Pakistan Economy - News & Updates - Archive

[Owais]

Revenue receipts exceed target by Rs 11.18 billion


ISLAMABAD (October 03 2006): The Central Board of Revenue (CBR) has collected Rs 187.38 billion in the first quarter of 2006-07 (July-September) against the target of Rs 176.2 billion, reflecting a growth of Rs 11.18 billion.

According to updated figures released on Monday, the Board collected Rs 187.38 billion against Rs 152 billion in the corresponding period of 2005-06, showing 23.2 percent growth.

On September 30, the Board's provisional collection had amounted to Rs 172 billion the period of July-September. But further Rs 15.38 billion was collected during following 48 hours on receipt of revenue figures from far-flung areas.

Tax-wise break-up shows that the collection on account of direct taxes was Rs 66.32 billion, against Rs 48.18 billion of last year, depicting an increase of 37.6 percent.

Indirect taxes collection amount to Rs 121.06 billion against Rs 103.87 billion, showing an improvement of 16.6 percent. Sales tax collection has reached Rs 75.60 billion against Rs 62.98 billion, indicating a growth of 20 percent. Of this, sales tax collection at import stage was Rs 44.80 billion, against Rs 39.02 billion, showing a growth of 14.8 percent, and sales tax collection on domestic consumption was Rs 30.80 billion, against Rs 23.96 billion, showing an improvement of 28.6 percent.

The collection on account of federal excise duty (FED) was Rs 16.48 billion, against Rs 12.23 billion, showing an increase of 34.6 percent. Against gains in all these taxes, the CBR Customs Wing has shown poor performance, as collection on account of customs duty was Rs 28.9 billion, against Rs 28.6 billion, reflecting a nominal increase of 1.2 percent.

At the same time, the overall payment of customs rebate to exporters also declined as compared to the payments made last year, sources said. The Board paid Rs 19.83 billion as refund and rebate to exporters during the first quarter 2006-07 against Rs 18.20 billion in last fiscal year, reflecting an increase of Rs 1.63 billion.

Out of this, sales tax refund was Rs 11.18 billion against Rs 7.57 billion; direct taxes refund Rs 4 billion against Rs 5.2 billion and payment of customs duty rebate was Rs 4.67 billion in the first three months of current financial year against Rs 5.28 billion of last fiscal year, showing a shortfall of Rs 0.61 billion.

As per data, the provisional collection of federal taxes for September 2006 is Rs 88.26 billion, while total refund and rebate paid during the month was Rs 4.54 billion.

The monthly-break-up shows that direct taxes collection was Rs 44.73 billion and indirect taxes collection was Rs 43.53 billion. Sales tax collection was Rs 26.74 billion; federal excise Rs 5.4 billion and collection of customs duty is Rs 11.28 billion

 

[Owais]

UK emerges lead investor as SCRAs soar to $97 million


KARACHI (October 03 2006): UK emerged as the lead investor, for the first time this year, on September 28 with its balances under Special Convertible Rupee Accounts (SCRAs) rising to $55.6 million. And, on September 29, its balances surged further and reached $63.5 million.

This was the result of net cumulative flows of $57.2 million during the month up to September 28 and $65.1 million to September29. Singapore, which has been relegated to the second position since, did not bring in any new funds between September 26 and 29 and so that its balances remained at $44.1 million on September 29 as on September 26. USA's balances also remained unchanged--around $16 million--although it brought in new funds to the tune of some $27.5 million in September alone.

On withdrawals front, Switzerland remained active in September also, as it had been throughout FY07. Its withdrawals reached $18.5 million on September 29, or $0.2 million higher than on September 26.

Hong Kong also continued withdrawing, albeit small sums, so that total withdrawals during the year reached $3.1 million on September 29. Qatar, too, withdrew a small amount since September 26. Its total withdrawals during the year to September 29 remained a small figure, viz, only $0.03 million. There was no change in the balances of other active players compared with the position on September 26.

