Pakistan Economy - News & Updates - Archive

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Friday, August 18, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\08\18\story_18-8-2006_pg5_11

ISLAMABAD: Dr Salman Shah, adviser to the prime minister on financial affairs, said on Thursday that Pakistan’s economy was one of the world’s fastest emerging markets and prospects of it further improving were high. He told PTV that after going through good and bad phases during the past 60 years, the economic policies of successive governments had stabilised and were moving in the right direction.

He said till the 1960s, the growth rate of Pakistan’s economy was favourable, but the chain was broken during nationalisation in the 1970s and the growth rate declined to its lowest in subsequent years. He said that consequently successive governments had to privatise public sector organisations, but the pace was miserably slow. He said credit went to the Musharraf government for not only quickening the privatisation process, but also for passing necessary legislation to make sure all transactions were transparent.

Dr Shah said that during the past six years investment in the country had increased and the fundamentals of the economy had improved. He said people from the Middle East, East Asia, Europe and the US were investing in Pakistan and that $3.5 billion had been invested in the country in the last fiscal year. He said that six ago the size of overall investments in the country were around $300 million. He said Pakistan was pursuing bold and rational economic policies, which if sustained would bring about revolutionary changes in the economy. He said that in the past huge sums were spent to cover the losses of public sector organisations, thus curtailing the size of the development budget. Giving an example, he said subsidies given to the Karachi Electric Supply Corporation (KESC) were more than the size of the entire development budgets of Sindh.

He said Pakistan Steel Mills were set up in the 1980s and the mills were going in loss till 2003-4. He said the government, in realisation of ground realities, had decided to help the private sector do business rather than doing it itself. He said such a policy would help improve the efficiency of service providing organisations and get rid of undue fiscal burden on the national exchequer.

He also said efforts were being made to control inflation and decrease the levels of poverty in the country. “However, positive results will take some time to show,” he added.

 

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Big energy deal with China in offing
BEIJING (updated on: August 19, 2006, 19:40 PST): Chinese private companies will soon finalise deals with their Pakistani partners to make investment in Petroleum and Natural resources sector, said sources with China Chamber of Commerce for Petroleum Industry (CCPI).

The CCPI will send a delegation to Pakistan later this year to finalise their ongoing negotiation in the energy sector. The sources told APP here on Saturday that the Chinese companies are encouraged by economic and investment policies of the present government in Islamabad and prepared to undertake joint ventures in the oil and coal mine sectors.

According to Wang Junjue, the secretary general of CCPI, the deals vary from joint oilfield development to coal mine investment. This will be a breakthrough for private domestic oil companies on the overseas market, he added.

Nearly 30 initial agreements were signed by China's private oil companies and their Pakistani counterparts during a forum held in Islamabad April this year. These agreements cover investment in oilfields, oil refineries, coal-fired power plants and hydropower projects.

The two sides also discussed a possible oil pipeline from Gwadar Port to Xinjiang and building up oil storage and refining facilities at the port. The oil pipeline proposal was made in a general co-operation agreement reached by the two governments during President Pervez Musharraf's official visit to Beijing in February.

The two countries have also proposed at the forum to establish an International Joint Fund to support the development of energy projects by Chinese private oil companies in Pakistan.

According to the informed sources, the Chinese petroleum industry has indicated an interest in shifting its excess capacity to Gwadar. The CCPI and All China Federation of Industry and Commerce (ACFIC) conveyed to Pakistani authorities during a recent visit that the Chinese petroleum industry is keen to invest in the local energy sector.

The ACFIC and CCPI indicated that both the public and private sectors are willing to co-operate in energy projects in Pakistan. This co-operation will not be restricted to building an oil pipeline to set up an energy corridor to Gwadar, but also in shifting energy related industry to Pakistan.

However, the government will need to provide strong support to lay down a framework for a safe financial, investment and security environment in Balochistan to attract this investment, the sources said.

The Chinese petroleum industry sees four potentially fruitful projects.

Firstly, an oil pipeline linking Gwadar to Xinjiang in China to set up an energy corridor. The economic viability of such a project is yet to be worked out. Secondly, the development of Gwadar Port Energy Zone, where the Chinese could set up an oil refinery with a capacity of 21 million tonnes.

Thirdly, the Gwadar energy zone could accommodate other energy sector industries.

