Pakistan Economy - News & Updates - Archive

[Neo]

Adopting latest rice planting systems

By Dr Sardar Riaz A. Khan

RICE an important food crop and one of the main export items accounts for 6.1 per cent of the value-added in agriculture and 1.3 per cent to the GDP. The country in respect to area under rice (paddy) ranks 10th in the world and 14th for yield per ha. The yield gap and world ranking suggests poor rice production system which needs immediate attention of the policy makers.

Rice is one of the highest water requirement crops depending on early and late maturing varieties. Course varieties are early maturing while fine basmati varieties are late maturing. It may be pointed out that of the total area, 62 per cent is under basmati, 27 per cent under Irri course varieties, and 11 per cent under others.

About 96 per cent basmati rice is grown in the Punjab as environment over there is suitable in maintaining the quality and aroma of basmati rice. Although, its yield is much lower than Irri but the demand is high in the national and international markets. Most of the farmers prefer to grow basmati rice despite low yield, high production cost and intense water requirement.

One kilogram rice is produced with about 25,000 litres of water while in China and India five and two kg of rice is produced respectively with the same quantity of water. The cost of rice planting and irrigation efficiency could be improved by following improved planting system.

The traditional rice planting system comprises puddling method that requires 10 to 20cm of standing water throughout its growing season resulting in higher water use than actually required. The problem of labour and expenditure has been aggravated due to the industrialization and urbanization. Lower plant population is also one of the main constraints in obtaining high yield under conventional planting.

However, a number of planting systems such as parachute rice transplanting technique, the SRI-method, the Chinese technologies, planting rice under plastic film cover, double cropping, hybrid planting, the Chinese rice transplanter, and directing seeding are other alternate systems which reduce cultivation cost, labour and water needs of the crop.

The Directorate of Agriculture, On Farm Water Management, Punjab in collaboration with the Pakistan Agricultural Research Council introduced the Chinese Parachute Rice transplanting technology in 2000 which takes 20-25 days to attain the seedling height of about 20cm as against 30-40 days. Plastic trays with 1.25cm deep plugs are used for raising the nursery.

About 2-3 healthy seeds are put in each plug of the tray followed by covering with sieved soil. A solo spray machine is used for throwing seedlings in such a way that proper quantity of soil surrounds the roots of each seedling in the form of a ball. Thus, parachute technology not only saves land and labour but also promotes early tillering.

The Directorate in collaboration with the University of Agriculture Faisalabad initiated the SRI technology. Initially farmers were not convinced but after witnessing the superiority of standing crop their confidence grew significantly. This technology increases production and raises the productivity of land, labour, water and capital.

Plants grown in close contact with weeds have to compete with weeds for nutrients, water and sunlight. In this technique seedlings are spaced by maintaining the plant to plant distance 20, 25, 30, and 40cm preferably in square pattern giving more access to sunlight and air above the ground.

China produces double cropping of rice using short duration and high yielding varieties. Pakistan should also study economic potentials of taking two crops of rice in regions with longer growing season. China is also growing high yielding and environment-resistant hybrid rice and has introduced five such varieties in Sindh. Minfal should collect information about its performance and study the potential of their cultivation in other provinces, as well.

Three technical reforms have taken place in China which are popularisation of dwarf varieties, reforming the cropping system by planting double cropping of rice and popularisation of hybrid which increases the average yield from 1,500kg per ha in 1950s to nearly 4,000kg per ha now.

China grows rice seedlings under plastic film covers which helps sowing and transplanting of seedlings to evade the attack of cold waves and low temperature in early spring in colder regions. Pakistan should also study the potential of this technology in Azad Kashmir, the NWFP, the Northern areas and parts of Balochistan having cold waves and low temperatures in spring.

The Chinese trasnsplanter helps in transplanting seedlings mechanically on large area in short time thus saving the cost of labour, besides planting the crop earlier providing it longer growing period. Pakistan should take into account its potentials.