Indices reflecting stocks position in the country for relevant dates changed as follows: KSE 100 Index (November 1991=1,000) increased from 10,305 on September 26 to 10,512 on September29. KSE 30 Index (June 30, 2005=10,000) rose from 12,808 to 13,077. BRIndex (September 16, 2004=5,000) increased from 11,076 to 11,374; and SBP General Index of Share Prices (2000-01=100) rose from 424 to 430.

Aggregate market capitalisation, accordingly, rose from Rs 2,820 billion on September 26 to Rs 2,875 billion. The increase in indices occurred despite the fact that roll-over week effect and the reported delay in implementation of amended CFS pushed investors to book profits. Banks, however, continued attracting investors' focus as Picic, BAFL, NBP and MCB scrips remained top volume leaders providing all-important cushion to the indices.

 

[Owais]

Over $500 million FDI expected in Islamic banking

KARACHI (October 03 2006): Approximately 500 million dollars to 600 million dollars will flow into Pakistan's Islamic banking industry alone as foreign direct investment (FDI), estimate President and Chief Executive Officer of BankIslami Pakistan Limited Hasan A. Bilgrami.

Talking to Business Recorder on Islamic banking and its future prospects, he said that the above amount could be substantially increased with the assistance of the government. He said that the total deposits with Islamic banks in Pakistan will reach Rs 780 billion by 2014, according to a research report on the future prospects of Islamic banking industry in Pakistan published by the Islamic banking division Ferguson Associates.

The State Bank of Pakistan (SBP), which has got an encouraging response in its efforts to promote Islamic banking from foreign and local investors, targets Islamic banking to have a 10 percent share of the total banking industry in Pakistan by 2020.

Bilgrami said that over a dozen of institutions had come into the Islamic banking market and many more were planning to enter. As of now, four Islamic banks, including BankIslami Pakistan Limited, was operating as full-fledged Islamic banks, he said, adding new Islamic banking licences had been given to two more banks, which were expected start business in 2006. Applications of many other interested parties for NOC were being processed by the SBP, he said.

In addition to full-fledged Islamic banks, Bilgrami said there were dedicated Islamic branches of conventional banks. So far, 12 banks had been issued licences for dedicated Islamic Banking Branches (IBBs), he said, adding in total there were around 110 branches in Pakistan offering Islamic products to customers.

The share of Islamic banking assets in total banking sector had reached around 2.41 percent now, a sizeable growth as compared to just 0.5 percent in 1996, he said.

The fast growing BankIslami Pakistan Limited, which started operation from the second quarter of 2006 with the sole purpose of providing banking facilities to its customers in strict compliance to the Islamic laws currently, had six branches, he said.

Bilgrami said it further planned to open 10 branches and a number of banking centres and expand its network to Islamabad, Lahore, Quetta, Faisalabad, Peshawar and Multan, etc. In next three years, it would have 36 branches and 83 banking centres all over Pakistan, he said.

Bilgrami said that there were 267 Islamic banks in over 75 countries, which managed approximately 202 billion dollars in deposits, 400 billion dollars in investments and over 262 billion dollars in other assets. Another 200 billion dollars to 300 billion dollars are managed by the Islamic windows of international banks.

He explained that the most crucial difference between conventional and Islamic banking was the strict prohibition of interest in letter and spirit.

To ensure this, according to Islamic economic theory, all financial transactions must be asset based. Moreover money could not be charged for money, since money itself had no intrinsic value. Furthermore, Shariah placed great emphasis on risk sharing; in an interest-based transaction the lender's profit is confirmed and no risk is involved on his side, and thus he is prohibited from profiting by it.

"Since interest cannot be charged on loans, Islamic banks make their income through Sharia-complaint transactions inducing sale (Murabahah, Salam, and Istisna), Islamic leasing (Ijarah) and profit and loss sharing techniques (Mudarabah and Musharakah)," he said.

BankIslami is the first bank in Pakistan as well as in the region to deploy biometric ATMs for its customers to ensure better security and service. Biometrics is defined as an automated method of verifying or recognising the identity of a person. BankIslami is providing the biometrics facility to its customers through fingerprint scanning.

