Pakistan Economy - News & Updates - Archive

[Neo]

Makran highway to boost trade

ISLAMABAD (August 22 2006): The fourth phase of Makran coastal highway is under construction, which would increase the trade between Pakistan and Iran. It is being constructed from Gwadar to Gupt which would also be linked to Gewani, PTV reported. It would cost more than Rs 3 billion and its construction is according to the international standards.

Motorway 8 to bring prosperity in Balochistan

ISLAMABAD (August 22 2006): Motorway 8 (M-8) is an ambitious project, which would bring prosperity in the area. The M-8 project would connect Gwadar to Dapaderu by Turbet, and Shahdadkot, PTV reported. Under massive construction development programme in Balochistan, 1500-km roads had been constructed while work on 1000-km is under progress.

The strategically important roads would make Gwadar the hub of trade activities in the country.

 

[Neo]

Tuesday, August 22, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\08\22\story_22-8-2006_pg5_7

ISLAMABAD: Federal Minister for Information Technology and Telecommunications Awais Ahmed Khan Leghari said on Monday that the annual exports of the Information Technology sector were about $600 million.

He said the IT export industry had created numerous job opportunities in the country.

"We are trying to increase the current pace of growth in the IT sector in order to increase our international competitiveness". The minister said that during the last two years about 10,0000 to 20,0000 jobs had been generated by the IT sector and between 200,000 and 250,000 jobs had been created in the telecommunications sector.

 

[Neo]

KARACHI, Aug 21: Private sector credit off-take by the major sectors such as textile and communication has started declining which may make it difficult for the country to achieve 7 per cent economic growth target for the ongoing fiscal year.

Bankers said that the textile and communication sectors were not consuming credit the way they did last year. However, no bank has any data to assess the level of lower outflow of credit towards the manufacturing sector.

Bankers said that the credit outflow towards the textile and communication sectors had already slowed down from last year mainly because of lesser requirement for their expansion plans.

During July-March 2006 textile sector borrowed Rs69bn compared to Rs95bn in the corresponding period of last year, according to Economic Survey 2005-06.

“The slower credit off-take was because shrinking demand of the textile and telecommunication sectors as they consumed maximum for expansion plans,” said Abid, a researcher.

“In FY2005 newly operated cellular companies borrowed heavily in order to start their operations and this phenomenon was not present during FY06.

The Economic Survey stated that during July-March 2005-06, communication sector (defined as transport, storage and communication) borrowed Rs5.7bn as compared to Rs20.8bn previously,” said Mohammad Imran, another researcher.

The bankers said that the major manufacturing sector would borrow less than previous year as they had been operating at the highest capacity level.

Installed capacity of cement sector is 20.94 million tons while the utilised capacity is 18.4 million tons. Fertilizer is working with 100 per cent installed capacity of 4.96 million tons.

Auto sector is also reaching at the optimum level as its capacity is 222,000 units per year and it is manufacturing 192,000 units.

“Unless new expansion starts, the credit outflow would remain low,” said a banker, adding that it would help the State Bank to keep the monetary growth within target.

Bankers do not believe that the higher lending rates were the reason for slower credit growth.

The production data also showed that the growth in both these sectors had come down. According to official data during July-March 2005-06, the textile sector, which has a weight of 24.4pc in the large-scale manufacturing sector, posted a growth of just 3.89 per cent.

Bankers and analysts said that tightening of monetary policy would not hurt the outflow of credit towards the manufacturing sector despite the interest rate hike.

The State Bank announced to keep tight monetary policy for July-December 2006 to bring down the inflation at 6.5 per cent.

The same policy was followed during fiscal 2005-06 but the credit off-take by the private sector reached Rs401 billion and monetary growth breached the target of 12.8 per cent.

The State Bank also increased the treasury bills rate and discount rate was increased by 50 basis points to 9.50 per cent.

This was a clear indication of higher interest rate, but the bankers said that demand was slowing down and the higher lending rates were not the reason for slow credit growth to textile or telecommunication sector.

