Pakistan Economy - News & Updates - Archive

[Owais]

UBL and POL net profits climb
RECORDER REPORT KARACHI (April 20 2006): The net profit of United Bank Limited (UBL) was more than double, while Pakistan Oilfields Limited (POL) registered a growth of 50 percent in the quarter ended March 31, 2006 on higher deposits and sales. Both the companies announced their financial results on Thursday and sent a financial statement to the Karachi Stock Exchange.

Pakistan Oilfields announced a bonus of 50 percent, which means shareholders would get five shares for every 10 shares held. The net earnings in the first quarter ended March 31 stood at Rs 1.5 billion or Rs 11.44 per share as compared to Rs 999 million or Rs 7.6 per share.

Similarly, the nine-month profit also record growth and earnings in the period amounted to Rs 4.395 billion or Rs 33.45 per share, up from Rs 2.401 billion or Rs 18.27 per share.

The growth in earnings is expected to be higher sales revenue, which is expected to be fuelled by higher production levels and increased oil and gas prices. The scrip has appreciated by 13 percent in just five trading sessions.

The upward drive in the scrip is mainly on the back of expectations of oil and gas discoveries, higher international oil prices and the recent activity is fuelled by the expectations of a bonus issue along with the nine-month results.

United Bank profit before tax amounted to Rs 3.5 billion, up from Rs 1.695 billion, where the net profit climbed to Rs 2.26 billion as compared to Rs 1.012 billion. The earning per share for the period ended March 31 was Rs 3.49 per share against Rs 1.56 per share.

 

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KARACHI (updated on: April 20, 2006, 16:21 PST): Higher domestic prices and a larger sown area have rekindled hopes of a bumper sugarcane harvest of over 50 million tonnes in the 2006/07 crop year, industry and the government officials said on Thursday.

Farm officials estimate that the area under sugarcane cultivation has risen by 8.7 percent to around one million hectares (2.5 million acres) against 920,000 hectares in the previous crop.

"The cultivation target was initially put at 960,000 hectares, but higher returns during the last season encouraged farmers to grow cane on a bigger area," an agriculture ministry official, who requested anonymity, said.

Pakistan's 13-month-long sugarcane season starts in February and ends in March the following year.

The sugarcane harvest fell last season to 44 million tonnes because of low rainfall and the loss of sugar-growing land to cotton. Around 10 percent of the total harvest in Punjab province was also damaged by frost.

But last year, sugarcane became the most profitable crop in the country, as shortages pushed prices to an all-time high of 120 rupees per 40 kg, almost double the government's fixed price.

The official said the sowing was completed on time and moderate winter rains had also improved the availability of irrigation water for the water-intensive crop.

"In Punjab particularly, growers have shifted to sugarcane from cotton crop due to the higher prices being offered for their produce," he added.

SUGAR OUTPUT

Industry officials said refined sugar output is expected to rise in the 2006/07 crop year to between 3.3 million and 3.5 million tonnes from a year-earlier 2.6 million tonnes. Demand is around 3.9 million tonnes.

The country would need to import 250,000-350,000 tonnes of sugar by the end of calendar 2006 to fill a supply gap and avoid price spikes, said Jawed Kiyani, a Lahore-based sugar mill owner.

"But next season, imports will not be as high as we have seen this time around," Kiyani told Reuters. "Our estimate is that maximum 350,000 tonnes of raw sugar would be imported between October and February."

Muhammad Najib Balagamwalla, chief executive of Seatrade Group, said the state-run Trading Corporation of Pakistan and private traders have finalised import deals of around 500,000 tonnes of sugar during the last six months.

"Now, we have stocks of 2.05 million tonnes, which are more than enough to meet the demand till October when the cane crushing starts," Balagamwalla said.

"Imports will slow down quite a bit from now onwards, but we will see some aggressive buying of raw sugar at the start of the next calendar year."

 

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M ISRAR KHAN
ISLAMABAD (April 20 2006): The Asian Development Bank (ADB) has pinpointed that the frequently changing data collection methodology of the Federal Bureau of Statistics (FBS) during the last decade has affected the reliability and comparability of its survey data.

The bank has proposed adoption of reliable and independent internal mechanisms for supervision and validation of fieldwork to address the problem.

For instance, different data sources that are not necessarily comparable in terms of sample design, seasonality, or methodology, are often used to examine poverty trends, making the data unreliable.