The Chinese business groups said that China has excess capacity in the petroleum services industry and planned to move the excess capacity to Dubai, but was now considering shifting it to Gwadar, the official added.

According to their initial estimates, the Gwadar Port Energy Zone could attract investment of up to $13 billion.

Fourthly, the Chinese petroleum industry also indicated an interest in oil and gas exploration projects in Pakistan, the official said. The Chinese business groups had proposed that a Pak-China energy and trade co-operation promotion association be established for such projects.

The association would include members from the oil and gas sector and other industries in the power sector. They had also suggested that a Pak-China joint investment company be set up to finance these projects, the sources added.

A senior official of China Federation of Industry and Commerce (ACFIC) said that the Chinese companies are motivated for investment by the statements, given by President Musharraf during his recent visit to Shanghai that his government will extend all possible incentives to convert Pakistan into an energy corridor for China, through Gwadar seaport and developing new rail and road networks.

 

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Export rises by 16.45 percent per annum in four years

ISLAMABAD (August 20 2006): Pakistan's exports grew at an average rate of 16.45 percent per annum over the last four years owing to sound macroeconomic policies coupled with wide ranging structural reforms, particularly in the areas of trade and tariff.

The policies implemented over the last six or seven years have helped Pakistan doubled its exports in seven years and increased its trade-to-GDP ratio from close to 26 percent in 1999-2000 to estimated 34 percent in 2005-06.

The exports were targeted at $17 billion or 18.1 percent higher than last year. Export during the first nine months of the 2005-06 are up by 18.6 percent - rising from $10,183 million to $12,073 million in the same period last year.

According to official sources the exports of primary commodities are up by 22 percent, prominent among those are exports of rice (33.6 percent), fish and fish preparation (30.2 percent) and fruits (20.6 percent).

Exports of textile manufactures grew by 19.2 percent, prominent among those are exports of bedwear (58.4 percent), ready-made garments (31 percent), cotton yarn (29.4 percent), cotton cloth (16.5 percent) and towels (12 percent).

Exports of other manufactures also registered a high double-digit growth of 19.2 percent. Within this category, exports of petroleum products grew by 80.8 percent and leather manufactures are up by 44.0 percent.

The overall exports posted an increase of $1,890.23 million in the first nine months of the current fiscal year over the same period of last year.

Exports this year have been largely quantity driven and with firming up of the prices of exportable, Pakistan's exports may rise substantially in the medium terms.

Pakistan's exports are highly concentrated in few items namely, cotton, leather, rice, synthetic textiles and sports goods. These five categories of exports account for 74.5 percent of total exports during the first nine months of 2005-06 with cotton manufacturers alone contributing 58.4 percent.

Pakistan's export composition has changed significantly since 1990's. The major changes encompass sharp decline in the shares of primary and semi-manufactured exports whereas, increase in the share of manufactured goods.

 

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Efforts on to improve investment climate in country: Salman


LAHORE (August 20 2006): Prime Minister's Adviser on Finance Dr Salman Shah has said that in the event of decline in foreign direct investment (FDI) in the country, the current account deficit (CAD) would not become sustainable and thus the pace of economy would need to be slowed down; hence it was vital that the flow of FDI is either maintained at present level or increased.

He was addressing the members of the Lahore Chamber of Commerce and Industry (LCCI) on Saturday. LCCI President Mian Shafqat Ali, Senior Vice President Abdul Basit, and Vice President Aftab Ahmad Vohra were also present on the occasion.

The advisor, who spoke at length on various issues of economic importance, said that at present CAD has been sustained due to continued commitment to the privatisation programme and strategic sales and international investment.

"The country received $3.5 billion under the head of FDI, and there should be concerted efforts to attract more FDI in a bid to keep the country on the trajectory of development and manage the current account deficit. The country has potential to attract FDI between $6 billion and $7 billion in the coming time," said Salman.

The adviser said that CAD could be brought down significantly by raising the interest rate and savings. The foreign exchange reserves, at present, stood at $13 billion. About the origin of FDI, he said that of US $3.5 billion, UAE contributed $1.4 billion, followed by USA, Saudi Arabia, Norway and the United Kingdom.

He also said that FDI is vital for keeping the momentum of growth and in this regard the private sector would have to play its due role. He averred the government was increasing the role of private sector by privatising major public sector industries. He said Pakistan was well-positioned to benefit from the fast changing global scenario, but there is a need to increase exports as compared to other countries falling in the same income group.