BankIslami is sponsored by three groups, ie DCD Group, Dubai Bank and Jahangir Siddiqui and Company Limited. DCD Group has played a pioneering role in setting up of institutions such as the Islamic bank of Britain and European Islamic Investment Bank in the UK aside from partnering with Dallah Al-Baraka Bank in South Africa.

Dubai Bank is one of the upcoming banks in the UAE, owned by Dubai Holdings, the investment arm of Government of Dubai and Emmar Properties, which is the largest real estate company in terms of capitalisation in the region.

Jahangir Siddiqui & Co Ltd is the largest and most diversified financial services group in Pakistan with a track record of innovation and success. It has the distinction of sponsoring the first and largest asset management company, ABAMCO Limited and the first Islamic fund. Recently JS Group has been at the forefront of starting a US $70 million private equity fund in Pakistan.

 

[Owais]

Sindh gives land to Kuwait-based company for refinery


KARACHI (October 03 2006): The Sindh government has allotted 500 acres of land to a Kuwait-based company to install an oil refinery at Port Qasim. The company intends to invest $1.5 billion in refinery sector.

The Sindh government has eased its land allotment policy to encourage foreign investment. Under the new policy, the investors have to file an application with the chief minister with a feasibility of their proposed project. The investors are given a particular time for presentation and then the request will be entertained.

The Sindh government is keen to promote investment in oil refinery and other allied sectors. In this respect, it has allotted 2600 acres to a construction firm to develop industrial area at Dhabeji.

The finance department is working out the price of the land. The land will remain property of the provincial government and the developer will invest his money. Through allotment of industrial plots, the developer and the Sindh government will retrieve their investment.

 

[Neo]

Revenue collection up 23pc in 1st quarter

ISLAMABAD, Oct 2: The Central Board of Revenue (CBR) collected Rs187.4 billion revenue during the July-September period of fiscal year 2006-07 as against Rs152.1 billion the same period last year, indicating an increase of 23.2 per cent.

Official figures released here on Monday showed that the revenue collection had surpassed the target set for the period under review by 5.1 per cent.

It further showed that the collection of direct taxes increased by 37.6 per cent to Rs66.3 billion during the first quarter as compared to Rs48.2 billion collected during the same period last year.

The sales tax collection reached to Rs75.6 billion during the period compared to Rs63 billion the same period last year, showing a growth of 20pc.

The excise duty receipts registered an increase of 34.6 per cent at Rs16.4 billion during July-Sept 2006-07 against Rs12.2 billion the same period last year.

While collection of customs duties rose by 1.2 per cent at Rs29 billion during the period under review over the corresponding period last year.

 

[Neo]

Cement exports up by 53.7pc



LAHORE, Oct 2: The cement demand during the first quarter of the current financial year has grown by 20.99 per cent to 5.414 million tons from 4.474 million tons during the same period last year.

In a statement issued on Monday, the newly elected All Pakistan Cement Manufacturers Association (APCMA) chairman Aizaz Mansoor Sheikh said the cement exports had registered a growth of 53.72 per cent and the domestic demand grew by 17.51 per cent.

During the period under review, the capacity utilisation was 74.49 per cent from an expanded capacity-base made available with the start of new production lines and optimisation of production capability undertaken by several plants.

The APCMA has appreciated the recent decision of the government regarding restoration of duty drawback on exports and waiver of subsidy on import of cement.

 

[Neo]

PM for changing entire tourist culture

ISLAMABAD (updated on: October 03, 2006, 21:26 PST): Prime Minister Shaukat Aziz on Tuesday called for generating new ideas and pursuing an effective marketing strategy to benefit from the rich tourism potential of the country.

Addressing the first-ever convention of tour-operators, District Co-ordination Officers, Nazims, travel agents here at the PM Secretariat, he called for bringing about a change in the entire tourist culture of the country.

"We have to package, manage the image and market it to the world as we have the natural beauty, a rich culture, vibrant heritage and a long history," the prime minister said.