The Household Integrated Economic Survey (HIES) is the main source of data for poverty estimates in Pakistan, and should be strengthened, at least to the extent of producing regular, credible data, even at intervals of two or three years. This would serve the purpose of poverty monitoring effectively.

The ADB in its Pakistan Poverty Assessment Update titled "The Reliability and Credibility of Statistical Data for Poverty Analysis in Pakistan" said, "The reliability and credibility of Pakistan's poverty database, which is generated primarily through household surveys, has been debated for a long time. Issues of concern include updating of the sampling frame; survey comparability; availability when needed; frequent changes in field methodology; and the quality of questionnaires used."

Criticising the Pakistan Social and Living Standards Measurement (PSLM) survey, the bank said that it does not, however, adequately monitor all millennium development goals (MDGs) and Poverty Reduction and Strategy Paper (PRSP) indicators. Fertility and child mortality rates, for instance, cannot be estimated through this survey.

One important MDGs indicator is the "proportion of children who reach Grade 5 of those admitted in Grade 1. This indicator requires data on school dropouts, which the PSLM does not provide. Like the PIHS, the PSLM survey also fails to monitor several other MDGs/PRSP indicators, such as maternal mortality and malnutrition (underweight children). The new survey is, therefore, inadequate for the purposes of monitoring all the MDGs/PRSP indicators.

The Bank also said that the credibility of data depends largely on how independent the executing agency is, and, more importantly, on the quality of the data itself.

The FBS ensures data quality by carrying out consistency checks and 'cleaning', but validating survey data in the field is the key to enhancing data quality. This is usually done through a post-enumeration survey (PES), which is not common in Pakistan. An alternative would be to validate FBS fieldwork externally, although this is not a common practice among data generating agencies in the developing world.

Third-party validation may in fact weaken the FBS's fieldwork supervision ability. Rather than introducing third-party validation to verify FBS household-level data, reliable and independent internal mechanisms for fieldwork supervision and validation could be developed to address the problem, it added.

It is important that such a mechanism establishes its credibility through long-term improvement in its data collection techniques. This will boost the confidence of the local staff and strengthen the FBS's ability to carry out surveys.

The Bank's background Paper-2 assesses the reliability and credibility of the household surveys that generate data for poverty analysis in Pakistan. It focuses on the data generated by four household surveys: the Household Integrated Economic Survey (HIES), Pakistan Integrated Household Survey (PIHS), Pakistan Demographic Survey (PDS), and Labour Force Survey (LFS), all the four are carried out by the Federal Bureau of Statistics (FBS).

A common observation on large surveys such as the HIES and PIHS is that the income accruing to the highest income group is seriously understated, and that the poorest are inadequately represented. This issue of the representation of high-income groups surfaced more seriously in the 2001-02 PIHS/HIES, where low- or middle-income group primary sampling units (PSUs) were enumerated against high-income PSUs.

The FBS report that was published subsequently blamed its field supervisors for the negligence. This is a poor defence - this is a serious sampling task and should be managed regularly well before a survey is started, it added.

The FBS has initiated a new survey, the Pakistan Social and Living Standards Measurement (PSLM) survey, but it does not contain a module on birth history to estimate fertility and child mortality rates. The PDS remains the main data source for these indicators.

Although a reliable data source, the PDS also faces certain concerns: recent changes in methodology may have affected fertility and mortality rates, but this impact has not been evaluated. In addition, data on children's height and weight is not regularly available to monitor child malnutrition. This information could be obtained through the PDS if female enumerators were inducted into the survey. It would be worth investing in the PDS for reliable demographic and health data.

The Bank said that in general, labour data remains inadequate; it would be worth investing more in the Labour Force Survey (LFS) to make it an annual survey.

The ADB also said that there is considerable debate on the urban sampling frame used by the FBS. Using the 1998 population and housing census data, the FBS revised its rural sampling frame, which was then used in the two combined rounds of the PIHS/HIES.

However, the FBS's urban frame was last updated in 1995, and this might affect the rural and urban distribution of a sample. It also affects the overall estimates of poverty, as well as comparability across years, and, thus, needs to be updated urgently. Frequent changes in data collection methodology also affect the reliability and comparability of survey data. Such changes include changes in the reference period for reporting births and deaths (the PDS) and for the expenditure module of the HIES/PIHS. Such changes may be required to improve data quality, but the frequency of changes in reference period may affect reporting quality and data comparability across surveys.

The quality of data produced by the household surveys so far implies that the quality of training and supervision of surveyors needs to be improved. One reason for the recent controversy over household size, which is an important variable in estimating poverty, was that ill-trained enumerators did not enlist household members properly.