China uses Azolla and the Indian Punjab Dhaincha as green manure crops which improve organic matter in the soil and physical conditions. It not only increases the yield of rice but of the following wheat crop as well. Rice is transplanted immediately after burying green manure crops to avoid delay in sowing.

The decreasing water resources and increasing labour cost may force farmers to adopt alternate ways. Direct seeding of germinated or ungerminated seeds is one of the options. It is getting popular because of economic benefits.

Although transplanting gives more yield than direct seeding, comparable yields with transplanting method can be achieved if direct seeded crop is properly managed. Seed priming technology is being used to increase the yield of direct seeded crop.

Scientists at the University of Agriculture, Faisalabad have established that osmohardening with calcium chloride in fine rice and osmohardening with potassium chloride in course rice which are more effective in priming seed.

The Directorate of On-Farm Water Management, Punjab has adopted conservation approach rather than conventional by developing zero tillage technology, furrow–bed planting, parachute and now KRL-rice transplanting techniques. It should also study the potential of various rice planting techniques as stated earlier. Besides other advantages these techniques may also help in saving water.

 

[Neo]

Kuwait firm targets prime land in Lahore
BY MUZAFFAR RIZVI

16 October 2006

DUBAI — A Kuwaiti firm has submitted Expression of Interest to acquire prime land in Lahore to build and operate a high-rise state-of-the-art five star hotel in provincial capital of Punjab, Pakistan.

"Noor Financial Investment Company of Kuwait will face prominent local business and hotel groups in the bidding competition, which is due in near future," a senior official of Pakistan's Privatisation Commission told Khaleej Times yesterday. "The Privatisation Commission is holding a pre-bid meeting today with the potential bidders who are keen to own and run a five star hotel on Shahrah-e-Quaid-e-Azam, Lahore," he said.

"The prime land is presently titled as "Services International Hotel (SIH) with an area of 15 Kanals and 4 Marlas," he said adding that the pre-bid meeting is being held to create better understanding of the process and to respond to the queries of the interested parties.

The commission had invited Expression of Interest (EOIs) in March 2006 and received nine EOIs from interested parties including Noor Financial Investment Company of Kuwait.

Other parties submitting EOIs include Associated Group (Lahore), Bahria Town (Pvt) Ltd (Rawalpindi), Hashwani Hotels Ltd, Marwat Enterprises (Pvt) Ltd (Lahore), Regent Plaza (Karachi), SA Builders (Lahore), Tri Star Group (Islamabad) and Consortium of Sapphire Textile Mills Limited (Lahore).

The available clear title of the land is in the name of Punjab Cooperatives Board for Liquidation (PCBL) to operate a hotel.

'The bidders for the land shall undertake to commence construction and operate a high-rise state- of- the- art five star hotel in an agreed time frame," the official concluded.

 

[Neo]

Monday, October 16, 2006

Pakistan plans to increase oil reserves

ISLAMABAD: Pakistan has decided to increase its strategic oil reserves from 21 to 60 days of consumption to ward off security, commercial and economic concerns in case of an unexpected supply disruption.

Official sources said the government had not yet decided how it would increase strategic stocks of crude oil and petroleum products.

A number of issues emerged during initial discussions among stakeholders on the subject. The discussed issues such as imposing a tax to generate funds for the storage capacity and build-up of stocks, operations of these stocks and whether the stocks should be maintained by oil companies or by the government or by a new strategic stocks entity.

As a result of these issues, the government has sought the World Bank’s assistance to engage a professional consultant for a study on the subject, and to analyse the cost-benefit ratio of raising the stock level.

Sources said the objective of the study was to develop a framework for the development of strategic crude oil and petroleum products stocks, in accordance with official security concerns and international best practices. An official source said the bank had prepared terms of reference for the study. The source said that the total storage capacity of all installations and depots in the country amounted to only 21 days of consumption, which would be insufficient during a supply crisis. Increased stocks would be available for use both in case of price and supply interventions, and difficult situations.