Salman Shah said the government has decided to set up 'Competition Authority' in place of the Monopoly Control Authority (MCA) that has failed to yield desired results. The government has taken initiative by building safeguards into the system to ensure continuation of reforms process and future growth, he added.

"Pakistan made a successful return to the international bond markets in February 2004 when it issued a 5-year Eurobond. Since then, there have been forays in 2005 and 2006 with the most recent offerings being well received. The government is aiming for another issue in 2007", said Salman. On current trade deficit, he said this was due to import of oil/energy, industrial machinery, raw material and at a restricted import of food items, such as meat from India.

He averred that high quality of machinery relating to engineering, power, construction and textile was imported in the country, and this reflects the fact that investment was pouring in certain areas, which is a good omen. The cement industry is also going for expansion to meet export targets, especially to Iraq, Lebanon and Afghanistan where reconstruction process is underway, he added.

About the price-hike, he admitted that prices of food in Pakistan are all-time high, which is also true for the entire region. Only increased production would resolve the problem, and there are a lot of opportunities for the private sector to invest in this sector to fill the gap, especially in livestock, poultry, vegetables and fruits, he said.

"Increased supply of food would meet the existing demand that would ultimately deflate its prices, hence it is in the hand of the private sector and there is abundance of opportunities for them to exploit," he added.

Dr Salman Shah said the business community should explore new markets, and the government would extend full support. The government is also willing to listen to the problems of the business community and would remove irritants being faced by them.

Talking to newsmen, he said the government was planning to enlist 5-10 percent of the OGDC shares in the Global Depository Receipts, which would be traded in the London Stock Exchange.

The adviser said the government is also working on improving the investment climate in the country, so that foreign investors could feel secured to invest in the country. He averred that Pakistan's economy has grown and there was huge room for both international and local investments.

To a question, he said it is positive to see that a big foreign bank like the Standard Charter has come to Pakistan, carried out half billion acquisition and also increased its network; which reflects the international confidence in the country's economy, which is very vital.

"Moreover, such banks would encourage other local banks to improve their banking system and services; in fact, they would set a benchmark for others to follow," he added.

Dr Salman was of the view the financial sector that is growing at good rate now need to introduce innovation, new customer products and improved services. He pointed out that our saving rate is still low that need to be improved and the role of financial sector in this regard is very important.

On the allegation regarding market crash in 2005, he refuted the allegations levelled by former Securities and Exchange Commission of Pakistan (SECP) chairman Dr Tariq Hassan in a white paper that was presented before the standing committee. He said that Dr Tariq, in his white paper, mentioned that he and State Minister for Finance Omer Ayub interfered in the stock exchange in August and April, respectively, while the crash took place in March; this clearly shows they were not involved in the crash.

According to him, in August, the Ministry of Finance did intervene to end the deadlock between the stock exchanges and the SECP over the issue of Continuous Financing System (CFS) and removal of Carry over Transactions (CoT), which was resolved and the CFS was implemented. Dr Tariq, in his white paper, termed it a good settlement, then where is the inference. LCCI President Mian Shafqat Ali, Senior Vice President Abdul Basit, and Vice President Aftab Ahmad Vohra also spoke on the occasion.

 

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ADB to provide technical help in energy sector

MANILA: Asian Development Bank (ADB) would be providing $1 million technical assistance to its member countries for promoting energy sector.

ADB statement issued here said that this technical assistance would help develop environment friendly energy.

ADB said that the existing annual demand of oil in Asia at 2100 billion tons would double in 2025. The Bank said that the environment friendly fuel was the biggest challenge for Asia in future and, therefore, the promotion of other alternative energy sources including coal was imperative.

ADB was currently engaged in giving a final shape to plans worth $1 billion for the promotion of energy in Asia in next 2/3 years.

 

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Pakistani share in World service sector at only 0.1pc

PESHAWAR: In international trade, Pakistan service sector has a share of extremely low 0.1 per cent.

During a workshop here, the provincial head of SMEDA Mohammed Tariq said services sector constituted the 20 per cent of international trade i.e. Rs130 billion.

The chunk in services sector belongs to the US, Britain and Germany, whereas, Pakistan contributes only $130 billion.