The Bank said that the supervision system should be changed to allow supervisors to manage their field teams for the entire survey period, as was done by the FBS in the PIHS rounds. Household survey monitoring teams consisting of regular field staff posted at national, regional and field offices across the country could also monitor surveys more effectively.

FBS supervisors are responsible for many things: overseeing the identification of enumeration blocks (PSUs); household listing; selecting households using systematic random sampling techniques; field enumeration; editing and cross-checking data entries; and finally, "cleaning up" the data collected, the bank adds. The supervisors cannot carry out all these assignments efficiently, and should be relieved of some of the duties.

For example, when the 2001-02 PIHS data was cross-checked, some low-income households were found to have been included in high-income areas. The FBS blamed its field supervisors for this negligence. However, this is a serious sampling task and should not simply be relegated to the supervisors. Household survey monitoring teams consisting of regular field staff posted at national, regional and field offices across the country could be used effectively to monitor surveys.

The concept of teamwork is largely absent in the FBS's fieldwork strategy. One reason that non-government agencies produce better-quality household survey data is that their fieldwork teams are headed by supervisors who are based in the field for the entire duration of the survey.

While on the other hand, the FBS module is different: it uses mostly male enumerators who are not accompanied by the supervisors on a daily basis. The PIHS series is an exception; data was collected by mobile teams of male and female enumerators who were managed by a team of supervisors on a daily basis. It may be costly for the FBS to spare its staff, as supervisors who go into the field every day with their team, but such improvement in the field strategy are necessary to improve the quality of household survey data.

 

[Neo]

By Our Reporter

ISLAMABAD, April 19: Imtiaz A. Rastgar, vice-chairman and CEO of the Engineering Development Board, has assured representatives of the industry that the proposals made by the board on the basis of the Motor Industry Development Programme (MIDP) of South Africa will be circulated to them in order to get their support before submission to the government.

According to a press release here on Wednesday, Mr Rastgar was chairing a meeting of auto, refrigerators and air-conditioners manufacturers, tariff consultants, the CBR, the ministry of industries and production and members of delegations who recently visited South Africa for studding the MIDP.

Zahid Yaqoob, EDB managing director and leader of the delegation, gave a detailed presentation about the MIDP and their findings about the working of the programme in South Africa.

He said the South African authorities were ready to send their master trainers to Pakistan. He said the main objective of the MIDP was to rationalise production into smaller range of products and achieve economics of scale through exports.

In the auto sector, they have gradually reduced tariff on CBU from 65 per cent in 1995 to 32 per cent in the current year. The same had been reduced from 49 per cent to 26 per cent on CKD. Duty free allowance (DFA) was the main instrument of the programme, Mr Yaqoob added.

The meeting decided to meet again on May 2 to finalise its proposals for incorporation in the forthcoming budget.

Meanwhile, two sub-committees on motorcycles and refrigerators and air-conditioners will meet separately with an aim to recommend export incentives in the light of the MIDP.

The meeting also decided to study the development made in auto sectors of Thailand and Turkey by sending the same delegation to these countries in order to recommend which model suits Pakistan.

Magsood A. Basrra of Atlas Honda also made a presentation on findings of his visit to South Africa. He said the programme was successful due to the support of multinational manufacturers and its long duration of 20 years.

Shakeel Ahmed, representative of the refrigerator and AC manufacturers group, also briefed the meeting about his findings of the visit.

 

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Thursday, April 20, 2006

* Inflation to fall to 7.7-8.3 percent
* Wheat yields could exceed record set last year
* Growth in textile, car sectors

By Sarfaraz Ahmed

KARACHI: The GDP growth rate this financial year is likely to be less than the 7 percent target, according to the State Bank of Pakistan.

Fast growing globalisation and increasing regional competition means Pakistan can ill afford to derail its macroeconomic stability, which has been the lynchpin in restoring domestic and foreign investor confidence, says the second quarterly report on ‘the state of Pakistan’s economy’ for financial year 2005-06 released by the State Bank on Wednesday.

The central bank estimates that real GDP growth will fall in the range of 6.3 to 6.8 percent. The slowdown relative to the target owes principally to “the (estimated) weakness in the commodity producing sectors of the economy, the impact of which will be partially offset by an anticipated above-target performance of the service-sector,” says the report.

Also, while inflationary pressures show a welcome decline, the downward trend is unsettled, and inflation remains relatively high. Inflation is projected to fall in the 7.7-8.3 percent range during FY06.

