqui Capital Markets, said that with combined oil & gas production in FY06 showed a nominal increase of 4 percent, growth in earnings mainly derived from higher oil & gas prices.

The company derives about 40 percent of its income from oil sales. Saudi Light oil prices averaged $59/barrel in FY06, which is 43 percent higher than last year's average oil price.

The average wellhead price of Qadirpur Field (accounting for 39 percent of total gas production) surged by 37 percent to Rs 201.4.Due to this, net sales of the company grew by 31 percent and reached Rs 96.7 billion. Other income of the company, which mainly includes interest income, depicted massive increase in FY06 by virtue of its holding of huge cash balances (Rs 38 billion as of March 2006) in the wake of rising interest rates scenario

 

[Neo]

ISLAMABAD (August 16 2006): Investment in country has soared to record levels and foreign direct investment (FDI) hit a record of 3.5 billion dollars during 2005-06. This was stated by Pakistan's Board of Investment (BoI) Honorary Investment Counsellor in Bahrain Mohammed Sajid Shaikh, the Daily News Bahrain reported.

He said so far, 57 entities have been privatised, raising Rs 316 billion, since economic reforms were launched in 1999. This money has been used for debt reduction and poverty alleviation. Privatisation is the cornerstone of Pakistan's economic reforms, which have made a major contribution towards the country's excellent economic performance in recent years, he added.

 

[Neo]

ISLAMABAD (August 16 2006): Despite a devastating earthquake less than a year ago and an extraordinary surge in global oil prices, Pakistan's economy has delivered yet again. It registered economic growth at 6.6 percent, and its investment rate touched a new high at 20 percent of gross domestic product (GDP).

Real per capita GDP had grown by 4.7 per cent and per capita income in current dollar terms was up by 14.2 per cent to $847 during 2005-06. In 2005, the World Bank reported, "Pakistan was the top reformer in the region and the number 10 reformer globally."

According to Gulf News reports, Pakistan is now one of the emerging economies among growing nations such as China, India and Brazil. Pakistan is a developing country with the world's sixth largest population. At purchasing power parity, Pakistan's GDP in 2005 was estimated at about $384.9 billion. The economy averaged an impressive growth rate of 6 percent per year during the 1980s and early 1990s.

In recent times, wide-ranging reforms have accelerated economic growth. Pakistan's manufacturing and financial services sectors have experienced rapid expansion and there is great improvement in its foreign exchange position.

In May 2006, Pakistan's foreign exchange reserves were more than $13 billion. According to the State Bank of Pakistan (SBP), as per current estimates, the nation's long-term growth momentum remains intact, with real GDP growth exceeding six percent for the third successive year.

In its bid to further speed up the growth process, Pakistan has embarked on a profitable reform agenda based on deregulation, liberalisation and privatisation. The newly created Trade Development Authority of Pakistan (TDAP) plans to increase and diversify the country's exports by exploring new markets and identifying new export products.

To increase market access for goods produced in Pakistan, the government is vigorously pursuing signing of Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs) with various countries. Islamabad also hopes to position itself as an energy corridor linking oil-and-gas-rich countries in the Gulf and Central Asia.

For 2006-07 Pakistan has set an export target of $18.6 billion. According to Prime Minister Shaukat Aziz Pakistan has exceeded the revenue collection target of Rs690 billion, and the economy has doubled in size to $134 billion in the last seven years.

The liberalisation in the international textile trade has benefited Pakistan's exports and it also expects to profit from freer trade in agriculture. As a large country, Pakistan hopes to take advantage of significant economies.

A perception of stability in Pakistan's monetary policies has contributed to a reduction in money-market interest rates, and a great expansion in the quantity of credit, changing consumption and investment patterns in the nation.

Pakistan's domestic natural gas production and its significant use of CNG in automobiles have cushioned the effect of the oil-price shock of 2004-05. Pakistan is also moving away from the doctrine of import substitution and is now pursuing an export-driven model of economic growth.

Construction sector in Pakistan is also booming. Recently, Dubai Ports World has announced that it would spend $10 billion on transport infrastructure and real estate in Pakistan.

Emaar Properties has also recently taken over three realty projects in Islamabad and Karachi. With an investment of $2.4 billion, it has embarked on a series of master planned communities that will set new benchmarks in commercial, residential and retail property in Pakistan.

