Pakistan Economy - News & Updates - Archive

[Owais]

French investors invited to invest in Hyderabad projects

HYDERABAD (October 13 2006): The District Nazim Hyderabad Kanwar Naveed Jamil has said that establishment of five star hotel, industrial expo centre and extension of industrial estate was at the top of the district government agenda to introduce and strengthen new economic & industrial culture in the district for the socio-economic uplifting of the people.

This he observed, while talking with the Commercial Counsellor Embassy of France in Pakistan, Walid Otari, who called on him at Circuit House here on Thursday. Members and office-bearers of Hyderabad Chamber of Commerce & Industries, MPAs Aslam Perwaiz and Naeem Ishtiaq and EDO Revenue Abdul Sattar Jatoo were also present in the meeting.

Talking on the occasion, the District Nazim informed the visiting guest that the district government had already reserved piece of land for the establishment of five star hotel and was in negotiation with different investors to implement the project. He also invited interest of French investors in this project. He said that further land required for the extension of Hyderabad SITE had been got sanctioned, while the matter of expo centre establishment was in process.

The District Nazim said that Hyderabad being situated on the bank of National Highway towards up country and near to seaport Karachi has good industrial potential. He said that availability of raw material due to its fertile land and manpower at low rate was another incentive for the investors, in addition to that full co-ordination and co-operation would be made available by the district government specially to encourage the foreign investment.

Kanwar Nadeem, while inviting French Embassy for holding industrial exhibition of French goods here, asked the French Commercial Counsellor that district government would provide all facilities required for the job.

 

[Owais]

Vietnamese trade team due in November

KARACHI (October 13 2006): The Commercial Counsellor and Head of Vietnam Trade Office, Naguyen Hong, informed the business community that a high-powered trade delegation from Vietnam will visit Pakistan in November this year and sign two memorandums of understanding (MoUs) with the Karachi Chamber of Commerce and Industry (KCCI).

Speaking at a meeting with KCCI President Majyd Aziz, he said the first MoU would be to participate in the My Karachi Exhibition scheduled to be held in June 1-3, 2007 and the second MoU would be an agreement to exchange delegations, ideas, and information, plus initiating a programme where each organisation, would on a reciprocal basis host a team of two representatives consisting of a member of the managing committee and a staff member who would visit one another to learn the best practices adopted in each organisation.

He said the Pakistani pharmaceutical exporters have a very good reputation in Vietnam for their clear-cut policies and business methods.-PR

 

[Owais]

48,688 CBU motorcars imported in fiscal year 2006

ISLAMABAD (October 13 2006): The imported Completely Built-in Units (CBU) motorcars were at 48,688 in 2005-06 against 8,880 in 2004-05, following duties/taxes incentives extended to the auto sector in budget 2005-06. The CBR data analysis on vehicles (2005-06) reveals the value of imports of motorcars in CBU condition has also recorded robust growth of around 226 percent.

Subsequently, the collection of customs duty has also been significantly improved from Rs 4.7 billion in 2004-05 to Rs 12 billion during 2005-06 yielding a substantial growth of Rs 7.3 billion. The collection of duty from CBU motorcars has been exceedingly higher than the annual projection of gain of Rs 1 billion from the measure during 2005-06.

The analysis revealed that the auto sector is the most reliable source of customs duty collection due to tariff peaks and its elasticity. The cars in CBU condition were subjected to customs duty ranging from 50 percent to 100 percent in 2004-05.

 

[Neo]

Friday, October 13, 2006

Pakistan Steel needs full overhaul

ISLAMABAD: The Pakistan Steel (PS) has presented a plan to the government seeking a complete overhaul of the mills, which the management describes as essential for the PS to survive as a viable industrial unit, a senior government official told the Daily Times on Thursday

The presentation was made at a meeting held at the ministry of industries, production and special initiatives early this week. The government has indicated that the management could be allowed to make investment to such an extent that could enable the mills for resale through privatization.