 

[Neo]

Monday, October 16, 2006

Pakistan prone to calamities: World Bank

ISLAMABAD: The World Bank has put Pakistan on its list of countries vulnerable to natural hazards with a high rate of mortality and economic losses.

The bank’s ‘Global Hotspots Study’ identified 86 countries vulnerable to natural hazards, and pointed out that 30 percent of Pakistan’s population or GDP in various areas was at risk from two or more hazards.

According to the study, 9 percent of the total area with 40.1 percent of the population is in the risk zone, while the percentage of GDP at risk has been calculated at 41.6 percent.

For the first time, the study provided a scientific basis for benchmarking and reducing the risk of economic losses.

A recent evaluation by the WB’s Independent Evaluation Group (IEG) said that natural hazard risks were highly concentrated, therefore special attention needed to be paid to planning ahead of disasters and reducing long-term vulnerability in countries at the highest risk.

The study recommended that disaster mitigation be made an integral part of strategic planning processes in such countries. The bank is teaming up with the International Strategy for Disaster Reduction (ISDR), and has just launched the Global Facility for Disaster Reduction and Recovery to reduce the impact of natural calamities.

After consulting various groups, the WB Board approved the global facility on the basis of three guiding principles; the new United Nations ISDR system would provide a coherent and coordinated approach to all global stakeholders for disaster reduction and recovery, ISDR processes, particularly joint programmes, would strengthen the global sharing of advocacy knowledge and partnerships, and the focus of the facility would be on capacity building to make the Millennium Development Goals disaster-proof.

The facility provides expertise and technical assistance to ‘low and middle-income countries’ to mainstream disaster risk reduction in strategic planning.

The Department for International Development of the UK has already allocated $8 million to this purpose, and several donors ensured additional support to the global facility. The new WB initiative also aims at supporting the implementation of the Hyogo Framework for Action, a global action plan adopted by 168 governments last year that includes guiding principles, priorities for action and practical steps to make the world safer from natural hazards.

 

[Neo]

Govt pursuing extensive programme to meet energy needs: Musharraf

RAWALPINDI: October 17, 2006: President Pervez Musharraf on Monday said government was pursuing an extensive programme to meet country's growing energy needs to sustain high economic growth and fast-paced industrialisation.

He made these remarks at a meeting also attended by Prime Minister Shaukat Aziz, as part of periodic review of the power sector.

Musharraf said the rapid economic growth and industrialisation has increased energy demand manifold and the government had made short, medium and long term plan to meet the future requirements. He underlined the need for tapping all sources of energy in this regard.

The President referred to various projects to generate energy through hydel, gas, coal and alternative sources to meet rising industrial demand that in turn will help reduce poverty through more job creation.

The optimum utilisation of energy resources is also important to achieve the goal of supplying electricity all over the country , he added.

Musharraf underscored the need of focussed efforts to plug gap between policy formulation and its implementation through regular review of demand and supply.

Speaking on the occasion, PM said that the government is also encouraging private sector investment in the energy sector in the wake of rising energy demand.

The premier said the government would explore all possible sources of energy to increase power generation in order to maintain the momentum of economic growth.

The government, he added, has formulated a clear policy, streamlined the procedures and reduced approval time to remove bottlenecks hindering the participation by the private sector.

 

[Owais]

Plugging power shortfall: Musharraf approves three-pronged strategy

ISLAMABAD (October 17 2006): President General Pervez Musharraf on Monday expressed dissatisfaction over Wapda and KESC power theft and line losses, and directed their management to improve performance in this area to make sure that maximum electricity goes for productive use. The President approved a three-pronged strategy for plugging the gap in power demand and supply before next summer.

It comprises sharp reduction in line and other losses, arrangements for more power generation on fast-track basis, and a prudent management to minimise load on system to avoid any failure or major fault in the system.