President Musharraf believes that Pakistan's central geo-strategic location at the heart of critical regions, including Western parts of China, Central Asian states, Afghanistan, Iran, India and the oil-rich Gulf countries, gives the country a pivotal role. In a recent statement, he hoped that Pakistan would become a trade and energy corridor for China and landlocked Central Asian countries.

 

[Neo]

PESHAWAR, Aug 15: Planners underlying the country’s marble and granite sector’s development plan, being prepared with the support of the United States Agency for International Development (USAID), estimate that the sector’s contribution to the GDP can be raised to 2.31 per cent by 2015 from the existing level of 0.38 per cent by streamlining it on modern lines.

The plan, being put in place under the USAID funded ‘Pakistan initiative for strategic development and competitiveness’, a project aimed at increasing the competitiveness of Pakistan’s small and medium enterprises, eyes at increasing the marble and granite sector’s share under the total exports of the country from 0.16 per cent in 2004 to 4.18 per cent in 2015.

The successful implementation on the plan, hoped an official, would help the federal government raise foreign exchange of $2.44 billion through marble and granite sector-related exports in 2015, much higher than what the country earned in 2004 when its total exports of marble and granite products stood at $23 million.

The marble and granite sector-related ‘strategy working group’ — established under the USAID funded activity — has estimated that modern technology and best practices vis-a-vis extraction of marble and granite deposits by miners as part of a strategy to organize the sector on modern lines would help increase the government’s revenue from Rs2.44 billion two years ago to Rs161 billion in 2015.

It would be possible as a result of increasing the sector’s capacity to sell more in terms of square feet.

The plan envisages to increasing the sale level to 380 million square feet in 2015 against 100 million square-feet total sales recorded in 2004.

The working group has, in view of the massive deposits of marble and granite in the NWFP and Balochistan, underlined the need to exploit the country’s strategic advantage in developing stone industry and making it locally and globally competitive by reducing extraction related losses and value addition.

“Economic success of the stone industry will contribute to employment and income generation, rural development and poverty alleviation,” hopes the working group’s report.

The strategy aims at improving the value chain productivity by providing training to produce skilled manpower, upgrading prospecting/quarrying and processing technology, establishing standards for quality of products and aligning production with market needs.

In this respect, it also stresses improving market access for local manufacturers and traders, enhancing product awareness and providing testing and product related information to the market players.

According to experts and business circles, there was a tremendous scope of bringing about improvement in the marble and granite sector to take maximum advantage of the potential the country had in view of large deposits of marble and granite in the NWFP and Balochistan.

Of all the marble extracted every year some 73 per cent is lost due to aged old mining practices. The new strategy, said a source, aims at bring down the ratio of extraction related losses to about 45 per cent by 2015.

“Out of the total marble extracted every year, only three per cent is cut in square blocks for exports, however, during the process 50 per cent of the marble is lost leaving only half for exports,” said an official document.

Whereas, out of 97 of the total extracted marble about 45 per cent is lost during the cutting process, five per cent is converted into slabs and some 50 per cent is converted into tiles, of which only two per cent are exported and 98 per cent are sold in the open market at quite a low price.

 

[Neo]

16 August 2006


ISLAMABAD — Pakistan government has decided to prepare viable recommendations to revive private sector investment by further liberalising the ongoing policies, it is learnt.
Informed sources said that President General Pervez Musharraf and Prime Minister Shaukat Aziz have also directed the officials of the ministries of finance, commerce and the Central Board of Revenue (CBR) to get the higher prices of utilities reduced especially that of power and gas with a view to encourage sizable private investment in the country.
Both the leaders have also called for removing "a plethora of administrative barriers to investment such as corruption, red tape and higher cost of inputs."
The Planning Commission in one of its presentations given to the president and the prime minister recently has regretted that despite extending a host of tax concessions and incentives offered during the last 6 years, the private sector remained shy and failed to make considerable investment in the domestic economy.
The commission believed that a well defined and coherent policy package was required for the strengthening of competitive edge of the private sector which has to play its role as an engine of growth.
Also, the government needed to overcome its financial and technological constraints to achieve its long term economic objectives, the commission said stressing that the current low tax-to-GDP ratio should be improved substantially to overcome the scientific, technical and human resources constraints to raise
the present per capita income of $780 to $3,000 in next 25 years.
Sources said that the officials of the Planning Commission wanted to have consistent inputs from all stakeholders to promote private sector investment.
Pakistan has to make important strategic choices to ensure sustainable growth in the manufacturing sector in a rapidly changing and international competitive environment that requires massive structural changes rather than a marginal change.
The commission also informed both the president and the prime minister that raising productivity was essential not only for economic growth but even to remain competitive in the world economy and that exclusive reliance on factor accumulation would no longer suffice.
The manufacturing and industrial sector was suffering from various structural problems resulting in slow growth rate of output and exports, low level of investment, high concentration of the manufacturing industries, allocative technical inefficiencies, poor quality of products, low level of research and development activities, resulting into slow growth of
productivity making the Pakistani products uncompetitive in the world market.
The traditional industries such as foods and textiles still account for an overwhelming share of the manufacture output.