This was for the first time that the PS management, now headed by Major-General Mohammad Javed (retd) presented the overhauling plan after the PS privatization was annulled by the Supreme Court.

Mohammad Javed, who replaced Lt-General Abdul Qayyum (retd) as PS chairman, demanded of the government that fresh investment is necessary to fetch a good price for the industrial unit, which is being operated in the public sector. The ministry of industries has been opposing the complete overhaul of the PS. However, the ministry is supporting the idea of making investment by the government to enable the mills for resale.

The meeting was presided over by Minister for Industries and Production Jahangir Khan Tareen and was attended by Minister for Privatization and Investment Zahid Hamid. Secretary Industries Kamran Rasool and Secretary Privatization Ikramullah and senior officials of the ministries concerned were also present.

The official declined to give the exact amount needed for complete overhaul of the PS. However, it has already been observed that the PS has to undergo a major overhaul if it is to survive as a unit.

A source privy to the meeting said overhauling is important because in the last 25-30 years, Coke-Oven Batteries, Hot Strip Mill and Steel Making Department remained totally ignored because of financial crunch and non-professional approach with which the mill was being run.

If the mill is revamped and partially expanded to 1.5 MT, its expenditure could be between $150-200 million, the meeting was informed. Its expansion to three million tons per year, which is its original economic size, would involve one billion US dollars. The official said there was general consensus at the meeting that the PS should be made a viable industrial unit and this is a must for the resale of the mills at a good price.

In the last bid of privatization, the Privatization Commission and the cabinet committee on privatization were held responsible for lower price fixed for the sale of the mills. The PS management was of the view that the government could not attract good buyer if its condition was not substantially improved.

There is a need that the government should go ahead with the overhaul plan of the mills before the next privatization move is launched.

 

[Neo]

Friday, October 13, 2006

Pakistan starts registration of cattle as Geographical Indication

LAHORE: After a bitter experience at the hands of Indian scientists on registration of Basmati rice as Geographical Indication, Pakistan has initiated the registration process for its cattle (Sahiwal and Cholistani) and buffaloes (Neeli and Ravi) as Geographical Indication.

Babar Yaqoob Fateh Muhammad, Provincial Secretary Livestock, told on Thursday that the government has hired consultants besides allocating funds to initiate the registration process.

“The Indian scientists have started claiming Sahiwal cattle as Indian cattle in some conferences, which our scientists have challenged then and there,” said Babar Yaqoob, adding: “Having strong realisation that Indian is trying to ‘Indianise’ it like the Basmati rice, we have started the registration process of these livestock as Pakistani GI.”

According to him, both the Sahiwal and Cholistani cattle and Neeli and Ravi buffaloes are also available in India but still they are not in pure form there. Similarly, he added, the number of these breeds is also very minimal India.

It may be noted that Pakistan has six indigenous cattle breeds in all four provinces which include Sahiwal and Cholistani (Punjab), Dhani and Bhag Tari (Balochistan), Kohistani (NWFP) and Kundi (Sindh). In buffaloes’ breed, both Neeli and Ravi belong to Punjab.

The livestock is contributing heavily to Pakistan’s economy, as it has a total share of 37 per cent in terms of annual income against 33 per cent from the agriculture sector. Pakistan is also third largest milk producer world over and many multinationals are planning seriously to invest in Pakistan’s livestock sector during next two to three years.

The government of President Musharraf has also given special importance to the livestock sector and budget allocations to this sector has registered a robust growth from merely Rs 50 million (some three years back) to around one and half billion for the current fiscal.

According to some estimates, Pakistan is producing 32 billion litres of milk annually, but 76 per cent of total production is wasted at homes due to unorganised marketing system. The government is investing heavily not only marketing but throughout the livestock chain to capitalise the potential appropriately.

 

[Neo]

Friday, October 13, 2006

Pakistan economy shows vigorous recovery: report

ISLAMABAD: The government that came to power in 1999 has undertaken reforms, which have helped, produce a vigorous economic recovery since 2001.