Mohammed Tariq said the sector was extremely important and 2.3 million people were associated with it.

In many sectors including IT, health and accounting, Pakistan could increase its share in international service sector.

 

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SBP gets Rs7b at 8.5% interest rate

KARACHI: State Bank of Pakistan borrowed Saturday Rs7 billion for 12 days from the banking system for the management of additional amount.

State Bank obtained the money at 8.5 per cent interest rate.

Earlier, the central bank received the offers of Rs9.5 billion from banks.

According to money market analyst Salman Jaffery, these offers on the part of banks indicate the presence of appropriate liquidity in the market.

 

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Ethanol-fueled cars could be made within six months: PAMA KARACHI: Pakistan auto companies could get on ethanol-fueled cars make ready within six months, however, it hinges on the demand for such cars and the availability of ethanol in the country.

Pakistan Auto Manufacturers Association (PAMA)’s consultant, Majeed Ahmad Jhumra told Geo News that auto manufacturers were following Euro Emission Standards, under which, they want the promotion of ethanol-fueled cars and if the demand for such cars grows in the country, then the manufacturing of flexi-fuel-engines was of no problem and such cars could be brought into the market within six months, as Pakistani companies could obtain this technology from abroad through which some adjustments in the engine would be made.

He told that the proposal of manufacturing of 10 percent ethanol-fueled cars every year was not difficult for the assemblers and if the government asks for it besides the demand existed, then the flexi-fuel-cars could be launched even in a greater than the proposed number.

He told that the price of ethanol-fueled cars would not be more than the existing ones besides their quality would also be not less in any way. Presently, these cars were being run on ethanol in the developed countries of the world, he told.

 

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KARACHI (August 20 2006): Recent rains have badly hit the industrial productions, which also resulted in suspension of exports, while industrialists see around 50 percent production losses due to shortage of labours, collapse of civic infrastructure and power failure.

The fresh spell of rains wreaked havoc on the city's entire communication infrastructure, which directly hit the industrial productions. Besides, labours and other related staff's shortage, the non-availability of crude material to industrial due to the collapsed civic infrastructure during rains to have been one of the core contributing factors in the decrease of production ratio.

The regular electricity breakdowns had also kept the production at zero level. According to industrialists, production losses have come to billions of rupees during last two days.

Karachi Chamber of Commerce and Industries (KCCI) President Haroon Farooqui told Business Recorder on Saturday that industries were functioning with around 50 percent capacity since the Thursday's rains havoc and due to several reasons, including improper power supply, shortage of labours, collapsed drainage system and dismantling of road communication system.

Regarding commercial activities in the city, he said the commercial activities in main markets were badly affected by rains and still presenting a deserted look due to knee-deep stagnant rainwater accumulated inside them.

"Rainwater is still inside the shops and their basements, which has badly caused the edible items, while commercial activities in all main markets particularly in Jodia Bazaar and commercial centers in Clifton have come to standstill as consumers could not turn out for rainwater accumulation inside commercial centers," he added.

Rains have definitely hit the productions and industries would have certainly met around Rs 2 billion to Rs 3 billion losses during last two days, he said.

On Saturday's business activities, The KCCI chief said it had got a slow momentum as around 90 percent industries again came to production, however, a clear picture could be seen on Monday if the rain did not continue.

About exports, Farooqui said due to deteriorated road communication system in the industrial areas of the metropolis which had completely suspended the freight traffic from industries. "The closure of Korangi Bridge after the Malir River surged during rains, has also put a negative impact on export cargo, which is carried through the Korangi Bridge by trucks to ports," he maintained.

Urging civic administrative institutions, he said a consolidated and co-ordinated programme should be visible between Karachi Port Trust, City District Government Karachi (CDGK), and Cantonment Board to cope with the rain emergency situation aptly, which unfortunately, lacked during recent monsoon season.

He said for better industrial production, business and commercial activities, and exports, a faultless road communication infrastructure, and improved drainage systems were needed in all industrial zones of the metropolis.

Site Association of Industry (SAI) Chairman Amin Bandukda estimated around Rs 1 billion losses in production and around $15 million to Rs 20 million losses in exports to have been caused by the fresh spell of rains on Thursday.

He said that around 40 percent industrial activities took place on Friday, which rather improved 90 percent on Saturday as rain was on a halt.