 

[Neo]

ISLAMABAD, Aug 15: The government is finalising an `export plan’ to increase Pakistan's exports from $16.5 billion to $40 billion during the next five years. "A decision has been taken to enhance our exports from 13 per cent of GDP to 15 per cent in the next five years for which we are currently preparing blueprints for the export plan," said Dr Akram Sheikh, Deputy Chairman of the Planning Commission.

Talking to Dawn, he said the proposed plan would be ready in two months for approval by Prime Minister Shaukat Aziz and added that last week he held a first meeting with all stakeholders, including private sector representatives, exporters, lines ministries and other departments concerned with a view to working out what he termed "certain practical export plan".

Responding to a question, the deputy chairman said in next few meetings with the stakeholders a number of new products would be identified for their value addition and ultimately for their exports.

"We are conscious of the fact that without identifying new products we cannot achieve $40 billion target in the next five years," Dr Sheikh said, adding that the government needed to study potential and strength of its infrastructure, technologies and manpower with a view to increasing its exports to 15 per cent of GDP.

He said once the draft of export plan was finalised, the government would look into the issue of extending further incentives and concessions to the private sector for substantially enhancing country's exports. “Since the private sector has to become the real engine of growth, the government will very much like to facilitate it in a big way,” he assured.

However, he said there was also a need to pinpoint various weaknesses and constraints which were becoming a hurdle in the way of significantly increasing Pakistan's exports. "We will evolve a consensus in our future meetings with the stakeholders with a view to achieving our objectives of enhancing exports."

He said Pakistan had to compete in the international market by exporting quality products and that without achieving international standards it would be difficult to enhance these exports.

In reply to another question, Dr Sheikh said the manufacturing and industrial sector was suffering from various structural problems resulting in slow growth rate of output and exports, low levels of investment, high concentration of manufacturing industries, technical inefficiencies, poor quality of products, low level of research and development activities, making Pakistani products uncompetitive in the world markets.

In this regard he referred to "strategic directions to achieve vision 2030" of the Planning Commission, according to which the share of medium and high technology in overall manufacturing value added was approximately 35 per cent of Pakistan compared with around 58 per cent for India and China, 61 per cent for Korea and 65 per cent for Malaysia. The share of high technology goods in manufactured exports remains low at one per cent compared with five per cent for India, 23 per cent for China, 32 per cent for Korea and 58 per cent for Malaysia.

The vision seeks to devise an export led industrial growth strategy and study threats to domestic businesses and industry from the point of identifying appropriate restructuring and business improvement required. It also called for examining the incentives and policies needed for pioneering industries, whether they are 'new' products, processes or technologies, so that the range of activities are expanded. "This should be clearly distinguished from the incentives for small and medium enterprises which relate to size, rather than growth of specialisation," the vision added.

 

[Neo]

Wednesday August 16, 2006

ISLAMABAD: The Central Development Working Party (CDWP) of the Planning and Development Division will meet on August 17 (Thursday) to consider engineering designs of Akhori and Sabakzai dams in addition to 31 other development schemes estimated to cost around Rs 58.1 billion.

A senior government official told Daily Times that the CDWP would consider the Rs 263.98 million project for Akhori dam’s engineering design, and the Rs 1.8 billion Sabakzai dam’s project proposed by the Water and Power Ministry. The meeting, to be presided over by the Planning Commission Deputy Chairman Dr Akram Sheikh, will also take up the Railways Ministry’s scheme to upgrade and convert 400 coaches worth Rs 3.98 billion. The Food, Agriculture and Livestock Ministry’s crop maximisation project (II) to cost Rs 7.821 billion will also be considered.