“The fiscal year has just started and the trend will take at least two to three months to appear more visible, however, the manufacturing sector performance may remain below expectation and that would hurt the economic growth.” said Abid.

The government has set 7 per cent GDP growth target for the ongoing fiscal year and is relying mostly on services and industrial sectors growth.

 

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ISLAMABAD: A delegation of investors from the UK called upon Managing Director of Pakistan Mineral Development Corporation (PMDC) Brig Muhammad Khalid S Khokhar to discuss the prospects of investment in coal sector.

According to a press release, Chairman of UK-based investment group introduced its Company ‘Pak Energy (Pvt) Ltd’ as a pioneering & the first coal base energy company to emerge in Pakistan and to extend its services to support energy sector of Pakistan by upgradation of indigenous coal. The investors group is keen to venture in bringing ‘Clean Coal Technology’ in Pakistan.

As Phase-I of their investment plans in Pakistan the sponsors shall commission a coal washing & blending plant with a capacity to upgrade 6000 tonnes of coal per day. With this, the future scenario of industries using/consuming indigenous coal would drastically improve. The upgraded coal will be fit for use in cement plants, textile mills, brick making & also for purposes of heating & that too at a cost effective price.

The group intends to set up two more plants in Phase-2 & 3 as part of their plans for future investment in Pakistan. Chairman of Pak Energy, Azam Imam pointed out that in future with the group investment, coal will be sold out on heat value basis rather than on weight basis as per present practice in Pakistan.

Brig Khokhar thanked the team of Pak Energy for giving & apprising the management of PMDC about the scope/objectives of their investment in coal sector in Pakistan. He especially mentioned that the investment plans of Pak Energy are in line & conform to the Energy Vision of President Gen Musharraf to develop alternate energy resources most importantly coal.

He assured the visiting team of foreign investors for PMDC’s full support & facilitation in their investment venture for the greater benefit of Pakistan in building sustainable & alternate energy resource.

 

[Neo]

Performs ground breaking of a five-star hotel

By Muhammad Anis

ISLAMABAD: Prime Minister Shaukat Aziz Monday said the government has several plans to make Islamabad a hub of international activities for Central Asia, South Asia and the Middle East to hold conferences, conventions, seminars and other events and promote tourism.

The prime minister was addressing the ground breaking ceremony of a five-star hotel 'Grand Hyatt' here Monday. The hotel is being raised by local investors who hail from country's industrial city, Faisalabad.

The PM said Pakistan has ancient ruins of Gandhara and six top mountain peaks out of twelve are here, which have great attraction for tourists. He said that Islamabad was an ever expanding and most attractive city of the country saying the coming up five-star hotels and other high rise buildings would be impressive addition to it.

Shaukat Aziz said Pakistan's economy was growing and there was always need for world standard hospitality services. He pointed out that Islamabad was also an IT capital and many companies were opening offices here and IT parks coming up.

He said that the international activities in Islamabad and other parts of the country would take a boost with the construction of modern airport which would be connected with Motorway so that guests could come and go back with ease.

He observed that the construction of five-star hotel adjacent to Jinnah Convention Centre along with providing job opportunities to hundreds of people during its construction and on completion would also benefit a number of industries.

The prime minister expressed the hope that the project would be completed as soon as possible and would provide world-class facilities to the visitors. Interior Minister Aftab Ahmad Khan Sherpao expressed the hope that the Grand Hyatt would be a landmark for Islamabad's development.

He said a lot of high-rise buildings are being built in Islamabad including more five star hotels. Sherpao said that besides five-star hotels, a number of three-star and budget hotels would also be constructed in the federal capital.

Chief Executive of BNP Group, Abdul Hafeez Shaikh, said the hotel would provide all the necessary and expected amenities of world-class five-star hotel. He said the hotel would provide ample facilities to hold international conferences, conventions and other event and it would also be the first hotel of the Grant Hyatt chain of hotels in Pakistan.