Calling for urgent relief activities, he said the short-term policy should be initiated by the CDGK and other civic institution in recent crisis emerged from rains to have nearly brought the industrial production to a halt, and urged the civic institutions to drain out accumulated rainwater from industrial areas.

He demanded that choked nullahs should be made clear to flow drain water smoothly, besides removal of encroachment made around and over them.

 

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ISLAMABAD (August 20 2006): Our standards are world renowned and our project in Islamabad will exceed the standards of local authorities in the building and construction strength, Engineer Keith Sheppard, Structure Engineer, WS Atkins, said in a meeting with the media on Friday.

It should be noted that PGCL is constructing a mega-project in Islamabad that includes a 37-storey hotel, shopping mall, residential and commercial towers.

Revealing the structural details of the project, he said that Atkins, in association with Pak-Gulf Construction (Pvt) Ltd (PGCL), has worked hard in structure and engineering design of the project according to the Zone-IV standards of Islamabad, says a press release.

 

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ISLAMABAD (August 20 2006): Director General Gwadar Development Authority (GDA), Ahmed Bux Lehri said on Saturday that efforts are in full swing to complete the relevant infrastructure of the port at the earliest.

In a telephonic interview to PTV, he said the port is being connected with other areas through a comprehensive roads and rails network and activities in this connection are at boost. He said the construction of a modern airport is also under process and land has been acquired for this purpose.

The town planners were given three years time for development projects in the area and they are working on target, he said. He said two big companies have been accorded NOCs for installation of water desalination plants, adding one of them would install 25 million gallons plant while the other of 10 million gallons.

Besides, he said, the housing schemes have also been asked to make their own arrangements for the provision of clean water and some of them have started the installation of desalination plants. He said, Water and Power Development Authority (Wapda) is presently providing 30-megawatt electricity, while they have promised to enhance this capacity to 100mw to meet the future requirements.

 

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ISLAMABAD (August 19 2006): Underlining the importance of advancement in the industrial sector for development and prosperity, Prime Minister Shaukat Aziz said on Friday that the government is focusing on development of skills, strengthening of infrastructure, value addition, better productivity and competitiveness in the industrial sector for enhancing jobs and income generation opportunities.

Chairing a meeting to review the goals and targets of the ministry of industries, production and special initiatives here at the PM House on Friday evening, the Prime Minister said industrial sector remains the engine for development and the government is facilitating the private sector to fully tap industrial potential of the country.

The Prime Minister asked the ministry to focus on development of SMEs, engineering sector, setting up of export processing zones, finalisation of industrial policy, auto policy and industrial statistics.

He asked the ministry of industries and production to take industry specific initiatives and focus on horticulture, home appliances, sports & surgical goods and furniture industry.

The Prime Minister appreciated the launching of pilot projects in textile, silver, jewellery, ceramics and blue pottery under "one village one product programme" to augment incomes and job creation in the rural areas and remote parts of the country. "The objective is to increase non-farm income, reduce poverty and improve the living standard of the people in the rural areas", the Prime Minister added.

He said to make the programme a success, as the government is providing skills training and marketing facilities to the workers of rural areas. He said the programme would be extended to all parts of the country.

The Prime Minister emphasised that industrial strategy should be finalised soon as it will give a sense of direction and confidence to investors. He asked the ministry to finalise the auto policy.

The Prime Minister was informed that both the policies are under preparation and will be finalised by October this year.

The Prime Minister also asked the ministry to work with federal bureau of statistics to improve industrial statistics.

The Prime Minister said that government is following its privatisation policy and some more industrial units will be offered for privatisation. He said the privatisation of Pakistan Steel Mills would be carried out in the light of Supreme Court's judgement.

Minister for Industries and Production, Jehangir Khan Tareen informed the Prime Minister about the major achievements of the ministry. He mentioned merger of old state owned enterprises, reconstitution of their board of directors and creation of new companies, approval of strategies for marble & granite, gems & jewellery and dairy sectors. He said 21 sick units have been revived at Karachi export processing zone (EPZ).

 

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RAWALPINDI, Aug 19: President General Pervez Musharraf on Saturday reiterated strong commitment for the socio-economic development of the people in Federally Administered Tribal Areas.

He was talking to a delegation of parliamentarians belonging to Fata.