Economic growth is a flagship indicator for the Pakistan economy illustrating the new dynamism of the unshackled private sector, Union Bank of Switzerland (UBS) Investment Research on Pakistan reported.

The report of UBS Investment research was published recently on “Asian Economic Perspective”, in which Pakistan government’s achievements on the economic front and positive growth in the economy were highlighted.

According to the report, the real economic growth, which ebbed to 2-3 per cent in 2000-01, expanded uninterruptedly to 7.8 per cent in 2004-05.

With fiscal and monetary stabilisation policies, a privatisation plan and benefiting from firm international support the economy has witnessed an upswing not seen since the early 1960s or mid-1970s, the report said.

About sustainability in the economy, it said that in our view maintaining the momentum of the current upswing depends at least in part upon a few key factors: encouraging private savings, raising the investment ratio, maintaining stable single digit inflation and resisting the urge to rollback fiscal reforms in a cyclical dip.

The UBS report observed said that previous administrations have succeeded in generating economic expansions, but they tended to be more limited due to the high government involvement in business and often came unstuck as external shocks or political change brought adverse policy reaction.

The UBS report said that what is different about this time round is that the administration has succeeded in raising the savings investment gap from -5 per cent of GDP in the 1990s to close to 0 per cent.

It added that this has happened alongside a big improvement in the current account and implies an accumulation of savings which, after a while will help lift domestic investment.

As a result the long term average growth rate has likely risen. Correlating this with previous trends is hard due to structural breaks in the series. However on the basis that the economy averaged around 6 per cent growth from the mid-1970s to mid-80s when industry was being nationalized and when the economy was less internationally integrated, then today a more efficient private sector with accumulating savings ought to manage 7-8 per cent after the investment ratio has started to rise with a reasonably stable political backdrop, the report said.

“We would look for investment to be focused into the core comparative advantage areas of light manufacturing, commodities and agriculture production,” the report said. It observed that at a minimum, investment into energy and water utilities would appear to be necessary considering the electricity shortages and water management difficulties in various parts of the country.

Economy, the report said has witnessed upswing not last seen since 1960s or 1970s Savings investment gap has risen driven by external & fiscal improvement 8-7 per cent long term average growth range likely sustainable, but further investment required to ramp up to 7-8 per cent Investment ratio yet to lift.

The UBS report further said that there appear to be 3 broad factors, which impact economic growth: the ratio of investment to GDP, the agricultural sector performance and the inflationary background. Perhaps the most important of these in the longer run is the investment ratio, the report said.

It added that previous economic expansions have been accompanied by a rise in this ratio (1960-65, 1974-76). Likewise slowdowns have also seen a reduction (late 1960s and 1990s). Unusually during the recent 2002-06 economic expansion the ratio has remained relatively flat, below the historical average.

It added that various studies have ascribed the present rebound to more efficient use of economic inputs (or a rise in total factor productivity, TFP).

However if this is so, looking ahead the supply-side bottlenecks developing (especially in energy) should be expected to put a cap on further acceleration in growth without a rise in investment, the report said. It said that a supply-side boon agriculture incomes account for around a quarter of GDP and so it is also a main determinant of GDP.

As a consequence rainfall, and its ability to bring supply side shocks is an ongoing factor in assessing the likely GDP growth outcome.

High rainfall in 1966-67, 1985 and 1995 undeniably boosted incomes in those years and conversely, the droughts, particularly those in the 1990s and 2001 had sharply negative impacts on GDP. Hence it is tempting to conclude, at least in the interim, that the healthy rainfall trends in recent years have enabled the current expansion to blossom so fully.

 

[Neo]

PPL to invest $7.7m for exploration in Indus block

ISLAMABAD: The government on Thursday awarded an exploration licence to Government Holdings (Pvt) Limited (GHPL) and signed petroleum production sharing agreement with GHPL and Pakistan Petroleum Limited (PPL) for eastern offshore Indus-C block, covering an area of 2,494 sq kms.