He said Pakistan offers a very secure investment opportunities to the investors. The Grand Hyatt Hotel will be completed at a cost of $260 million and would be ready for opening at the end of 2009.

The project would be raised on a plot measuring 13.5 acres purchased from the Capital Development Authority for Rs4 billion and it would have 360 rooms and 200 service apartments.

 

[Owais]

Sindh, Punjab cotton crops hit by recent rains

KARACHI: The recent rains have damaged cotton crops in Sindh spread over 0.1 million acres, while in the Punjab on 0.2 million acres.

Agriculture ministry’s cotton commissioner, Dr. Quadir Bakhsh told Geo News that the cotton this year in Punjab was sown on 6.6 million acres, while in Sindh on 1.5 million acres.

Dr. Quadir Bakhsh told that the cotton in lower Sindh planted on 0.5 million acres severely hit by rains lost 20 percent i.e. 0.1 million acres cultivated area. He told that the losses could be correctly estimated after the monsoon spell in Sindh, which was still continuing.

 

[Owais]

Dhodak field expansion to increase gas production

Islamabad: The condensed gas production after the upgradation of Dhodak Gas Field would increase from 23,00 barrel to 4,000 barrel a year, reports said on Tuesday.

According to Pakistan's state oil firm, Oil and Gas Development Company (OGDC), the upgradation of Dhodak Gas Field will be completed till November.

The company also informed that the upgradation of the gas field would increase the production rate of condensed gas by 17,00 barrel per day, while LPG production will be soared by 55 lacs ton.

 

[Owais]

Scheduled investment banks’ total investment up

KARACHI: Scheduled investment banks’ aggregate investment during the first seven months of the current calendar year surged by over Rs100 billion.

State Bank of Pakistan (SBP) sources told that the investment banks’ total investment beginning January stood at Rs730 billion, which at the end of July 2006 soared to Rs831 billion, while the investment in the first month of the current fiscal year i.e. July 2006 alone rose by Rs36 billion.

The aggregate volume of investment of the banks at the end of June 2006 valued at Rs794.5 billion, which shot up to Rs831 billion at the end of July, sources told.

 

[Owais]

IMF proposes further liberalisation of economy


ISLAMABAD (August 23 2006): The International Monetary Fund (IMF) on Tuesday termed Pakistan's current pace of investment as 'insufficient' to keep its economic growth on track, and recommended it to further liberalise economy for attracting more foreign and domestic investment in the future.

The Fund also wanted Pakistan to become more aggressive to enhance its trade with international partners to achieve the target for the current fiscal year.

Sources said that the IMF review mission, currently visiting here, held meetings with different economic policy makers in Islamabad and got the details of economy gains during the last fiscal year.

The mission comprises Mohsin Khan, Miguel Savastano and Hend Lorie.

Sources said that the IMF delegation pointed out various areas, which were hampering local and foreign investment into Pakistan. Some of these were slow pace of reforms programmes initiated for almost all key areas of economy such as banking, judicial, energy in particular, gas and electricity distribution companies and bottlenecks that were yet to be removed to give key role to the private sector.

The mission suggested that the government should focus on all these areas, which can help attract more domestic and foreign investment besides enhancing its trade with major international partners to achieve $18.6 billions for 2006-07.

The mission's meetings with Governor State Bank of Pakistan (SBP) Dr Shamshad Akhtar, Commerce Minister Humayun Akhtar and National Reconstruction Bureau (NRB) chief Danial Aziz were of extraordinary importance.

The mission is in Islamabad for annual review of Pakistan's economy under consultations article IV of IMF. Under article IV of the consultations, the Fund can review economic growth of its member countries including Pakistan and give its suggestions for policy making. However, its suggestion are not binding for those members who are not beneficiary of its financial assistance.

It may be noted that after a long association for financial assistance Pakistan had walked out of IMF's funding facility some few years back.

One of the policy makers told Business Recorder after the meeting with IMF delegation that the government side gave the mission details of steps being taking to increase investment for different sectors. He said the visiting delegation was also briefed about the incentives granted to exporters to take exports to an optimal level.