President Musharraf said that preference would be given to dialogue process for resolution of problems in the tribal areas, particularly in North and South Waziristan.

He expressed the hope that strengthening of political and administrative systems would lead to better governance in the Fata.

The President stated that construction of road network, hospitals and schools would bring the tribal areas into the mainstream national development.

Federal Minister for Culture, Dr Ghazi Gulab Jamal, Federal Minister for Political Affairs, Engineer Amir Muqam, Governor NWFP, Lt-Gen (retd) Ali Mohammad Jan Aurakzai, PML Secretary-General, Senator Mushahid Hussain Syed, MNA Munir Khan Aurakzai, and MNA Dr Nasim Afridi attended the meeting.

President Musharraf said foreign terrorists would not be allowed to use Pakistani soil for ulterior motives at any cost, adding that these elements would have either to surrender or quit the area

 

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FDI to touch $7 billion mark in 2006-07




LAHORE, Aug 19: Pakistan must continue to attract substantial foreign direct investment (FDI) in order to finance its ever-expanding current account deficit, failing which will result in slowdown of economic growth, Dr Salman Shah, adviser to the prime minister on economic and financial affairs said on Saturday. He said that devaluation by Re1 will cost Rs35bn to the national economy.

“It is of critical importance for us to continue to lure considerable amount of FDI if we wish to maintain the current momentum of economic growth. Right now, there is no problem as we are getting sufficient FDI and considerable foreign exchange in the shape of remittances to bridge the current account deficit. But should we falter in attracting substantial FDI in future, we shall have to resort to the harder choices of either devaluing the currency or hiking the interest rates or using our foreign exchange reserves to cover the yawning current account deficit,” he added.

Pakistan’s current account deficit swelled to $5.5 billion in the FY06, and was financed through FDI of $3.5 billion, which included $1.5 billion privatisation proceeds and $2 billion green field foreign investment.

However, Dr Shah was hopeful that Pakistan would receive additional remittances this fiscal compared to the last year because of the ongoing oil boom in the Middle East as well as will manage to attract FDI to the tune of $6-7 billion in line with its potential, he told a small gathering of traders and businessmen at the Lahore Chamber of Commerce and Industry (LCCI).

Dr Shah, who visited the LCCI in order to sell the economic and financial policies of the government and to motivate them to invest in the economy, was given a cold shoulder by industrialists and exporters, who stayed away from the meeting. His presentation on investment was attended by only a few businessmen and small traders, and the LCCI management had to call in its employees to fill in the vacant chairs.

“Dr Shah has nothing new to say or offer to us,” a leading exporter of garments told Dawn over telephone when asked as to why his community had stayed away from the meeting. “Most businessmen, just like me, were well aware of what he was going to say. They (the government) don’t care a fig for us. That is precisely why exporters and manufacturers stayed away from the meeting, choosing to give their precious time to their business instead of wasting it in listening to Dr Shah’s sermons and claims.

In his presentation, prepared for briefing foreign investors on Pakistan’s economic potential to lure them into investing in the GDRs (Global Depository Receipts) of OGDC--the government intends to list on the London Stock Exchange--Dr Shah gave an overview of the economic, financial and other reforms and policies framed in the last seven years, the success achieved, and future strategy for maintaining the present momentum of growth in the country.

While dilating on the economic successes of the government, the adviser also conceded that the country needed to quickly increase exports to 15 per cent of the GDP from the current 12-13 per cent, raise its revenues as percentage of GDP and enhance savings rate to 25 per cent from the present 16 per cent in order to strengthen the national economy.

The adviser told his audience that the government planned to issue GDRs of 5-10 per cent shares of OGDC for the international investors. He said Pakistan had never been active in the international equity market in the past. “But if Pakistan has to grow at the pace at which it is growing now, we will soon be a major economy. This will require discarding the traditional sources of finances like the Asian Development Bank and the World Bank and look to international capital markets and investors for meeting our financial requirements,” he said.

Urging the local businessmen and investors to invest in different sectors of the economy, he said local and foreign investment was needed to maintain the current GDP growth rate of 6-8 per cent, create millions of jobs and alleviate poverty. “Any future plan we have for the country’s economy has to be driven and implemented by the private sector. The private sector has to be the engine of growth,” he added.