Sources said that the President was seriously concerned over the current losses level and wanted quick improvement from Wapda and KESC in this area. He directed the top management, present in the meeting, that they should take all possible measures to bring power theft and other losses of power to an acceptable level.

High losses rates of Wapda and KESC have also consistently been questioned by international donors, in particular the World Bank. But both utilities have yet to reach an acceptable level. The World Bank and other donors take 20 percent losses for electricity as acceptable level. Wapda's losses are comparatively less than KESC but still these are much higher than the acceptable level.

The meeting, that lasted for four hours, was attended by Prime Minister Shaukat Aziz, Minister for Water and Power Liaqat Ali Jatoi, Planning Commission chief Dr Akram Shaikh, Wapda Chairman Tariq Hameed, and KESC chief and senior officials of the concerned ministries and other departments.

The President also wanted a short-term solution to power shortage. He directed Wapda and KESC to implement short term as well as long term policy to overcome power shortage problem. He said that all means, including alternative sources of power generation, should be utilised, in an effective manner, to produce more power before next summer season when its use would go up considerably. Jatoi in his presentation told the meeting that Wapda and KESC have been directed to come up with an acceptable solution to power shortage that was posing serious threat to all sectors which substantially contribute to speed up the economic growth of the country.

 

[Owais]

JP Morgan plans to reopen equity business in Pakistan

ISLAMABAD (October 17 2006): J.P. Morgan is planning to reopen its equity business in Pakistan, the first foreign brokerage to return since they abandoned the South Asian nation in the early 2000s, sources familiar with the development said. The number 3 US bank shut its Pakistan equity brokerage arm five years ago as part of a consolidation plan.

"J.P. Morgan will be opening an equity platform in Pakistan along with equity and economic research," said a market source with knowledge of the development. "A decision in this regard has been taken, and the bank will start operations hopefully in January," said the source, who declined to be identified.

J.P. Morgan closed its equity broking business in Pakistan in 2001 saying at the time it did "not have sufficient scale in equity broking to maintain a sound business franchise". It continued its position in investment banking.

Pakistan's financial market has seen revitalised foreign interest in recent months. Last month, Asia-focused Standard Chartered completed the 487 million dollars purchase of a 95.37 percent stake in Union Bank Ltd, the biggest buy yet by a foreign bank in Pakistan.

This month, Dutch bank ABN Amro started a due diligence review of mid-sized Pakistani lender Prime Bank. According to bankers, Britain's Barclays Plc, Singapore's Temasek Holdings and HSBC are also exploring possibilities.

Another source familiar with J.P. Morgan's plans said the US bank would set up sales and research operations. "It will be the biggest international bank presence in the equity market in Pakistan," he said.

Analysts said J.P. Morgan's decision was testimony to the rising Pakistan risk appetite of foreign institutional investors. They said rising foreign portfolio investment in Pakistan in recent years, and the recent success of MCB Bank's global depository receipts (GDR) issue, also showed that foreign interest in Pakistan was rising.

In the fiscal year ending on June 30, foreign portfolio investment to Pakistan stood at 351.5 million dollars, compared with a net outflow of 27.7 million dollars in 2003-04. MCB Bank, Pakistan's second-largest listed bank, raised 150 million dollars last week by issuing GDRs in London.

A senior government official said the return of J.P. Morgan to Pakistan would be a significant move, and added that more foreign brokerage houses were likely to follow.

 

[Owais]

Chinese investors: Elahi announces provision of 500 acres of land


LAHORE (October 17 2006): Punjab Chief Minister Chaudhry Pervaiz Elahi has announced provision of five hundred acres of land for Chinese investors in different industrial estates of the province. He made this announcement at a reception hosted by Minister for Science, Technology, Culture, Information and Public Affairs of Jiangsu province, Sun Zhijun, at Nanjing on Monday.