According to the central bank, the relative improvement in water availability and availability of agriculture credit bodes well for Rabi crops, in particular the wheat crop. Wheat yields could surpass the record (2586kg/hectare) set last year. In aggregate, minor crops could also do better than targeted during Rabi. The overall growth of the crops sub-sector remains below target due to underperformance by two major Kharif crops - cotton and sugarcane.

In large-scale manufacturing, the report says the largest industrial group, textiles, grew 7.7 percent year-on-year (yoy) during the first seven months of FY06, but far below the 26.4 percent yoy growth in the corresponding period of FY05. The chemical industry posted only 4.4 percent yoy growth in output during July-Jan FY06, primarily due to capacity constraints. The fertiliser industry, also facing capacity constraints, witnessed 16.4 percent growth, as compared with 42.2 percent last year. However, the automobile industry posted encouraging growth of 28.2 percent.

The central bank report says the government’s fiscal position witnessed moderate deterioration during H1-FY06, despite recording strong growth in tax revenues. Monetary policy remained tight throughout July-Feb FY06, while the benchmark 6-month T-bill rate was kept almost unchanged.

The report says that large government borrowing during July-Feb FY06 was mainly due to relief spending needs in the earthquake affected areas, retirement of long-term government paper and less than anticipated external receipts from NSS instruments.

Pakistan’s overall external account deficit narrowed marginally during July-Jan FY06 to $0.58 billion from $0.61 billion in the corresponding period of FY05, says the report. The sharp deterioration in the current account ($2.4 billion) deficit was principally due to higher import related activities.

The central bank says a substantial part of improvement in financial flows was due to increased foreign private investment, especially FDI, including a substantial $255 million received as privatisation proceeds.

 

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Thursday, April 20, 2006

KARACHI: The inflows of the foreign direct investment has shown some improvement in the country during this current fiscal, but it is still less than one percent of the global FDI flows.

The central bank in its second quarterly report said while there has been some improvement in the investment climate of the country, much remains to be done in order to deepen these flows sustainably. Despite the gradual rise in foreign investment, Pakistan still receives a meagre share (less than one percent) of the global FDI flows.

It said a comparison with some other countries of the region Pakistan’s share in the global FDI flows though rising is still less than the other large countries.

During the July-Jan period the FDI flows recorded a substantial rise of $711 million to reach $1.226 billion.

A large share of this increase came from rising investment in equity capital, the bulk of which was in the sectors of telecommunication, financial business services, oil and gas exploration, power and trade.

The country’s outstanding export bills held by exporters increased by $173 million during July-Jan 2005-06 as compared with the $132 million rise in the same period last year.

During the period the trade balance deteriorated sharply from $2.6 billion to $4.7 billion during July-Jan 2005-06 as a very strong import growth of 31 percent outpaced a reasonable 13 percent growth in exports.

 

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Rs32bn development projects cleared



Thursday April 20, 2006 (1037 PST)




http://pakistaniforces.com/forums/http://www.paktribune.com/news/topstories.phphttp://www.paktribune.com/news/print.php?id=141207http://www.paktribune.com/mypaktribune/favlink.php?t=Rs32bn development projects cleared
ISLAMABAD, April 18: The Planning Commission has cleared 18 major development projects worth Rs32.1 billion which would now be formally approved by the Executive Committee of the National Economic Council (ECNEC) here on April 22.



Official sources told Dawn on Tuesday that the ECNEC meeting to be presided over by Prime Minister Shaukat Aziz would ensure that the finance division releases funds well in advance for new development projects.

The objective, sources said, was to remove the objections of the ministries, divisions and the provincial departments about the delay in disbursement of funds that invariably results in cost escalation of projects.

The government has been advised by its economic advisors to avoid increase in the budget deficit due to various reasons, including an enormous increase in the cost of hundreds of development projects every year.

The new development projects are in the energy, health, higher education, physical planning & housing, rural development/area development, social, transport and communication sectors.