He said the tourist trade was bringing in investment of billions of dollars across the world besides generating extensive economic activity.

However he said the true potential was not being realised in Pakistan owing to a complacent attitude.

"We have to change the entire culture and make it tourist friendly," he told the travel agents and tour operators.

"We have to utilise whatever we have but we need to adopt a positive approach and generate ideas that sell," he added.

The prime minister said tax incentives to the tourism industry were no answer to generating more tourist traffic. Rather he called for making all out efforts by being competitive and by providing quality service to the tourists.

"Pakistan has a tourist friendly ambience, ranging from lofty peaks in north to the vast deserts and the glistening sea in the south," he added.

He said it was his desire to see the federal capital as the regional conference and convention centre, with lots of hotel space and facilities for foreign visitors.

The prime minister mentioned the Gandhara civilisation that was in close proximity to the capital, besides the religious place of worship for Sikhs.

Similarly he said cities like Lahore, Karachi and others can think of marketing their historical places, organising festivals which generate interest in local culture, arts and crafts.

Prime Minister Shaukat Aziz also called for promoting domestic tourism and mentioned the recent rain in Tharparkar which attracted hundreds of tourist from Karachi.

He asked the DCO's and Nazims to promote local tourism by arranging events and activities which can gradually attract people from all over the country and even abroad.

The prime minister also pointed at the local specialities of each area like the 'pala' fish of Hyderabad, the Mughal era building of Lahore, the steam safari to Landikotal - all which can attract local and foreign tourists.

He said the Pakistan International will start new flights to Northern Areas, Gawadar and some special package tours for visits to religious places like Nankana Sahib.

 

[Neo]

WB offers $125 million to promote rural telephony: Awais

ISLAMABAD (updated on: October 03, 2006, 21:37 PST): Ministry of Information Technology will shortly launch a multi-billion-rupees project with the help of World Bank to accelerate growth of telecommunication in remote areas of the country.

Minister for Information Technology, Awais Ahmad Khan Leghari on Tuesday said details for the Rural Telecommunications Access Project were being worked out and the World Bank had agreed to provide $ 125 million financial aid to jumpstart growth of basic telephony in the rural areas.

He made this announcement in a statement following a meeting with a four-member World Bank delegation headed by senior WB representative Ritin Singh, which met him here to discuss modalities of the project and identify areas to receive support within the telecom sector.

Leghari said the amount received from the World Bank would be deposited in the Universal Service Fund (USF) as contribution by the government to bring the rural population into the mainstream of the country's economic development.

"The benefits of such an intervention would be a higher GDP growth, improved governance and poverty alleviation through enhanced economic activities and job creation," he said and added this would also give us the advantage of not only the provision of much-needed funding into the USF to start it up, but World Banks' technical assistance based on their experience of similar initiatives in other developing countries would also be available to us in the roll-out process.

Leghari said the government wanted to invest heavily into the rural telecommunication to bridge the access gap through output-based aid schemes as introduced earlier by many countries in South Asia, Latin America and Africa.

"International experience shows that despite deregulation and competitive private sector participation, universal access to telecom services is unlikely to be achieved without intervention, at least in the initial phase of development," he said.

He said the government would use USF to extend a one-time subsidy or grant for private operators, and the subsidy would be offered through bidding on a competitive basis to keep the cost as low as possible to ensure maximum private investment in achieving universal service goals.

"The fund would also be used to create an atmosphere free of exclusivity rights or technology restrictions to ensure maximum advantages to the target population," he said.

He said rural tele-density in Pakistan stood at a dismal 1 per cent of the population and he was keen to take it to at least 5 per cent by 2010, which obviously required for a massive investment to put in place a proper telecom infrastructure.

"We estimate this cost to be around $ 100 million and the grant being extended by the World Bank would provide us with an ideal platform to extend telecom services to the un-served areas," he said.

Earlier, Leghari told the World Bank delegation Pakistan had made significant progress in telecommunication development in recent years with the overall tele-density touching 18 per cent at the back of around 40 million mobile phone subscribers.