This block is located in the Arabian Sea, approximately 150 kms off the coast of Karachi. The PPL will invest US$7.7 million during the first three years of the initial term of the licence.

This new production sharing agreement is part of the government’s drive to attract investment into the oil and gas sector and boost Pakistan’s economy by substituting imported oil with indigenous oil and gas.

To meet this objective, the unexplored offshore region is being given special emphasis where an oil and gas discovery can provide major impetus for attracting new investments, significantly affecting exploration landscape of Pakistan.

The PPL has been involved in petroleum exploration and production in Pakistan for over half a century and has made several oil and gas discoveries including the Sui field. It has geological and geophysical knowledge, data and experience in exploration and field development.

The company is the producer of gas from Sui, Mazarani, Kandhkot and Adhi fields. The company is operator of eight exploration licences and seven development and production leases. Besides, it has working interest in eight exploration licences and six development and production leases.

At present, the PPL produces around 770 million cubic feet of gas, 3,870 barrels of oil and 70 metric tons of LPG per day.

The execution ceremony was witnessed by Amanullah Khan Jadoon, Minister for Petroleum and Natural Resources and Mir Muhammad Naseer Mengal, Minister of State for Petroleum and Natural Resources.

The exploration licence and petroleum sharing agreement were signed by Ahmed Waqar, Secretary Petroleum and Natural Resources, Mohammad Naeem Malik, Director General Petroleum Concession, Agha Sher Hamid Zaman, Director GHPL and Syed Munsif Raza, Managing Director PPL.

 

[Neo]

Wireless broadband services for

100 urban centres soon: Awais

ISLAMABAD: Ministry of Information Technology is working on a series of projects to provide wireless broadband services to over 100 major urban centres to lay the groundwork for provision of e-services to the public.

Minister for Information Technology, Awais Ahmad Khan Leghari on Thursday said the government is planning to use resources from the Universal Service Fund to take the wireless broadband internet service to at least 100 towns with up to 0.5 million population as a way to increase awareness about using IT as a tool to improve socio-economic conditions.

He was addressing a launching ceremony of ‘World Ahead Programme’ in Pakistan by Intel Corporation with the objective to accelerating access to uncompromised technology for all people in Pakistan. The launch of the Intel World Ahead in Pakistan reflects the collaboration between Intel Pakistan Corporation, Wateen Telecom and Ministry of IT.

He welcomed Intel’s initiative and hoped other companies would also help in the government efforts to accelerate access to technology and improve opportunities for education, commerce, healthcare and communication for all Pakistanis.

The minister expressed the hope the Intel’s World Ahead Program would provide a foundation for technology usage and ownership besides extending broadband internet access and preparing students for success in today’s knowledge-based economy.

Leghari said e-services and telemedicine were some of the key facilities which could be provided to people at tele-centres. He said Pakistan was emerging on the radar screen of IT global market as there was a huge amount of good stuff happening in the It sector in Pakistan.

The minister said Pakistan was an IT-savy country and was increasingly being recognised as a strategic location for big companies to expand their operations.

On the occasion, Intel Corporation Vice President John Davies said under the programme, Intel would establish six tele-centres at Attock, Multan, DG Khan, Sukkur and Gawadar to provide low-cost connectivity for voice and data, ICT training and basic telemedicine. The project would help provide an easy access to e-mail for job-hunting; gathering information about farming weather and the pricing of crops. “These tele-centers will be a key step in bridging the digital divide and making technology more easily accessible to citizens in Pakistan,” said Mr Davies.

He said his company had a strong history of collaboration with the Government of Pakistan to bring technology close to people’s lives. “The Intel World Ahead program does more than just provide affordable PCs,” he said, calling it “a holistic programme to help build everything from the right systems tailored to local needs, and critical connectivity, to sustainable local capabilities through quality education that makes a meaningful difference in people’s lives.” Chief Executive Officer (CEO), Wateen Telecom Tariq Malik said, “We are proud to work with Intel and the Federal Ministry of Information Technology and Telecommunications to bring the first ever WiMAX broadband deployment to Pakistan.