Five of the development projects for Karachi have especially been cleared by the Planning Commission which include a bridge over the Malir River connecting Shah Faisal Colony with Korangi sector-10 (Rs6.2 billion), establishment of accident and ancillary services complex at the Civil Hospital Karachi (Rs1.4 billion), construction of Sohrab Goth interchange at the intersection of Shahrah-i-Pakistan and Rashid Minhas Road (Rs579.95 million), institutional enhancement to implement the Karachi Mega City Development project (Rs1.1 billion) and provision of MRI and CT scanners for the Civil Hospital Karachi.
Other projects are a Japanese-assisted rural road construction project (Rs9.8 billion), improvement and refurbishing of existing sewerage treatment plants (Rs2.7 billion), Fulbright Scholarship Support Programme (Rs7 billion), National Tuberculosis Control Programme 2005-10 (Rs1.1 billion), construction of the Sibi Rakhni Road (Rs1.4 billion), widening and remodelling of roads and intersection of the Islamabad International Airport to the Flying Club Rawalpindi (Rs1.2 billion), procurement of fire-brigades for Islamabad, the Kala Dhaka Development Project, transmission scheme for dispersal of power from the 2x50mw windmill power plant at Mirpur Sakro, the Kohistan Development Project, the Indus Highway Project (N-5 Phase III) and strengthening of the Gambat Institute of Medical Sciences.

 

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Thursday April 20, 2006

ISLAMABAD : Prime Minister Shaukat Aziz Tuesday directed the Civil Aviation Authority (CAA) to accelerate work on the planning phase of the new Islamabad international, which will be the most modern airport in the region.

Chairing a meeting of CAA here at the PM house, he directed the authority to assign work separately to two contractors to simultaneously start work on project, with one working on the runway and allied facilities and the other on the building.

“This will be the most modern airport and serve as a hub in the region and cater to growing needs of tourists and businessmen,” the Prime Minister said.

He said the work on the airport will be started in next few months and will be accomplished on most modern lines. The meeting discussed in detail the civil aviation policy. The Prime Minister said local and foreign carriers need to be encouraged to increase flights to Pakistan, however said that this be done while keeping in view the requirements of the PIA.

He directed the Civil Aviation Authority to focus on improving country’s airports and facilitate the passengers. He also asked for development of valuable surplus land adjoining the airports.

He also expressed satisfaction that the Civil Aviation Authority has transformed itself into a self-sustaining organization through sound management policies and appreciated the hard work put in by its employees and management.

Minister for Defence Rao Sikandar Iqbal informed the Prime Minister that technical and civil work of the new airport was being finalized while planning of the new Gwadar airport will commence next month.

The Federal Minister for Defence Rao Sikandar Iqbal, Minister of State for Defence Zahid Hamid, Secretary Defence, DG Civil Aviation Authority and senior officials attended the meeting.

 

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DHAKA (April 21 2006): India and Pakistan on Thursday agreed not to levy import duties of more than 5 percent on products traded within the South Asia Free Trade Area (Safta).

The decision was made at a meeting of South Asian commerce ministers, which concluded in Dhaka on Thursday. The meeting primarily discussed implementation of a free trade area in the region over next decade.

"They have agreed to remove import duties above 5 percent in three years to 2008 under the South Asia free trade area (Safta) agreement," Bangladesh's commerce minister Altaf Hossain Choudhury told reporters.

"Immediate beneficiaries will be five other countries in the South Asian Association for Regional Co-operation (Saarc) and implement the reduced duty in four phases starting July this year," Choudhury said.

"The other five Saarc countries have also agreed to reduce their import duties by between 0 to five percent by next 10 years," he added.

The meeting was attended by commerce ministers of all Saarc nations, except Nepal.

The meeting decided to draw up a timetable to gradually ease tariffs to make Safta effective by 2016, officials at the meeting said.

Afghanistan will join Saarc next year.

"With 1.4 billion population in the Saarc region, one of the largest areas in the world, the intra-regional trade is very minimal," Lyonpo Chenkyab Dorji, the secretary general of the Saarc secretariat, told the opening session of the meeting on Thursday.

Intra-regional trade volume among Saarc countries stands at $6 billion, or about 4.4 percent of the total trade of member states worth $135 billion, officials said.

The SAFTA agreement signed at a summit in Islamabad in January 2004 came into effect in January this year. Tariff concessions under the agreement will be effective from July, 2006. A range of products that members deem sensitive will be excluded from the free trade deal.

 

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ISLAMABAD (April 21 2006): Pakistan on Thursday announced the realisation of debt cancellation/swap of over $650 million from donor countries, including around $392 million pertaining to Canada against the expenditures on education.

Subsequent to Paris Club III rescheduling, Pakistan had initiated a dialogue for debt cancellation/debt swap with donor countries.

Following negotiations, Pakistan has succeeded in reducing its external debt burden by around $652 million over next five years out of which around $392 million pertains to Canada for which a debt conversion agreement is being signed by the economic affairs division secretary with the Canadian government on Thursday.