"A healthy competition in the market has resulted in various benefits for the subscribers including very low tariff, reduced cost of bandwidth, better quality and higher efficiency," he said.

He said the benefits of the telecom development had been far-reaching for the economy with a third of the total FDI Pakistan received coming through telecom-related investment, but disparities still existed, especially in the rural areas where tele-density was still teetering at 1 per 100 inhabitants.

"The rural-urban divide is constantly widening as the mobile phone revolution is largely forced in the urban areas while the WLL system is also far from meeting the requirement of the rural areas which make up for 70 per cent of the country's population," he said.

Leghari said the government had identified four key areas, including basic rural telephony, broadband, e-services and content development, to focus on during the roll-out of the Universal Service Fund.

"Our aim is to provide at least 250,000 broadband connections and offer three major e-services within the next 12 to 18 months," he said, pointing out content creation as a key area because without content creation there would be no solid progress in the broadband proliferation which heavily relied on the availability of content in local languages.

The minister said the provision of e-services was a vital pillar of the government policy to take the fruits of IT to the common man and called for addressing the information infrastructure gaps alongside acceleration of rural telecom access, to provide the rural population with greater access to public services.

He said some of the key areas warranting immediate government support included development of a common E-government platform that integrates disparate government ministerial information systems within a centralised data warehouse, accessible through a secure web-enabled enterprise application system.

He also called for scaling up ICT pilot projects and establishing an E-Commerce legislative and regulatory framework which could secure Pakistan's national interest, and international principles of law.

 

[Neo]

Pakistan continuing its economic growth: Prime Minister

ISLAMABAD (October 03 2006): Prime Minister Shaukat Aziz has said Pakistan is continuing its economic growth; development and the structural reform agenda so as to further improve the standard of living of the people.

He was talking to Moeen Qureshi, former caretaker Prime Minister of Pakistan and Chairman Emerging Partnerships, US who called on him at the Prime Minister House on Monday. The Prime Minister highlighted the various reforms initiated in financial services, agriculture, industry, governance, and justice and security fields.

He also apprised Moeen of the priorities of the government in the social sector and the steps taken by it for employment generation, better facilities of health and education.

He said the government had made record high allocation of over Rs 415 billion for the Public Sector Development Programme which covers a host of areas including power generation, better roads, education, infrastructure development, health care, irrigation and construction of water storage. Shaukat said the government is also encouraging public private partnership particularly in port management, electricity generation and telecom sector.

He said that inflation is beginning to show downward trend and The 6-8 percent growth target will be achieved. He said the government continues to encourage the domestic and foreign investment, which is occurring at a record level in manufacturing, agriculture, services sector, tourism, construction, real estate development, IT and Telecom.

Moeen appreciated the economic achievements of the government and the structural reforms introduced during the last seven years. He said the reform agenda of the government coupled with consistency and continuity of the policies have put Pakistan's economy on a sound footing.

 

[Neo]

$500m automation project

Sindh, Malaysian firm in final talks

By Imran Ayub

KARACHI: The Sindh government has entered into final talks with a Malaysian firm for awarding a $500 million contract for the automation of public service institutions in the province, a highly-placed source said on Monday.

He said senior provincial officials visited Malaysia recently, where final phase of talks were held and eventually it was estimated the contract would cost $500 million to the Sindh government.

“In the detailed talks between the Sindh government and the Malaysian firm, implementation of e-government came under discussion,” said the source. “It includes automation of government institutions, which mainly deal with public services.”

He said the Sindh government desired to seek federal government’s financial assistance to execute the project and it could take a few weeks more to finalise the modalities and conditions for the project.

“The provincial IT ministry has moved a summary to get final nod from the provincial cabinet and then it will take up the matter with federal authorities,” added the source. In 2002, the federal government launched e-government programme with an aggressive campaign to put all the public service departments online but plans almost failed to take off in the absence of a comprehensive strategy and design.

However, last year the government constituted National e-Government Council, which announced around a billion-rupee e-government projects. Initially, the federal government picked up six projects for the e-government programme. However, the recent move has extended the scope of the programme to provincial level.