Sun Zhijun is also a member of the Standing Committee on Jiangsu of Communist Party of China. A large number of the Chinese investors, members of the Chief Minister's delegation besides the ambassador of Pakistan in China, Salman Bashir were also present on the occasion.

The Chief Minister said that the Chinese entrepreneurs who would invest 25 million dollars in the industrial estates in Punjab, would be provided with this land free of cost while the others with developed industrial plots at the original cost. He said that such plots have already been allocated for Chinese investors in the industrial estate of Faisalabad.

He said that the industrial progress of China was a model for the other countries and Pakistan also wanted to set its future course of development on these lines.

He stressed the need for better co-ordination between the chambers of commerce and industry of China and Pakistan and said that Punjab government wants to exchange teachers and students with China in technical education sector.

 

[Owais]

Over 50 percent of global FDI goes to rich nations: Pakistan got 0.24 percent in 2005

ISLAMABAD (October 17 2006): More than half of global foreign direct investment (FDI) goes to the developed countries due to their high profitability rates, a United Nations report says.

Titled as 'World Investment Report 2006, FDI from Developing and Transition Economies: Implications for Development', the report highlights how sharply the inflows to developed countries have increased over the past few years.

According to the report launched here on Monday, almost 90 percent of FDI inflows to developed countries originated in other developed countries--a strong indication of global wealth being concentrated in few hands!

In 2005 alone, the report said, the inflows of the foreign direct investment to the developed nations had jumped 37 percent, to $542 billion, and prospects for further increase were promising.

The amount ($542 billion) that went to the developed nations was more than half of the total $916 billion FDIs for the year (2005), and 29 percent higher than the previous year, it added. The developing nations, that otherwise perhaps are in the need of more inflows, received only $334 billion, 22 percent of the total investment that moved either way in the year.

In Asian region, the FDI inflows to South, East and south-east Asia, including Oceania, reached a new high of $165 billion in 2005, a 19 percent increase over 2004, the report said. With a continued high economic growth, the region has become more attractive to market-seeking FDIs. Furthermore, it has become a hot spot for transnational corporation investment (TNC) investment in financial services and technological industries.

China was at the top of the list among the recipient countries of the region, as well as of the developing world, with $72.4 billion inflows, followed by Hong Kong and Singapore with $35.9 and 20.1 billion, respectively. Pakistan was at the bottom on the list with only $2.2 billion received in 2005, way behind India which received $6.6 billion in the year.

Compiled by the UN Council on Trade and Development (Unctad), the report said that the increase was partly driven by strong economic growth in some countries. Also a high corporate profitability, that increased the number and volume of cross-border mergers and acquisitions (M&As) to the second largest recorded since 1987 was contributing in it.

In 2005, the largest single recipient of inward FDI inflows was the United Kingdom, with total $165 billion, largely due to the merger of two outfits into Royal Dutch Shell. The United States was a close second to the UK in the FDI recipients' list, with $99 billion inflows in the year.

Some European countries were also among major recipients of FDIs in 2005. They were France ($64 billion); Netherlands ($44 billion); Germany ($33 billion); Belgium ($24 billion); Spain ($23 billion) and Italy $20 billion.

About Pakistan, nothing much was said in the report, but experts believe a global phenomenon of sharp rise in the FDI over the past some years was of very little advantage for Pakistan's people due to its absorption in non-productive services sectors like telecom and petroleum (exploration and marketing).

A tendency of restricting investment to only big urban centres and neglecting rural areas altogether by foreign investors was another reason that deprived the downtrodden creatures of the surging FDI's fruits. This was the expression one could gather from a few questions the media persons asked at the launch.

But there was nobody, either from the UN economic team in Pakistan or the government, at the ceremony to answer these questions. State Minister for Investment Omar Ghumman was scheduled to chair the event, but he did not turn up.

 

[Owais]

Central bank powerless in controlling rupee value: Dr Shamshad


KARACHI: Governor State Bank of Pakistan Dr Shamshad Akhtar said Monday that the foreign exchange reserves of the country are quite enough for the payments of the 27-week imports; however, the bank has no authority over the value of rupee.