Under this arrangements, the Canadian ODA loan amounting to C$449 million (US $392 million) will be written off against expenditure on education, particularly to teachers' training in all the four provinces and the education ministry, according to a press release issued by the economic affairs division on Thursday.

Earlier, the division had finalised a debt cancellation of approximately $200 million from Italy out of which $100 million are being cancelled against Pakistan's expenditure on Afghan refugees and another $100 million against earthquake reconstruction expenditure.

Likewise, negotiations have also been completed with Germany for writing off an amount of $62 million loan owed by the government of Pakistan to Germany against expenditure on reconstruction in the earthquake-affected areas.

These initiatives, altogether, will help reduce Pakistan's external debt burden by $652 million.

 

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KARACHI (April 21 2006): Liquid foreign exchange reserves have reached $12,906.5 million on April 15, 2006. According to the break up, the State Bank held $10,611.2 million whereas other banks held $2,295.3 million.

 

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KARACHI (April 21 2006): President Pervez Musharraf has assured foreign investors of the security of their capital, saying that the government had formed a strategy to confront terrorism and extremism, which had yielded "encouraging results". Pakistan is undergoing a "societal transformation" with improvement in law and order, he said.

He was speaking at the annual dinner of the Overseas Investors Chamber of Commerce and Industry (OICC&I) at the Karachi Golf Club.

The President said that overseas investment is the "the main source of economic growth of Pakistan", and called on investors to help the government get more investment into the country. He said that foreign companies were making healthy profit but as the President put it "I do not grudge their earnings and profit. I look forward to more investment from abroad, so that the economy progresses."

The President said that he had decided to chair all conferences on foreign direct investment in the country.

He said that Rs 30 billion had been allocated for the social sector, which was three times as much as the allocation in the 1998-99 fiscal year. He pointed out that Pakistan's credit rating had improved and a leading economist magazine had included Pakistan in its list of the top 25 performers in the economic market. This he said, "Is a big achievement." He pointed out the increase in exports and urged export efforts for engineering goods and dairy products.

Speaking on the occasion, Federal Minister for Commerce, Humayun Akhtar Khan lauded the services of the chamber and the contribution of its members towards the economy of Pakistan.

Earlier the president of OICC&I Salman M Burney traced the 146 years history of the chamber. He gave interesting statistics about member companies who he said have an equity base in excess of Rs 240 billion and total assets of Rs 1,100 billion invested in Pakistan. Sales of member companies represent over 11 percent of GNP of the country and over 33 percent of the GDP in the manufacturing sector. He said that over 37 percent of our revenue is remitted to the government in the form of various taxes, 30 percent of the total national excise duty collection and over 20 percent of all import and sales tax is paid by our members.

Burney said that the vision and mission of the chamber is to ensure that the interests of our members and the country are aligned for mutual progress and development. He thanked the President for the economic stewardship by him and his team, which his government had provided over the last six years. He said during this period Pakistan's economy had emerged from a depressed phase, to a point where we have a resurgent business sector, generating strong economic growth at levels, which are amongst the best in a global context, year after year. Significantly this has been achieved whilst facing some of the most serious challenges that this country has ever seen and despite very major natural disasters of a scale which could have laid low many a countries' economy.

He pointed out that this has been possible due to some core principles. First and foremost was the clarity & stability of policy frameworks. Secondly, the principle of transparency and a level playing field for all. Thirdly & most significantly was the pro-business culture.

Burney said that we should not be complacent, and therefore it was encouraging to see that the government is working on second generation reforms aimed at increasing competitiveness and improving governance. He also emphasised the importance of intellectual property rights and said much more needs to be done on this front.

He outlined the efforts of member companies in the field of corporate social responsibility and said after the devastating earthquake the companies and their staff contributed significantly to the national effort and till to date member companies had contributed to the tune of over Rs 5.4 billion in cash and kind towards the relief and reconstruction effort.

The dinner was attended by over 400 top executives of member companies and high government officials including the governor and chief minister of Sindh.-PR

 

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FAISALABAD (April 21 2006): In view of Pakistan's mixed experience of economic growth and poverty reduction, the consultants of Asian Development Bank argued that poverty cannot be tackled only through economic growth, and that there needs to be a strategy to ensure equitable distribution of income, employment generation, and social sector development.