The official said the Sindh government had planned to bring automation in vehicle testing system and registration along with other public service institutions. “The government also designs a strategy to computerise the police record,” he added. “For this purpose, in the first phase the Sindh government is likely to take up 24 police stations across the province to test the impact of automation.”

He said Civil Hospital Karachi was also among other government-run institutions, which was on the authorities’ list for automation. “The projects will not only facilitate citizens but also bring transparency in the government institutions,” said the source citing the government plans.

He said the e-government programme was envisaged to adopt a paperless environment in all the ministries and departments to enhance their performance. “The local software houses and companies don’t have potential to execute anyone of the projects alone,” said the source in response to a query.

The country’s IT industry size touched a total volume of $2 billion during 2005-06 and official estimates suggest it may reach near $3 billion by the end of current financial year. In a recent presentation to Prime Minister Shaukat Aziz, the Pakistan Software Export Board (PSEB) - a federal body set up to promote outsourcing and software exports ñ claimed under the World Trade Organisation (WTO) formula IT services and software exports stood at $1 billion during 2005-06.

“As per estimates, IT export revenue, reported by the State Bank, was $75 million,” said Yusuf Hussain, Managing Director PSEB citing the presentation. “Similarly, our IT export revenue brought into the country was $150 million and global IT export revenues were counted at $600 million while our domestic IT revenues touched $1.4 billion.”

 

[Neo]

Washington, DC
October 2, 2006
China, India and Pakistan: half of world cotton production and two-thirds of world cotton consumption


World cotton production is projected at 25 million tons in 2006/07. China (Mainland), India and Pakistan combined are expected to produce 13 million tons in 2006/07, or over half of world production for the first time in history. World cotton consumption is expected to continue to increase in 2006/07, but at a slower rate than in the last two seasons, to 25.6 million tons. China (Mainland), India and Pakistan combined may consume 16.6 million tons of cotton in 2006/07, or 65% of projected world consumption, up from 50% in 2000/01. Cotton consumption in the rest of the world is projected to remain stable at 9 million tons. World cotton imports are projected at 9.2 million tons in 2006/07, slightly down from the record reached last season.
World cotton ending stocks are projected at 11.6 million tons in 2006/07, down for the second consecutive season.

WORLD COTTON SUPPLY AND DISTRIBUTION .2005/062006/072007/082005/062006/072007/08.Million TonsMillion BalesProduction 24.6625.025.7113.3115118Consumption 24.7925.626.2113.9118120Exports 9.749.29.244.74242Ending Stocks11.9111.611.554.75353Cotlook A Index*.56.15..56.15.* US cents per pound.

 

[Owais]

Pakistan faces cotton shortfall after pest attacks



KARACHI (updated on: October 04, 2006, 18:03 PST): Pakistan, heavily reliant on cotton, expects a smaller crop this year due to bad weather and pest infestation, farmers and government officials said on Wednesday.

Farmers and government officials said the crop could fall to 12 million bales, against a targeted 13.82 million.

"We would have very little choice other than to scale down our earlier estimates of 13.82 million bales to 12 million," said a government official.

Agriculture officials said they had begun assessing the crop size and that they needed at least 10 more days to complete their assessment.

Qadir Bux Baloch, the Agriculture Development Commissioner, said a government-appointed cotton crop assessment committee would come up with its report on the crop size in the second week of October after assessing damage.

"Crops in three (main) cotton producing areas in Punjab are heavily damaged by the leaf curl virus," Baloch told Reuters, referring to the central province that is the main cotton producing region.

He said rains had also damaged at least 20 percent of standing cotton on more than 250,000 acres (101,250 hectares) in southern Sindh province, which produces a quarter of Pakistan's cotton.

Official said floods in the Chenab River, which passes through a number of cotton-producing areas, had also affected the crop in Punjab.

Another official said the long monsoon season had resulted in the shedding of cotton flowers in the Punjab, reducing yield.

"The season started with an unfavourably long monsoon which hampered cotton flower formation," said the official, who asked not to be named.