Addressing a seminar regarding access to financial sector in rural areas and mobile money transfer, she said that devaluation of money was given impetus by the increasing demand of dollar in the market.

Dr Shamshad Akhtar said that the central bank had no objection to the government’s permission for institutions to invest in national saving schemes, provided that there should be parity between banks’ profits and the profits being given in these schemes.

Regarding Pak-Indian banking, the central bank had talks with Reserve Bank of India, she added.

 

[Neo]

Trade surplus with US drops

ISLAMABAD, Oct 16: Pakistan’s trade surplus with the United States dropped by $47.5 million in the first eight months of the current calendar year over the corresponding period last year, despite reassurance by President Bush of further opening US markets for Pakistani goods and the ongoing efforts to reach a free trade agreement (FTA) with the world’s sole super power.

The trade surplus with the US came down to $1.27 billion in January-August 2006 from $1.318 billion in the same period last year, statistics of the US Census Bureau show.

Sources at the commerce ministry said that things seemed to be not improving for Pakistan, as the vital issue of FTA was not taken up with the US authorities during the recent visit of Gen Pervez Musharraf to the United States.

They said the Generalised System of Preference (GSP), which the US had offered to Pakistan, was also expiring in the next two months and Pakistan would have to mount diplomatic efforts to make the US Congress extend the agreement for another year.

From January to August this year, Pakistan exported goods worth $2.454 billion to the US, mostly textile, textile products and apparel, while it imported goods worth $1.183 billion from the US during this period.

In August alone, the US had a negative trade balance worth $226 million with Pakistan. But keeping in view its long standing association with the US and its present role in the war on terror, Pakistan is still far behind and is on seventh position in the list of 25 countries from which the US imports textiles, textile products and apparel as its top trading partners.

Pakistan is even behind Bangladesh -– on number sixth in the list -– which exported textiles products worth $306.6 million to the US markets in August this year as compared to Pakistan’s $295.2 million.

In July, Pakistan exported textile products worth 320 million to the US that saw a 7.9 per cent decrease in August.

China has topped the list by exporting textile products worth $3.5 billion to the US in August, followed by Mexico with $626.5 million at number two and India with $383.1 million at number three.

 

[Neo]

Pakistan FDI inflow grew 95pc in 2005

ISLAMABAD, Oct 16: Pakistan witnessed a 95 per cent growth in foreign direct investment (FDI) inflow in 2005 to touch the $2.183-billion mark, while the outflow fell to $44 million, states United Nation's World Investment Report 2006 launched here on Monday.

A comparative analysis showed that the growth in FDI inflow for Pakistan was much higher than some of the neighbouring economies. The FDI inflow has increased by 50 per cent for Bangladesh, 21 per cent for India and 17 per cent for Sri Lanka.

Globally, the FDI inflows have climbed by 29 per cent -- a second consecutive year of increase -- to reach a total of $916 billion. These increases were across the board. For developed countries, the FDI inflow went up by 37 per cent to $542 billion, while for developing nations it went up by 22 per cent to a record $334 billion.

However, still the world inflows remained far below the 2000 peak of $1.4 trillion.

Regionally looking South, East and Southeast Asia, because of continued high economic growth, has become more attractive to market seeking FDI. The region where the FDI inflows reached a new high of $165 billion in 2005 has become a hot spot for trans-national corporation investments in financial services and high technology industries.

The region is said to be attracting high quality FDI aimed at high value-added and knowledge-intensive activities.

The report also focuses on South-South investments that have been growing for almost 15 years and have strong global implication.

FDI OUTFLOWS: The FDI outflow for Pakistan fell to $44 million in 2005 from $56 million in 2004.