 

[Owais]

Textile made-up exporters may lose $42 million


KARACHI (August 23 2006): Pakistan's exporters of textile made-ups may lose up to $42 million following the filing of Chapter 11 bankruptcy by 'Best Manufacturing Group' (BMG) of Jersey City, New Jersey, USA, BMG's total imports of textile made-ups from world-wide sources stood at $25 million, of which one-third came from Pakistan, a leading Pakistani exporter of textile made-ups told Business Recorder here.

BMG, which is USA's largest manufacturer of table linen and napery for hospitality, healthcare and rental textile businesses, filed for Chapter 11 bankruptcy protection three days back, listing liabilities of over $100 million, and assets of about $153 million, according to reports reaching here on Tuesday.

The Pakistani exporter said that although the market for Pakistan's textile made-ups would remain intact, the new US importers, who would take the place of BMG, may have their own preferences for importing the items which were being imported by BMG from Pakistan. Besides, Pakistan's exporters will have to make renewed efforts to find some sound and reliable US importers with whom they could develop business relationship.

He said that some Pakistani exporters of textile related items "are now in USA" to study the situation arising out of these developments. He said that BMG was one of Pakistani exporters' important business partners with whom they had cordial relations and long association. They fear that since business is generally done on credit basis, their money may either be totally lost or they might face inordinate delay in receiving their payments because, in case of bankruptcy, creditors' settlement is processed in the last after meeting all other claims.

According to available details, the district court in New Jersey has designated the case as a 'complex Chapter 11 case', a distinction made when the case is extra large or there are significant number of creditors involved.

BMG said there are more than 2,000 creditors in the case, including vendors and employees. Also, the court has granted the company an additional 30 days to file its schedule of assets and liabilities.

Although the company maintains that it has sufficient liquidity to handle merchandise flow, it said that rapid growth through acquisition and softness in the market prompted the filing. The company's plan is to move more business to Cambodia, increase offshore sourcing, close the facilities in King of Prussa, Pa, and Mahwah, NJ, cut back on the manufacturing operation in Cordele, Ga, launch new hospitality apparel line, and consolidate healthcare and institutional into one division.

"We plan to take full advantage of the opportunities presented by this restructuring to address both our financial and operational issues in order to position our company for long-term success," chairman, Scott Korman was quoted having said.

When a related official in Export Promotion Bureau was asked to comment on the impact that BMG bankruptcy would have on exports of Pakistan's textile made-ups, he drew total blank about the development. He said that although he had no knowledge of the issue, he would certainly try to find out the details and revert to comment on the subject on Wednesday.

 

[Owais]

SECP clarification on short selling

ISLAMABAD (August 23 2006): The Securities and Exchange Commission of Pakistan (SECP) has clarified the prohibition on the short-selling of shares in futures contracts at Karachi Stock Exchange (KSE).

The KSE board of directors, in its meeting held on August 17, 2006, had reviewed interim market measures taken on June 14, 2006, and recommended withdrawal of the prohibition placed on short-selling in futures contracts, effective September 2006, subject to the approval of SECP, while continuing other temporary measures, said an SECP press release issued on Tuesday.

The said decisions of the KSE Board came to the notice of the Commission through newspapers of August 18, 2006 and subsequently through a facsimile from KSE management later in the day, the SECP said.

Thereafter, the SECP Chairman had a meeting with KSE board of directors on August 19, 2006 to discuss the said matter, along with other pending issues. During the meeting it was mutually agreed that KSE would be furnishing comprehensive rationale for the Board decisions taken in relation to the temporary market measures as the same necessitated the approval of the Commission.

However, upon non-receipt of the requisite information, the SECP issued a letter to KSE on August 21, 2006 confirming SECP's understanding with KSE. "This press release is being issued to clarify and place on record the true facts and to contradict incorrect statements appearing in some sections of media in this respect", the Commission added.