"And now high temperatures are favouring infestation of pests, so it is pretty sure that we will not have a big crop this year."

The official said the latest pest attacks were likely to cut total output further.

"The damage made by the pest attack is extensive, much higher than previously estimated," he added.

In May, Pakistan expected its cotton crop to increase by more than six percent to 13.82 million bales in the 2006/07 crop year.

Cotton sowing starts in February and ends in June, while the harvest starts from July in Sindh and September in Punjab.

Cotton and textiles account for about two-thirds of the country's exports and a healthy cotton crop is vital to economic growth.

A poor crop could deal a blow to government's hopes of seeing the economy grow around 7 percent in 2006/07 (July-June) against last year's 6.6 percent.

Pakistan expects domestic consumption of 15 million bales in the season that started in July, in line with recent years. Despite being the world's fourth-largest cotton producer, Pakistan annually imports about 1.5-2.0 million bales of high-grade cotton to meet growing demand from local textile mills.

 

[Owais]

Rs 27.46 billion loss to IDBP: Finance unable to take action


ISLAMABAD (October 04 2006): The Finance Ministry has expressed inability to take any action against those responsible for causing Rs 27.46 billion financial loss to the Industrial Development Bank of Pakistan (IDBP).

"Loans were extended by a set of individuals, and monitoring was done by others. It would be quite difficult to arrive at clear-cut conclusion and definitive evidence of individuals' interaction in a court of law," sources quoted Finance Ministry as saying in a report to be discussed by the Cabinet on Wednesday.

The said that different heads of IDBP wrote off loans of Rs 7.772 billion from 1989 to 2004, of which, Rs 5.862 billion was waived from 2000 to 2004 during General Pervez Musharraf's tenure as President and Chief Executive.

Sources said that Rs 1.089 billion was written off in 2000-01, followed by Rs 292.858 million in 2001-02, Rs 1.245 billion in 2002-03, Rs 258.155 million in 2003-04 and Rs 2.976 billion in 2004-05. However, total financial loss had accumulated to Rs 27.46 billion up to June 2006.

Sources said that the Cabinet, while considering Finance Division's summary on "corporatisation and restructuring of IDBP' in its meeting of July 12, 2003, decided that details of persons/agencies responsible for the bank's financial problems along with complete losses sustained by the bank should be placed before the Cabinet.

Sources said that a summary was submitted to Cabinet Division on August 17, 2004 soliciting approval for IDBP (re-organisation and conversion) Bill 2004 together with the State bank's investigation report about losses of IDBP.

The Cabinet Division advised that in view of importance of proposed legislation, two summaries - one relating to the proposed legislation and the other to the SBP report - might be submitted separately, sources added.

Accordingly, a summary for the Cabinet on October 6, 2004 was submitted for approval of the IDBP (re-organisation and conversion) Bill 2004.

The Cabinet in its meeting on October 13, 2004 approved the bill, which was cleared by the Standing Committee of the National Assembly on 2nd August 2005 and referred to the House for passage.

Sources further said that as for the report on the IDBP losses and the persons involved, State Bank of Pakistan, being the regulator of the banking sector, was requested to investigate.

The sources said the government has only forwarded five cases to the National Accountability Bureau (NAB) which includes Plaza Enterprises Limited, whose case is pending before the Sindh High Court.

Hayat Vinyle Limited had offered a plea bargain with the bank after which the bank wrote of Rs 22.279 million loan. As regards Ital Pak Marble Limited, the bank said that its losses could not be determined now and would be finalised after recovery Rs 42.366 million as per the MoU.

Regarding the case of Ital Pak Marble and Pakistan Multicoating Limited, the bank said that due to facilitation provided by NAB, addendum to the MoU was prepared by Mandviwala and Zafar Legal Consultants regarding further payment of Rs 1.128 billion to be received by the bank after incorporating developments that have taken place since the original MoU was signed.

In this regard, after unanimously arriving at consensus amongst the bank and Sultan Lakhani, settlement agreement was signed in the office of NAB Sindh at Karachi on August 9, 2004.