We also expect to make available cutting-edge wireless broadband connectivity in selected urban and rural areas,” he added.

Earlier in the day, Leghari held a meeting with a five-member Intel Corporation delegation led by John Davies.

Awais said his ministry was planning to use the USF aggressively to increase teledensity and broadband penetration by setting up more tele-centers which would also become the hub for provision of all key public services besides being repositories of knowledge and information for the local people.

He said the USF would become operational in about a month and the World Bank had also agreed to provide Pakistan a sum of $125 million to fund any project to increase universal access in the country. He said it were not just the urban areas starving for e-services but the rural areas were also eagerly looking for the delivery of such services.

Awais said the provision of about 20 public services electronically would involve massive investment and the government would like to outsource the provision and subsequent handling of these services to the private sector to add value to the local industry.

The minister said his ministry would also invest heavily into the content development in local languages and efforts would be made to use Urdu as a medium of distribution of the public services.

He said the computer industry in Pakistan was going from strength to strength and though the imposition of GST had been a stumbling block, the ministry was doing all it could to ensure there was no discouragement to computer manufacturing and user proliferation.

He conceded there was a need to introduce low-cost personal computers to the literate population, especially students and government employees, and his ministry would consider provide incentives for any such initiative.

He said Pakistan being a country of 150 million people, including a growing middle class endowed with better literacy, could be an ideal place for investment for any international company.

 

[Neo]

Friday October 13, 2006

Pakistan's NBP hopes to open Indian branch soon

ISLAMABAD, Oct 13 (Reuters) - National Bank of Pakistan (NBP) , the country's largest bank, hopes to set up its first branch in India next year, the bank's president said on Friday. "We submitted an application to the Reserve Bank of India a few months back, and have since been in continuous correspondence with them," Syed Ali Raza told Reuters.
"These things take time. But all going well, we hope to open up a branch there by the middle of next year," he said.

State-run NBP has a market capitalisation of about $3.15 billion. In the year to December 2005, it had a net profit of 12.71 billion rupees ($209.6 million).

Raza said it had not been decided where the bank would open the branch, but said preference would be in the capital, New Delhi.

"It depends if they give us a choice. Most probably, it would either be New Delhi or Bombay," he said.

"But our preference would certainly be New Delhi."

Last year, India and Pakistan agreed to allow banks to open branches in each other's countries after a gap of four decades.

The move came amid a hesitant peace process between the South Asian neighbours that included talks on the disputed Himalayan region of Kashmir, over which they have fought two of their three wars since independence from Britain in 1947.

No Indian banks have yet opened branches in Pakistan.

Two Indian banks operated four branches in Pakistan and one Pakistani bank operated a sole branch in India from independence until the two countries fought their second war over Kashmir in 1965. ($1=60.62 Pakistani rupees)

 

[Owais]

Rs 19.5 billion package for Balochistan unveiled


QUETTA (October 14 2006): Prime Minister Shaukat Aziz on Friday announced Rs 19.5 billion development package for Balochistan that includes Rs 2.5 billion special package for Dera Bugti and Kohlu districts. This package is in addition to Rs 31 billion being released to the province during the current fiscal year for mega projects, he said.

Addressing a crowded press conference here at the Governor house, he said special emphasis has been placed for socio-economic development of the province and improving the living standard.

Flanked by Balochistan governor Awais Ahmad Ghani and chief minister Jam Muhammad Yusuf, he unveiled a new "Vision for Balochistan," devised in consultation with the provincial government.

The vision provides the policy guidelines and actions for a developed and prosperous Balochistan, creating employment opportunities, ensuring speedy development and promoting investment-friendly atmosphere.

The Prime Minister said the development package (the Incremental Financial Support 2006-07) includes additional Rs 6.3 billion to be provided to the province under the NFC award, Rs 2 billion under gas development surcharge, Rs 2.1 billion deferment of federal government's loan, Rs 2.9 billion special development programme for all districts of the province for micro-level development.