 

[Owais]

Ecnec to consider Rs 185 billion projects today


ISLAMABAD (August 23 2006): The Executive Committee of National Economic Council (Ecnec) will meet here on Wednesday to consider 34 development projects, costing about Rs 170 billion to 185 billion. According to sources, the agenda shows that a handsome amount of about Rs 127 billion would be allocated for 11 projects in the water sector alone.

The projects in this sector are: Construction of Fall Structures on Nara Canal; Re-sectioning of Ranto Canal of Jamroa Canal; Second flood protection sector project (FPSP-II); Remodelling of SMB Link and Bahawal Canal Lower; Chashma Right Bank Irrigation project (additional work and outstanding liabilities); Makhi-Farash Link Canal project' Pehur High Level Link Canal project; Taunsa Barrage Emergency Rehabilitation and Modernisation project (revised PC-1); Bazai Irrigation project; Rehabilitation of Irrigation System in NWFP; Punjab Barrages Rehabilitation and Modernisation project (emergency repair works; feasibility study and detailed design, revised PC-1) and Extension of RBOD from Sehwan to sea at Gharo (revised PC-1).

In energy sector, three projects of over Rs 30 billion are: setting up of Oil-Fired Thermal Power Station at Jamshoro units (revised PC-1); Feasibility study and detailed engineering design and preparation of tender documents for Kohala hydropower project; and 450 MW Combined Cycle Power Plant at Chichoki Mallian in the energy sector.

The Ecnec will also take up Milk Collection/Processing Dairy Production and Development programme and Livestock Production and Development of meat production in agriculture sector.

In the mass media sector, the most important project of establishing Islamabad Media Tower will also come up for consideration of the planning body. National Monument of Pakistan, in culture and Construction of Building for Pakistan School of Fashion Designing, Lahore (revised) in commerce sector are the projects to be considered for approval of the Ecnec.

In education sector, three schemes of Capacity Building for Teachers Training institutions of Ministry of Education in Islamabad Capital Territory (ICT); Federally Administered Northern Areas (FANA), AJK Punjab and NWFP would be tabled for consideration.

The Ecnec will also take up six development projects, which include Supply and installation and operation of water desalination plant of two MDG capacity for Gwadar Industrial Eastate, water supply schemes in district Peshawar under the President's directive, water supply scheme for Shalman to Landi Kotal, Khyber Agency, expansion of filtration plant and water supply network for supplying clean water to Hyderabad city under the Prime Minister's package, water supply and sewerage schemes for Mirpur City and other hamlets and construction of office building for National Accountability Bureau, Rawalpindi.

Establishment of nation-wide integrated trunk radio system for police in governance sector, construction of building of Gomal Medical College, D.I Khan, Establishment of Peshawar Institute of Cardiology (Phase-II), Upgradation of Saidu Group of Hospitals for teaching purpose of Saidu Medical College, Swat and Improvement/Standardisation of DHQ Hospital, Nowshera are the project in Health sector. Overseas scholarships for MS/M.Phil leading to PhD in selected fields Phase-II in Higher Education will be considered by the Ecnec.

 

[Owais]

WYSE to shift software base from India to Pakistan


KARACHI (August 23 2006): The US-based WYSE Technology Inc plans to switch its software development base from India to Pakistan and initially it would start its operations with 100 local developers within the next three months.

CEO WYSE, Dr John Kish talking to Business Recorder on the sidelines of a seminar titled 'Thin computing for a flat world' said that they were planning to bring huge investments in the country starting with at least 100,000 dollars that would keep on growing with time to hit millions.

He said that India had become quite expensive as compared to Pakistan, while Pakistan having skilled human resource and encouraging government polices was a far better option for international IT and outsourcing firms to make investments.

About their plans, Dr Kish said that WYSE would set up sales support office along with R&D centre in Pakistan and added that they would also propose suggestions to local varsities about computer science and IT curriculum along with arranging internship programmes.