About Delta Type Limited, the bank said that offer made by the borrowers at NAB was not acceptable to the bank being on lower side. As such the case was returned by the NAB. The bank is continuing legal action against the company and its director and guarantors, sources added.

 

[Owais]

Big setback to public-private joint ventures


KARACHI (October 04 2006): Public-private partnership for infrastructure projects has received a hard blow on account of the government's decision to permit non-bank corporations again to plough their pension funds, gratuity schemes and provident funds into National Saving Schemes.

"They have killed the institutional market. How will investors' benchmark 10-15-20 years COIs raise financing for these projects?" questioned an investment banker.

According to an economist, NSS is a guaranteed money loser for the government. He argued, "Every time the interest rate rises, the investor can cash out and then re-enter NSS Schemes again. Secondly, the cash flow is uncertain. "And, thirdly, when interest rates rise, capital losses can be booked on investment in Pakistan Investment Bonds (PIBs). No need to do it for COIs in NSS."

The government had managed to reduce its bank borrowing for budgetary support at the end of the first quarter of FY07. The net increase in bank borrowing in first quarter FY06 was Rs 80 billion. In the corresponding period a year later it was Rs 44 billion.

This reduction was largely due to transfer of Rs 49 billion from State Bank profits to the budget and receipt of Rs 8 billion from Etisalat on account of PTCL sell-off.

The government has once again opened a Pandora's box. All work to restructure CDNS, streamlining its operations and demutualisations were nicely proceeding along. The net inflow in the first two months of the current financial year was said to be Rs 12 billion. It was estimated that due to Behbood Schemes for pensioners the net inflow for the year would be Rs 30 billion. Why then lose the hard won gains since 2002, is perplexing for economic agents.

If the government was indeed worried about the fiscal deficit getting out of hand, it could have allowed a one-off eligibility to institutional investors to renew their investments upon maturity. Historically, experts say, neglect of policy results in economic upheaval and the whole nation has to pay the price. It is better to think through the impact before tinkering, experts opine.

 

[Owais]

UK, Singapore and US raise SCRAs to $108 million


KARACHI (October 04 2006): During most of September, movements in Special Convertible Rupee Accounts (SCRAs) was an affair between UK, Singapore and USA on the one side (ie the build-up side) and Switzerland and Hong Kong on the other (the depletion side).

USA, which had all along been a lead investor in Pakistan's scrips, has been lagging behind this time and appears satisfied to occupy third position. Singapore has been occupying the driving seat until recently when, on September 28, it was overtaken by UK as lead investor.

The trio brought in still more fresh funds between September 29 and October 2, the dates for which latest update was available. However, Switzerland appears to have lost all interest in Pakistan's portfolio investment. Its withdrawals rose to a hefty $20 million on October 2, which included $1.5 million withdrawn during the three intervening days. Hong Kong withdrew another $0.6 million in the first two days of October with total withdrawals reaching $3.7 million on October 2.

Among the leaders, UK's balances rose by $7.7 million to $71.2 million between September 29 and October 2; those of Singapore rose by $4.6 million to $48.7 million; and of USA by $0.6 million to $17 million.

There was no change worth mentioning in the balances of other countries, except Germany, which also withdrew a very small amount of $0.001 million, making the first movement since the beginning of the new financial year.

Indices, reflecting stocks position changed as follows: KSE-100 Index (November 1991=1,000) increased from 10,512 on September 29 to 10,616 on October 2. KSE-30 Index (June 30, 2005=10,000) rose from 13,077 to 13,228; and BRIndex30 (September 16, 2004=5,000) increased from 11,374 to 11,529.

Update on SBP General Index of Share Prices (2000-01=100) and aggregate market capitalisation was not available, which stood at 430 and Rs 2,875 billion, respectively, on September 29. The increase in indices occurred as stocks succeeded in shrugging off week-end hesitancy with investors indulging in speculative buying in half a dozen small banks still ruling at attractively lower levels with merger and acquisition reports rife in the market