Another Rs 2.5 billion for Kohlu and Dera Bugti districts, Rs 1.7 billion for construction of Labour Colony in Sui and Rs one billion each for Gwadar Development Authority and Gwadar International Airport are also included in the package.

He said currently 138 projects of the federal government are in progress in Balochistan at a total cost of Rs 164 billion. He said these projects have provided about 70,000 jobs to local youths of the province.

The Prime Minister also announced to provide 200 bulldozers to Balochistan on emergency basis and said tenders for import of the same would soon be invited. Referring to unemployment in Balochistan, the Prime Minister said 32,124 jobs would be given to the people of Balochistan.

"5000 jobs from grade-1 to 16 have been allocated for Balochistan in the federal departments while 6000 jobs would be provided to local youths under the newly increased job quota of the province from 3.5 percent to 5 percent," he elaborated.

"11000 jobs would be provided to Baloch people under the ministry of food, agriculture and livestock," he added. Prime Minister Shaukat Aziz said 11,000 jobs had already been allocated for Balochistan under the ministry of food and agriculture's programme in which 500 more vacancies would also be created this year. Some 160 vacancies at POF, Wah and Aeronautical Complex, Kamra, have also been allocated for Balochistan youth, he said.

The Prime Minister said 7,300 jobs would be provided to Baloch people in Pakistan army while 365 vacancies at Sheikh Zaid hospital, Quetta would also be filled by the local youth, he said.

"Advertisements for these jobs would be published in local press while the recruitment will also be made in Balochistan itself for which teams will be deputed in the province," he said.

"We will also launch an internship scheme in government departments all over the country under which youth would be given jobs in various departments at a monthly allowance of Rs10,000. It will also create job opportunities for Baloch people," the Prime Minister said.

The Prime Minister also referred to the Rozgar scheme recently launched by President General Pervez Musharraf and said the youth of Balochistan can also benefit from this scheme under which the National Bank of Pakistan will provide soft loans.

He further said the admission quota and scholarships for Balochistan students in various colleges and universities of the country have also been increased. The Prime Minister expressed satisfaction over the law and order situation in Balochistan and said the situation is now improving in the province.

Replying to a question, he said the government is ready to talk to every body for broad consensus on national issues. The Prime Minister, however, vowed no compromise would be made on stability, sovereignty and integrity of Pakistan.

Replying to another question, Shaukat Aziz said a Senate committee under the chairmanship of Wasim Sajjad is working on the provincial autonomy and the matter would be taken forward on the basis of its recommendations.

About the permanent solution of the financial crisis of Balochistan, the Prime Minister stressed the need for creating economic activities in the province through various sources, but said investment and better law and order situation are prerequisites which must be attained.

He said Balochistan has great potential in mineral and oil and gas sectors. Two big copper companies of the world from Canada and Chili are investing millions of dollars in the Recodik copper and gold project that will generate increased employment opportunities, he said.

 

[Owais]

Pakistan becomes attractive country for investors: Musharraf


ISLAMABAD (October 14 2006): President General Pervez Musharraf has reiterated that Pakistan has become attractive country for investors owing to continuity of policies and adoption of reform agenda by the government.

He was talking to chief executive PTCL Mohammad Abdullah Ali Bamakharama who called on the President in President Camp Office, Rawalpindi on Friday. Aiwan-e-Sadr sources told Online that President observed that the structural reforms introduced in the past seven years have enhanced the volume of economy twofold. Revenue receipts have surged by Rs 400 billion.

He went on to say the per capita income has increased and poverty has been reduced. "We are sustaining continuity of our policies and we will continue to pursue these policies in future, he added.

Pakistan has become attractive country for investment due to incentives and concessions announced by the government for investors. Flow of foreign investment soared beyond 3 billion dollars last year and it would witness further rise this year.