Dr Emma Hooper, Poverty and Macro Economic Specialist, Asian Development Bank (Pakistan Resident Mission), said that under ADB's Country Strategy and Programme for 2002-06, poverty reduction has been the overall objective of ADB's development assistance to Pakistan. A new Country Strategy and Programme will be prepared to cover the period 2007-11, he added.

As input to this, Dr Emma Hooper said that the preparation of ADB's Pakistan Poverty Assessment Update started in 2005. Part of this process has been the commissioning (both in-house and from external consultants) of a number of draft background papers on specific topics for in-depth examination.

In particular, crosscutting themes such as poverty definitions, income and non-income poverty, gender and poverty, and issues such as the protection of the chronically poor, food security, and the social sector, have been the subject of research by the Poverty Group of the Country Policy Operations Unit at ADB.

In a recent report of ADB stated that Pakistan's structural adjustment reforms have not resulted in the economic growth or had the favourable impact expected. During the post-structural adjustment programme, growth slowed down, while income inequalities increased.

The taxation structure became more regressive and public expenditure on services used by the poor declined. Employment grew very slowly and real wages declined. Consequently, poverty increased considerably after FY1988.

Over 40 percent of Pakistan's population is below 15 years of age and about 22 percent comprises females of reproductive age. Such an age structure has a built-in momentum toward future population growth.

High dependency ratios, large families, and a small number of earners are the result of this age structure, and these factors are considered major correlates of poverty. Household size varies inversely with per capita expenditure quintile and is much larger among poor households in urban and rural areas. The mean number of children in the lowest quintile is three time as high as that in the highest-income group.

The dependency ratio for the top quintile is less than half that of the bottom quintile. Because of the rapid growth of population, the absolute size of the illiterate population has increased even faster than the literate population. The population boom has also led to irrevocable environmental degradation and high levels of housing poverty.

However, Pakistan has experienced a fertility transition in the last 2 decades. Consultants argued that economic hardship faced by Pakistan families in the 1990s may well have helped limit family size, but further studies are required to establish the causal relationship between population growth and poverty.

Poverty and the labour market are closely linked, because market earnings are among the main sources of income for workers.

The period from FY1988 to FY2002 shows that the slowdown in economic growth accompanied by an increasing imbalance in the supply and demand for labour, caused a sharp rise in unemployment and a significant increase in poverty levels during this period.

Given the concentration of workers in the low-paid informal sector, employment may not guarantee households a transition out of poverty. Policies directed at reducing unemployment, therefore, will only partly address the problem of poverty, and need to be reinforced by better terms of employment for the poor who are already employed. Wages are the most important component of the terms of employment.

The flow of foreign remittances has been an important factor in explaining changes in poverty level in the country. The results of a standard Keynesian macro-model show that, on average, remittances contributed a 2-percentage point decrease in poverty.

However, this inflow did little to improve income distribution. Based on household survey data, studies show that poverty tends to be much lower among migrant households than among non-migrant households. In urban areas, poverty was almost non-existent among migrant households while a quarter of non-migrant households were found to be below the poverty line. In rural areas, the poverty level was much higher among non-migrant households than among migrant households.

Overseas migration has thus had a significant impact on poverty reduction in Pakistan.

The ownership of land is highly unequal in Pakistan and considered one of the major causes of rural poverty. Less than half of all rural households own any agricultural land, while the top 2.5 percent account for over 40 percent of all land owned. Land inequality is relatively higher in poor districts located in the cotton/wheat belts of southern Punjab and Sindh.

The ownership of farm assets (other than land) among cultivating households is also unevenly distributed. These factors, along with the prevailing tenancy arrangements, particularly sharecropping, have a strong correlation with rural poverty.

The incidence of sharecropping has declined over time, although a large number of rural households still cultivate others' land as share-tenants. Studies find the highest level of poverty among these sharecroppers.

 

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ISLAMABAD (April 21 2006): Pakistan would be the gateway of Asian trade towards the European countries in the near future due to its strategic location and consistent business-friendly policies coupled with the stature and influence of its visionary leadership.

In an interview with the APP, Federal Minister for Communications Shamim Siddiqui on Thursday said, as Pakistan provides a passageway to bridge China, Iran, India, Korea and Japan with Turkey and the rest of European countries, the government would spend billions of dollar in collaboration with World Bank and Asian Development Bank (ADB) till the year 2015 to construct a network of roads to materialise the Asian highways, which would bring about a huge economic activity within the whole region.

He said the volume of Chinese business through Gwadar Port would be around $25 billion, as this route would reduce 5000 kilometres from Beijing to Kashghar.