Outflows from the South, East and Southeast Asia region declined by 11 per cent during this period, although they were still relatively high at $68 million. Asia's new industrialising economies -- Hong Kong (China), South Korea, Singapore and Taiwan province of China -- remained the main sources of FDI from developing countries, despite a significant decline in their outflow in 2005.

Outward flow of FDI from the region still focuses on services, but a growing share of capital outflows from the region has been targeting manufacturing and natural resources.

Muhammad Muslim, director general (Planning and Policy), Board of Investment, speaking at the launch of the report said last year Pakistan was well ahead of its investment target of Rs3 billion. Pakistan received a cumulative investment of Rs3.6 billion.

In reply to a question, the official agreed that most of the foreign investment was going to the non-productive sector, particularly the services sector. Besides, he said Pakistan had its own limitations of absorbing the investment because of infrastructure constraints, something that was evident from the inability of “our roads to cope with the growth in the automobile sector”.

However, he noted that the growth in the services sector had a positive effect on the overall economy and boosted the productivity of the country.

 

[Neo]

PM approves geological survey for gem deposits
ISLAMABAD, Oct 16: Prime Minister Shaukat Aziz on Monday approved a proposal for conducting geological survey for gem deposits in various parts of the country to quantify the existing deposits and identify potential mining locations.

Chairing a meeting at the Prime Minister’s House to review the gems and jewellery sector development strategy, the premier said the government was working to establish Pakistan as high value-added, internationally competitive, world-class hub for precious stone cutting and jewellery manufacturing.

The government is targeting to double exports of gems and jewellery within a period of one year and increase the volume of export to $500 million in a period of five years from the existing $25 million.

Mr Aziz said Pakistan had high potential in the gems and jewellery sector because of availability of natural resources of precious and semi-precious gemstones, skilled craftsmen, strong domestic market demand and low cost of labour.

He said the Pakistan Gems and Jewellery Development Centre had been established to make efforts to increase the export of gems and jewellery.

The prime minister said the ministry of industries and production should focus on conducting market and industry surveys on regular basis to develop Pakistan brand and roadmap for international recognition. They should improve their marketing skills to establish Pakistani products as a brand in the world market, he added.

Mr Aziz also emphasised the need to promote research and innovation to diversify product base and establish quality standards and mechanisms for implementation.

Industries and Production Minister Jehangir Khan Tareen made a presentation about the significance of gems and jewellery industry and government's strategy to enhance exports and introduce value-addition in the existing products.

Mr Tareen said the government would establish gem testing and certification labs at gem trade hubs of Giligit, Quetta, Peshawar and Karachi. He said the training facility and manufacturing centres to upgrade technology and processes would be set up in Karachi, Lahore, Peshawar, Quetta and Northern Areas.

 

[Neo]

Tuesday, October 17, 2006

Inflation may fall in Oct-June of this fiscal

* 6.5% inflation target expected to be achieved

ISLAMABAD: Recent tightening of the Monetary Policy is likely to reduce core inflation further during the remaining months (October-June) of the current fiscal year 2006-07 and the overall inflation target of 6.5 per cent is most likely to be achieved, according to the Quarterly Review of the Inflation during July-September period.

Food inflation was 9.9 per cent in the first quarter of the current fiscal year as against 8.4 per cent in the same quarter last year. With the end of Ramazan and then Eid, the supply situation in the country is most likely to improve.

A Finance Ministry report available with Daily Times on Monday states that that the overall CPI-based inflation stood at 8.7 per cent in September 2006 as against 8.5 per cent in the corresponding month last year. The pick up in overall inflation in the month of September 2006 is largely attributed to a sharp pick up in food inflation, which stood at 11.3 per cent as against 7.5 per cent in the same month last year.

The widespread monsoon rains in different parts of the country along with the collapse of a crucial bridge, linking north and south of Pakistan, disrupted the flow of goods throughout the country. Furthermore, with the advent of Ramazan (fasting month of the Muslims) during the last week of September, there is additional pressure on prices of vegetables and fruits.