Citing particularly to development in IT and Telecom sectors, he said revolution has come in these areas. The number of mobile phone users has crossed the mark of 41.5 million. The performance of PTCL is improving following its privatisation, President underlined.

President underscored the need for further cementing the bilateral ties between Pakistan and UAE in all spheres of life. PTCL chief lauded the prudent policies including visa policy being followed by the government. He thanked the President for the co-operation extended by government of Pakistan vowing he would transform PTCL into a company capable of providing services of international standard. Maximum facilities would be provided to Pakistani subscribers, he assured.

 

[Owais]

Oil discovered in Hyderabad

KARACHI (October 14 2006): The Oil and Gas Development Company Limited has discovered oil in its exploratory well at Pasakhi North East, located in District Hyderabad, Sindh. An estimated 1800 barrel per day oil is expected from the exploratory well No 1 in Pasakhi D&PL in Lower Guru Formation.

The company's statement sent to Karachi Stock Exchange here on Friday says that the Pasakhi North East Well No 1 was spudded on March 5 this year and was drilled down to the depth of 4486 metres (MD)/4150 metres (TVD). The well has been plugged at 3530 metres and the lower Guru formation has been tested.

The post-completion results of the well are tabulated as N/T combination 12-B with gross quantity of 2000 barrel per day (BPD), while the oil quantity is estimated at 1800 barrel oil per day (BOPD), with water quantity of 200 barrel water per day (BWPD) at API 41.20 degree. The company would convey further information with respect to reserves, addition and sustainable production potential to all concerned as it becomes available.

 

[Owais]

R&D support authority: Commerce loses battle with textile ministry

ISLAMABAD (October 14 2006): The Commerce Ministry has lost the legal battle with Textile Ministry over 'right to administer Research and Development (R&D) support to textile sector'.

Sources told Business Recorder that the two ministries were having a legal bout over R&D controversy, but the Law Ministry stamped out Commerce Ministry saying that since the subject of R&D support had been allocated to Ministry of Textile Industry, the administration of this subject be transferred to it.

"Draft order, proposed to be issued by Textile Ministry, is perfectly legal and does not suffer from any jurisdictional infirmity," sources quoted Law Ministry as saying.

However, Commerce Ministry has challenged the observation of Law Ministry by sending the case to Cabinet Division which, one official said, was the right forum to decide such disputes. Giving background, sources said that Commerce Ministry, which is uneasy since the creation of Textile Ministry, had approached Law Ministry, claiming that the subject of R&D support in textile sector belonged to Commerce Division.

The stance of Commerce Ministry was that imports and exports across customs frontiers are a subject allocated to it under the Rules of Business, 1973 and it is competent to issue statutory rules and orders (SRO) involving imports and exports invoking its powers under section 3 of Imports and Exports (Control) Act 1950. The ministry claimed that the Act has not assigned to the Ministry of Textile Industry.

The Law Ministry said that the subject R&D support to textile sector is aimed at facilitating and supporting the textile sector. It seems pertinent to point out that the Ministry of Textile Industry came into existence on May 9, 2005, pursuant to the notification S.R.O. 430(1) 2005, and subjects related to textile industry were allocated to it, sources quoted the Law Ministry as saying.

It further said that the subjects allocated to the Textile Industry Division are enumerated at item 29A reads as follows: "Training, skill development, research for quality improvement and productivity enhancement throughout the production/valuation change".

In view of these provisions, it transpires that R&D support to textile sector is the administrative concern of the Textile Ministry, the sources quoted Azam Warraich, Additional Secretary Law as saying. "No doubt, administration of Imports and Exports (Control) Act, 1950 has not been assigned to the Textile Ministry but the subject of R&D support to textile sector has been allocated to it," Law Ministry added.

However, Law Ministry has suggested that as the issue raised by the Commerce Ministry basically relates to the interpretation of entry 7 of item 29 A of the schedule II to the Rules of Business, 1973, the Commerce Ministry, if it so liked, may seek interpretation of the Cabinet Division.