He said the credit for the future trade and investments in the country goes to the visionary leadership of President Musharraf and consistent policies of Prime Minister Shaukat Aziz.

To achieve the desired results, the government would introduce a network of roads, which would lead towards saving of Rs 240 billion of fuel. Besides, at least 55 percent time duration of travelling between Karachi and Peshawar would also be reduced, he added.

He said important Asian powers like China, Japan, Korea, Malaysia and India would use Gwadar as a trade link towards Turkey and other European states.

He said the Gwadar port would be functional in December this year and to ensure swift transportation from Gwadar to China and other neighbouring countries, there was a dire need to rehabilitate the N-25 route.

Describing the road demography, he said there were two road networks in the country. Around 1800-kilometre long GT Road (N-5) links Karachi with Peshawar via Bahawalpur, Multan and Lahore. The other route, which is 1400 kilometres long (N-55), connects Karachi with Peshawar through Jamshoro, Dadu, Sehwan, Rajanpur, D.G. Khan, D.I. Khan and Kohat.

To a question, the minister said the government was constructing third link named as Motorway, which would ensure smooth transportation of goods from Gwadar to Karakuram Highway, the route to China.

 

[Owais]

Six more licences issued for bike manufacturing

KARACHI (April 21 2006): The government has given its final nod to six new players to set up plants for assembling and manufacturing of motorcycles in the country, sources privy to this development told Business Recorder on Thursday. With the issuance of these new licences, the number of motorcycle manufacturers and assemblers in the country has increased to 46 from 40.

THE COMPANIES ARE: Specialised Motorcycles (Karachi); Moon Traders (Karachi); Ghani Automobiles (Lahore); Master Engineering Corporation (Lahore); Buraq Motor Corporation (Lahore); and Stahlco Automobiles (Lahore).

Sources elaborated Specialised Motorcycles (Karachi) would enter into the market with a brand name of (Hunter HR-70), however, Moon Traders (Karachi) is coming with Moon Star 70cc.

Similarly, Ghani Automobiles would launch its product by the name Gi-70. Nevertheless, Master Engineering Corporation (Lahore) would launch two of its models, ie, Leader LD-70 and LD-100.

However, Buraq Motor Corporation is launching Buraq 100cc, while Stahlco Automobiles is coming with Stahlco 70cc.

Sources informed new players are currently giving final touches to their products and planning to launch their products shortly.

"They were just waiting for the final nod from the federal government and they would soon launch their product and marketing campaign," sources said.

They said all the six new players have made their plants operational and were all set to kick-off their production and were just waiting for the final approval.

The federal government had issued similar licenses to five companies in December last year including Babar Auto Manufacturing (Karachi); Moonstar Motor Corporation (Karachi); Master Motorcycles (Lahore); Super Sonic Corporation (Karachi); Bhawaja Automobiles (Karachi); and Crown Lifan (Sadiqabad).

Other than that some 40 companies were already operational in the country. Pak Hero Industries, Atlas Honda, Pakistan Cycle Industrial Co-operative Society Limited, Saigols Qingqi Motors Limited, Excel Industries, New Asia Automobiles, United Sales, Blue Star Automobile, Pacific Motor Company Limited, HKF Engineering (Pvt) Limited, Sazgar Engineering Works Limited, Star Asia and Zxmco Pakistan (Pvt) Limited are assembling 70cc motorcycles.

Suzuki Motorcycle Pakistan Limited, Dawood Yamaha Limited, Dewan Motorcycles Limited, Ahmed Automobile Company, NJ Auto Industries, Sitara Auto Impex, AB Engineering (Pvt) Limited are also producing motorbikes, besides companies from Hyderabad, Memon Associates Foundry Limited, Raazi Motor Industries and Shafiq Sons which are engaged in manufacturing Super Star SS-70, Hi Speed SR-70 motorcycles and Jinan JN-70cc motorcycles, respectively.

Other companies including DS Motors Fateh Motors, King Hero Motorcycle Industries, Super Asia Motors (Pvt) Limited, Toyo International Motorcycle, Suleman Auto Industries, Metro Hi-tech industries (Pvt) Limited, Eagle Industries, Raja Auto Cars, Ali Raza Industries, Habib Motorcycles (Pvt) Limited, NJ Auto Industries, Omega Industries, Pakistan CICS Limited, Rafiq Engineering Industries (Pvt) Limited and Sonica Auto Industries (Pvt) Limited are also manufacturing different models of motorbikes, mainly 70cc.