He said Pakistan offered excellent opportunities of investment to both local and foreign investors. “We are a big economy of 160 million people with GDP of $135 billion and per capita income of $846. Private consumption in Pakistan is leading the aggregate demand and a large consumer market is emerging, he said adding the country was fast becoming a regional trade, energy and transport corridor for Asia. There are lots of opportunities for the investors to invest and make money.

He said the acquisition of Union Bank Limited by Standard Chartered Bank was a welcome sign for the economy as it reflected a confidence of international financial institutions and investors in Pakistan’s economy and would help improve the banking and financial services.

In response to demands for devaluation, Dr Shah said if the Pakistani currency was devalued by just Re1 against dollar, it would result in an additional burden of Rs35 billion on the economy as the country’s total external debt stood at $35 billion. “Devaluation is not advisable if we want to maintain stability,” he said. He advised the businessmen, particularly exporters, to enhance their competitiveness by increasing their productivity, becoming efficient, and cutting unnecessary costs instead of calling for depreciation of the currency.

“Stop looking towards Islamabad, and start looking for markets and becoming more productive and efficient,” he told the businessmen. http://www.dawn.com/2006/08/20/ebr1.htm

 

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BEIJING, Aug 19: Chinese private companies will soon finalise deals with their Pakistani partners to make investment in the petroleum and natural resources sector, said sources with the China Chamber of Commerce for Petroleum Industry (CCPI).

The CCPI will send a delegation to Pakistan later this year to finalise their ongoing negotiations in the energy sector. The sources told APP here on Saturday that the Chinese companies were encouraged by economic and investment policies of the present government in Pakistan and prepared to undertake joint ventures in the oil and coalmine sectors.

According to Wang Junjue, secretary-general of the CCPI, the deals vary from joint oilfield development to coalmine investment. This would be a breakthrough for private domestic oil companies on the overseas market, he added.

Nearly 30 initial agreements were signed by China's private oil companies and their Pakistani counterparts during a forum held in Islamabad in April this year. These agreements cover investment in oilfields, oil refineries, coal-fired power plants and hydropower projects.

The two sides also discussed a possible oil pipeline from Gwadar Port to China's Xinjiang and building up oil storage and refining facilities at the port. The oil pipeline proposal was made in a general cooperation agreement reached by the two governments during President Pervez Musharraf's visit to Beijing in February.

The two countries have also proposed at the forum to establish an international joint fund to support the development of energy projects by Chinese private oil companies in Pakistan.

According to the sources, the Chinese petroleum industry had indicated an interest in shifting its excess capacity to Gwadar. The CCPI and the All China Federation of Industry and Commerce (ACFIC) conveyed to Pakistani authorities during a recent visit that the Chinese petroleum industry was keen to invest in Pakistan's energy sector.

The ACFIC and the CCPI indicated that both the public and private sectors were willing to cooperate in energy projects in Pakistan. This cooperation will not be restricted to building an oil pipeline to set up an energy corridor to Gwadar, but also in shifting energy related industry to Pakistan.

The government will need to provide strong support to lay down a framework for a safe financial, investment and security environment in Balochistan to attract this investment, the sources said.

The Chinese petroleum industry sees four potentially fruitful projects. Firstly, an oil pipeline linking Gwadar to Xinjiang in China to set up an energy corridor. The economic viability of such a project is yet to be worked out. Secondly, the development of Gwadar Port Energy Zone, where the Chinese could set up an oil refinery with a capacity of 21 million tons. Thirdly, the Gwadar energy zone could accommodate other energy sector industries.

The Chinese business groups said China had excess capacity in the petroleum services industry and planned to move the excess capacity to Dubai, but now considering shifting it to Gwadar, the official added. According to their initial estimates, the Gwadar Port Energy Zone could attract investment of up to $13bn.

Fourthly, the Chinese petroleum industry also indicated an interest in oil and gas exploration projects in Pakistan, the official said. The Chinese business groups had proposed that a Pakistan-China energy and trade cooperation promotion association be established for such projects.

The association would include members from the oil and gas sector and other industries in the power sector. They had also suggested that a Pakistan-China joint investment company be set up to finance these projects, the sources added.

A senior official of the China Federation of Industry and Commerce said the Chinese companies were motivated for investment by the statements given by President Musharraf during his recent visit to Shanghai that his government would extend all possible incentives to convert Pakistan into an energy corridor for China, through Gwadar seaport and developing new rail and road networks.