The meeting will discuss the Textile Industry Ministry’s Rs 498.82 million project to establish the Faisalabad Garment City.

The Information Technology And Telecommunication Ministry’s Rs 9.05 million project to introduce telemedicine is on the meeting’s agenda as well. The CWDP will consider the Education Ministry’s Rs 19.86 billion project to establish basic education community schools.

The agenda includes the Science and Technology Ministry’s schemes for the provision of electricity to October 8 earthquake affected areas by installing 100 micro hydropower plants at a cost of Rs 132.26 million, the acquisition of an oceanographic research vessel for coastal surveys, improving facilities to produce silicon solar modules up to 80 kilowatts per year at a cost of Rs 183.986 million, and mass awareness for water conservation and development at a cost of Rs 194.22 million. In the transport and communication sector, the proposed schemes are improvement of Booni Mastui Shandoor Road’s black topping in Chitral for Rs 575 million, and the construction of Surab-Basima-Nag-Panjgur-Hoshab Road at a cost of Rs 14.09 billion.

A Rs 46.34 million scheme for feasibility studies of the Left Bank Outfall Drain’s (LBOD) redesign in stage I and II will also be brought up for the CDWP’s consideration. The energy sector schemes include a Rs 72 million power distribution enhancement project, the addition of a 3x200 MVA auto transformer to the 500 KV Lahore-Sheikhupura Grid Station, and the addition of a 4th auto transformer to the Gatti Grid Station in Faisalabad.

A feasibility study of the Shushgai-Zhendoli hydropower project to cost Rs 108.42 million and a feasibility study of the Shogo-Sin hydropower project to cost Rs 99.47 million are also on the agenda. The Interior Ministry’s project to establish a 200-bed hospital for Lahore Pakistan Rangers at a cost of Rs 199 million will also come under discussion.

The CDWP will also take up the president’s Rs 105 million special programmes for the provision of education facilities to 200 tribal students from FATA in areas outside the NWFP. The meeting is scheduled to discuss four development schemes of the Higher Education Commission (HEC). The HEC has plans to develop Hazara University at a cost of Rs 343.27 million, improve education and research facilities at Faisalabad University Of Agriculture at a cost of Rs 482 million, and develop infrastructure for improved educational facilities at Kohat University of Science and Technology at a cost of Rs 495.8 million and at Sialkot University of Engineering Science and Technology at a cost of Rs 488.39 million.

Other schemes include the establishment of a unit for vegetable seeds and nursery production at a cost of Rs 732.56 million, and a special programme to cost 374.89 million for sanitary facilities and quality inspection services.

 

[Neo]

Going strong;Pak economy delivers yet again: Gulf News
Tuesday August 15, 2006

ISLAMABAD, Aug 15: Despite a devastating earthquake less than a year ago and an extraordinary surge in global oil prices, Pakistan’s economy has delivered yet again.

It registered economic growth at 6.6 per cent, and its investment rate touched a new high at 20 per cent of gross domestic product(GDP).

Real per capita GDP had grown by 4.7 per cent and per capita income in current dollar terms was up by 14.2 per cent to $847 (about Dh3,111) during 2005-06.

In 2005, the World Bank reported, “Pakistan was the top reformer in the region and the number 10 reformer globally.”

Pakistan is now one of the emerging economies among growing nations such as China, India and Brazil, Gulf News Reported. Pakistan is a developing country with the world’s sixth-largest population. At purchasing power parity, Pakistan’s GDP in 2005 was estimated at about $384.9 billion (about Dh1,414 billion). The economy averaged an impressive growth rate of six per cent per year during the 1980s and early 1990s.

In recent times, wide-ranging reforms have accelerated economic growth. Pakistan’s manufacturing and financial services sectors have experienced rapid expansion and there is great improvement in its foreign exchange position.

In May 2006, Pakistan’s foreign exchange reserves were more than $13 billion (about Dh48 billion). According to the State Bank of Pakistan (SBP), as per current estimates, the nation’s long-term growth momentum remains intact, with real GDP growth exceeding six per cent for the third successive year despite a few dips in agriculture.

In its bid to further speed up the growth process, Pakistan has embarked on a profitable reform agenda based on deregulation, liberalisation and privatisation. The newly created Trade Development Authority of Pakistan (TDAP) plans to increase and diversify the country’s exports by exploring new markets and identifying new export products.