Dr Kish said that he was sure that they would find better personnel than India here, as about 85,000 IT graduates were generated in the country each year. "Although the number is lower than the requirement but still the situation is quite favourable," he added.

He said that keeping in view the current policies of Pakistan, WYSE Inc was considering making Pakistan a hub of its commercial activities in the South Asia.

"For the very reason we are conducting meetings with WYSE's customers and various government functionaries so as to evaluate future strategies," Dr Kish informed.

Earlier, speaking at the seminar, the WYSE chief said as the field of information technology was developing at a neck-breaking pace, it was impossible for any nation to remain aloof of such advancements. In this connection, Pakistan government must be appreciated for carrying out investor-friendly policies to keep up with other nations of the world particularly in IT.

"Playing fields are not just levelled, but have been flattened and it is all about communicating, collaborating and competing on a global level. It is about finding the most efficient ways to deliver access to the information people need in order to move things forward. WYSE's thin computing is designed for such a flat world," he observed.

He said that thin computing delivered the much-needed access, at a much lower cost than the traditional methods, all without compromising security or manageability.

"It gives everybody in an organisation secure access to the information and the applications they need, without requiring the desktop systems to store them," he added.

He said that the WYSE continued its dominance as the world-wide market-share leader for the 40th consecutive quarter. The need to comply with regulatory guidelines, the need to secure desktop data, and the resulting management costs were driving more organisations to purchase thin clients, he added.

Manish Sharma, WYSE's Regional Director for South Asia also spoke on the occasion. In Pakistan, WYSE is represented by Karachi-based NC Inc for the last 18 years. "Dr Kish's visit to our country is very strategic, as he has earlier established a research and development centre in China and a testing facility in India to support this region" said Sami Askari, CEO NC Inc.

 

[Owais]

CBR examining sales tax profiles of 6000 untraceable units


ISLAMABAD (August 23 2006): The Central Board of Revenue (CBR) is examining tax profiles of 6000 untraceable firms/units registered with the sales tax department. Sources told Business Recorder on Tuesday that the Board a few weeks back had detected 6,000 units during scrutiny of tax record, who are operating without National Tax Numbers (NTNs).

Following detection of these cases, the Board directed the collectors of sales tax to check up tax paid by these untraceable registered units. Collectors are also examining the data to ascertain whether these units have claimed sales tax refund or not. Sources said that it is an extensive exercise, which needs thorough scrutiny of the profiles of these units.

It is pertinent to mention that around 6,000 taxpayers have obtained Sales Tax Registration Numbers (STRN), but their record is not available in 'NTN Master Index'.

 

[Owais]

Australian team briefed on energy resources

ISLAMABAD (August 23 2006): Pakistan has 175 billion tons coal deposits in Thar, which it intends to utilise in the coming years, said the Minister for Petroleum and Natural Resources, Amanullah Khan Jadoon here on Tuesday.

During a meeting with a former prime minister of Australia R L L Bob Hawke, who is visiting Pakistan at the head of a three-member delegation to explore and discuss the investment opportunities in the oil and gas and other minerals sector.

The government in its effort to accelerate the economic growth at a faster pace is focusing on energy sector. It has already issued over 100 licences to local and foreign exploration and production companies and is still looking for more parties interested to invest in the sector, he told Bob Hawke.

He said that government is bent upon exploring the proven oil and gas reserves, both onshore and offshore, to tap 309 million barrels oil and 33 trillion cubic feet gas.

The Minister further said that Pakistan is ranked second largest country with 175 billion tons of coal deposits in the Thar desert, and added that the government is taking concrete steps to increase the coal share in the energy mix from 6 percent to 50 percent in future.

The former prime minister of Australia thanked the minister for the co-operation and extending warm hospitality to the delegation and said that his visit would be beneficial to explore investment opportunities in oil, gas and alternative energy sources.

Secretary Petroleum Ahmad Waqar, Director General, Hydrocarbon Development Institute of Pakistan Hilal A Raza and Chairman Saif Group of Companies Anwar Saifullah Khan were also present in the meeting.