"If there still remains any legal issue to be resolved we will be glad to render necessary assistance to the Commerce Ministry as and when desired," Additional Secretary, Law said. Sources said that Commerce Ministry has now taken up the issue with the Cabinet Division.

 

[Owais]

World Bank against gas subsidy for fertiliser industry

ISLAMABAD (October 14 2006): The World Bank has demanded that the government should put an end to its policy of heavily subsidising the fertiliser industry for gas, saying that it was the basic reason of distortion in the pricing mechanism and was hurting other categories' interests.

Sources said the World Bank conveyed its concern on the issue when its power sector mission held a meeting with the officials of Petroleum Ministry some time back.

The bank said that fertiliser industry was enjoying subsidy in gas rates at the cost of other consumers, and continuation of the mechanism would keep on putting the other categories at disadvantage.

The bank is against cross-subsidy mechanism-based gas pricing mechanism and wants that Islamabad should charge all categories at actual rates to remove distortion in the system.

The World Bank's missions and Islamabad office have been raising the issue regularly with the officials during meetings and want early end to it.

It also expressed serious concern over subsidising general consumers at the cost of other categories.

The bank said it understands that a number of new fertiliser plants were being set up with gas supplied for use as feedstock at heavily subsidised prices. There are many other sectors which may have higher utility for use of gas (such as power sector, or even residential consumers if they are charged appropriately in relation to competing fuels). It proposed that the government should review the fundamental issue of administrative allocation of gas to different consumer categories, ascertain the relative utility of gas use in different end-uses, and establish the principle of charging tariffs which cover full cost of supply.

The government is subsidising gas to fertiliser industry to promote investment in this sector and help it produce more fertilisers to meet agriculture sector's demand. Despite these incentives, local fertiliser production is short of demand.

Pakistan is facing huge gap in fertilisers' demand and supply and relies heavily on imports to meet the demand of the farmers for all seasons.

 

[Owais]

Hutchison plans to invest in Gwadar port project

ISLAMABAD (October 14 2006): Hutchison Port Holding plans to increase its investment in Pakistan, possibly in the Gwader seaport project which, the group's chief executive, J E Meredith, said has the potential to become regional hub for trade.

He said that Pakistan is in his group's regional focus because of its geo-strategic location and investment-friendly polices. Hutchison Port Holding, which operates in 44 countries around the world and is already working in Pakistan, has plans to invest more in the ports sector, possibly by way of joint venture on public-private partnership basis, he said.

He expressed these views in his meeting with Prime Minister Shaukat Aziz here at the Prime Minister House on Friday. Also present at the meeting was Ports and Shipping Minister Babar Khan Ghouri.

Prime Minister Shaukat Aziz said the investment regime of the government, incentives, and the level playing field provided to investors, reduced the cost of doing business, openness of policies and transparency in transactions was attracting higher investments and Pakistan is geared to become a regional hub for trade and manufacturing.

He said that Pakistan, being a country of 160 million people with a huge market, offers attractive investment opportunities, particularly in the areas of power, energy, railways, IT & telecom, ports and shipping, construction and real estate sectors.

The reform agenda of the government is based on the philosophy of privatisation, deregulation and liberalisation, and transparency is the hallmark of all government transactions, he said, and added that the government was encouraging investments on public-private partnership basis.

The Prime Minister said the size of the economy had doubled during last seven years. Last year, the GDP growth was 6.8 percent. Per capita income grew at an average rate of 13.9 percent per annum during last four years, rising from $582 in 2003 to $847 in 2006. Poverty is declining and 15 million people have been brought out of poverty net in last five years.

The PM said that Pakistan was fast becoming a regional hub of IT, telecom and media business and a large number of companies are shifting their businesses to Islamabad as doing business is more feasible in Pakistan.

The Prime Minister said that as a result of the fast growth and investments being made by the private sector, there is a skills gap and the government has initiated many programmes for capacity building of the technical manpower.