To increase market access for goods produced in Pakistan, the government is vigorously pursuing signing of Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs) with various countries. Islamabad also hopes to position itself as an energy corridor linking oil-and-gas-rich countries in the Gulf and Central Asia with the growing economies of India and China.

For 2006-07 Pakistan has set an export target of $18.6 billion (about Dh68 billion). According to Prime Minister Shaukat Aziz Pakistan has exceeded the revenue collection target of Rs690 billion (about Dh42 billion), and the economy has doubled in size to $134 billion (about Dh492 billion) in the last seven years.

The liberalisation in the international textile trade has benefitted Pakistan’s exports and it also expects to profit from freer trade in agriculture. As a large country, Pakistan hopes to take advantage of significant economies.

A perception of stability in Pakistan’s monetary policies has contributed to a reduction in money-market interest rates, and a great expansion in the quantity of credit, changing consumption and investment patterns in the nation.

Pakistan’s domestic natural gas production and its significant use of CNG in automobiles have cushioned the effect of the oil-price shock of 2004-05. Pakistan is also moving away from the doctrine of import substitution and is now pursuing an export-driven model of economic growth.

As a developing nation, Pakistan knows that its progress will depend on the equitable distribution of wealth. Towards this, the government spent more than Rs1 trillion (about Dh60 billion) on poverty alleviation programmes reducing poverty from 32.1 per cent in 2000-01 to 25.4 per cent in 2004-05.

Rural poverty has also declined from 39 per cent to 31.8 per cent and urban poverty from 22.7 per cent to 17.1 per cent. Acknowledging the need for technology in the nation’s progress, Pakistan has granted numerous incentives to technology companies.

As a result, there has been impressive growth in the IT sector; IT exports grew 50 per cent from 2003-04 to 2004-05, with total exports standing at $48.5 million (about Dh178 million).

This year the government has set an export goal of $72 million (about Dh264 million).

Pakistan had more than 20 million internet users as of 2005 and is said to have the potential to absorb up to 50 million mobile phone and internet users in the next five years. In 2005, there were six cell phone companies operating in Pakistan with nearly 28 million mobile phone users.

Wireless local loop and the landline telephony sector has also been liberalised increasing the teledensity rate from less than three per cent to more than 10 per cent in a span of two years.

Pakistan’s principal natural resources are arable land and water. About 25 per cent of Pakistan’s total land area is under cultivation and is watered by one of the largest irrigation systems in the world.

Agriculture accounts for about 23 per cent of GDP and employs about 44 per cent of the labour force. In 2005, Pakistan produced 21,591,400 metric tonnes of wheat, more than all of Africa (20,304,585 metric tonnes) and nearly as much as all of South America (24,557,784 metric tonnes).

Pakistan’s industrial sector accounts for about 24 per cent of GDP. Cotton textile production and apparel manufacturing are Pakistan’s largest industries, accounting for about 64 per cent of total exports.

Other major industries include cement, fertiliser, edible oil, sugar, steel, tobacco, chemicals, machinery and food processing.

Construction in Pakistan is also booming. Dubai Ports World announced on June 1 that it would spend $10 billion (about Dh37 billion) on transport infrastructure and real estate in Pakistan.

Emaar Properties has also recently taken over three realty projects in Islamabad and Karachi. With an investment of $2.4 billion (about Dh9 billion), it has embarked on a series of master planned communities that will set new benchmarks in commercial, residential and retail property in Pakistan.

International funding is also pouring in. The Asian Development Bank (ADB) will provide close to $4 billion (about Dh15 billion) development assistance to Pakistan during 2006-08.

The World Bank unveiled a lending programme of up to $6.5 billion (about Dh24 billion) under a new four-year, 2006-09, aid strategy aimed largely at beefing up the country’s infrastructure.

Japan will also provide $500 million (about Dh1,836 million) annual economic aid to Pakistan. In addition to increased remittances from Pakistanis living abroad, the foreign direct investment (FDI) in Pakistan soared by 180.6 per cent year-on-year to $2.22 billion (about Dh8 billion) during the first nine months of fiscal 2006.

According to the SBP, during July-March 2005-06, FDI year-on-year increased to $2.224 billion (about Dh8 billion) from only $792.6 million (about Dh2,911 million) and portfolio investment to $407.4 million (about Dh1,496 million), from $108.1 million (about Dh397 million) in the corresponding period last year.

Exports from July 2005 to June 2006 were $13.52 billion (about Dh50 billion) marking an increase of 17.80 per cent compared to $11.48 billion (about Dh42 billion) in the corresponding period last fiscal. Export projections in the current fiscal are over $17 billion (about Dh62 billion).

Pakistan has sufficient momentum to sustain rapid growth in the coming decade. To help materialise this, the World Bank is working in partnership with the government in systemic reforms to improve governance and service delivery.

The signing of the South Asia Free Trade Agreement (SAFTA) in January 2004 is an important step towards higher intra-regional trade in South Asia. The first phase of SAFTA tariff reductions was expected to come into effect from July.

President Musharraf believes that Pakistan’s central geo-strategic location at the heart of critical regions, including Western parts of China, Central Asian states, Afghanistan, Iran, India and the oil-rich Gulf countries, gives the country a pivotal role.

In a recent statement, he hoped that Pakistan would become a trade and energy corridor for China and landlocked Central Asian countries.

“We are talking of Pakistan-China inter-connectivity in terms of energy and trade, improvement in the Korakoram Highway (KKH), development of railway link and gas and oil pipeline linkages and even fibre optics connectivity along the KKH under one project simultaneously,” he said.

He is also hopeful of a strengthening of a quadrilateral arrangement between Pakistan, China, Kazakhzstan and Kyrgyzstan for mutually beneficial economic growth.

http://www.paktribune.com/news/index.shtml?152330

 

[Neo]

KARACHI (updated on: August 16, 2006, 21:02 PST): Pakistan received $377.01 million as workers' remittances during first month of current fiscal year registering increase of $63.87 million or 20.40 percent against $313.14 million in July, 2005, the State Bank of Pakistan (SBP) said on Wednesday.

The amount includes $0.68 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

The inflow of remittances into Pakistan from almost all countries of the world increased last month as compared to July, 2005, the SBP said.

According to break up, Pakistan received workers' remittances in July, 2006 from USA ($90.73 million), Saudi Arabia ($80.92 million), UAE ($59.62 million), GCC countries - including Bahrain, Kuwait, Qatar & Oman ($57.48 million), UK ($31.70 million) and EU countries ($10.53 million) as compared to corresponding receipts from respective countries during July, 2005 i.e. $91.30 million, $56.63 million, $43.31 million, $40.56 million, $33.72 million and $7.26 million.

Remittances received from Canada, Switzerland, Australia, Norway, Japan and other countries during July, 2006 amounted to $45.35 million as compared to $37.23 million during July, 2005.

 

[Owais]

Govt fails in achieving 50 million tonnes wheat target

ISLAMABAD: A meeting of Economic Coordination Committee (ECC) on Wednesday was told that wheat stocks of 6.47 million tonnes were available in the country, while the target of 50 million tonnes for the current year could not be achieved.

Chiared by Prime Minister Shaukat Aziz, the meeting permitted import of transformers to power distribution companies for Wapda to overcome loadshedding in the country.

The committee has also directed the Fatima Fertilizer Company to carry out its setting up process within 90 days time, otherwise its financial close will be made on the pattern of IPPs.

Fatima Fertilizer Company was allocated supply of 110 million cubic feet gas per day but 75 million cubic feet gas was given with the conditions that the company will be established within two years time.

The ECC noted that the company could not meet its target and failed to achieve any significance progress. The meeting directed the company to furnish bank guarantee of appropriate amount to be determined by a ministerial committee assuring that it would be established in set time frame.

It approved leasing out of two sleeper factories of Pakistan Railways located at Kotri and Kohat to the private sector, while decided levy of cotton cess at the rate of Rs.5 per bail to provide financial support to Pakistan Cotton Standardization Institute.

The ECC has directed the National Highway Authority to encourage use of cement in the road construction for bringing about an improvement in the quality of construction.

It also approved acquiring of 150 MW power plant on rental basis at the rate of 3.133 cent excluding fuel price for three years time to be set up at Gujranwala, Faisalabad and Lahore.

 

[Owais]

Several banks show interest in NWFP interest-free banking

PESHAWAR: Several banks have expressed their intention to start interest-free banking in NWFP.

NWFP Information Minister, Asif Iqbal Dawoodzai in a meeting here with the Meezan Bank’s Peshawar representative, Sadiqur Rahman told this.

He said that the NWFP government was endeavouring for the promotion of Islamic banking across the province and it would continue patronizing all such banks wanting to launch interest-free banking.