All these factors collectively contributed to this rise in food prices during the month of September. The sharp pick up in food inflation contributed to this rise in overall consumer price index (CPI).

Non- food inflation on the other hand witnessed a deceleration in the month of September 2006. Non-food inflation stood at 7.0 per cent in September 2006 as against 9.3 per cent in the same month last year. Core inflation (non-food non-energy inflation), as expected, shows a significant deceleration in the month of September 2006. Core inflation was 6.2 per cent in September 2006 as against 9.6 per cent in the same month last year. Recent tightening of the Monetary Policy is likely to reduce core inflation further during the remaining months of the current fiscal year.

The first quarter of the current fiscal year (July-September 2006-07) shows a decelerating trend in inflation with the exception of food inflation. The overall CPI-based inflation was 8.4 per cent in the first quarter of the current fiscal year (July-September 2006-07) as against 8.6 per cent in the corresponding period of the last fiscal year (2005-06).

Non-food inflation declined to 7.4 per cent as compared to 8.6 per cent during the same period. Most importantly, core inflation averaged 6.6 percent in the first quarter of the current fiscal year as against an average of 9.2 percent in the same quarter last year. Food inflation on the other hand witnessed some increase during the period. Food inflation was 9.9 per cent in the first quarter of the current fiscal year as against 8.4 per cent in the same quarter last year.

With the end of Ramazan and then Eid, supply situation in the country is most likely to improve and there are already indications that food inflation is likely to decelerate in the remaining months of the current fiscal year. The overall inflation target of 6.5 per cent is most likely to be achieved.

 

[Neo]

Sustainable financial systems for poor needed: SBP chief

KARACHI: The State Bank Governor, Dr Shamshad Akhtar, has emphasised that building sustainable financial services systems for poor is of critical interest and requires laying foundation for potentially profitable market and enterprises that can develop ways to reduce the costs and risks of serving them.

“Both SBP and banking industry are working towards exploring options on how to reach financial services to un-banked segments of population and will be able to draw from lessons and experience of the region”.

She was delivering her keynote address at a seminar on ‘Improving Access to Financial Services: Mobile Money Transfer and Beyond’ which was jointly organised by the SBP and ADB here on Monday.

She said that while encouraging e-banking and e-commerce, SBP is now working closely with the banking industry to explore options for adoption of new technologies to reach under-banked areas with the objective of enhancing access of rural, agriculture and microfinance credit and to attract international remittances.

In this respect, strategic alliances with overseas partners with special focus on technological compatibility are encouraged by SBP. Dr Shamshad Akhtar highlighted the importance of sharing regional experiences of strategic approaches, options and innovative connectivity models for rural and under-served areas.

She noted that developments in the financial industry and technology have been mutually reinforcing with developments in database management systems along with networking has encouraged virtual and electronic banking and commerce thereby facilitating an explosion of financial innovations.

Additionally, the banking industry has exploited different technologies to deliver financial services with the proliferation of automated teller machine (ATM) and point-of-sale (POS) network and devices.

The use of a mobile phone to conduct payment and banking transactions (m-banking) is at an early stage in a number of developing countries and is growing as mobile phone service providers are penetrating in developing markets and setting up the infrastructure.

For improved coverage of mobile banking applications there is need to develop proper sector regulation, effective institutional and commission arrangement sharing amongst retailers, clients and outlets that accept and sell cash and commission. Such an arrangement can also be used to launch an aggressive marketing campaign that is geared for all types of users and service providers, she added.

In his opening remarks, Dr Peter Fedon, Country Director, ADB’s Pakistan Resident Mission stated that modern technology solutions hold much promise for increasing access to efficient and sustainable financial services and reaching clients in remote or under-serviced areas for continued economic growth.

Fedon stressed the importance of bringing in innovation and applying new technologies for improving operational efficiencies, and reducing transaction costs associated with delivery for financial services, such as worker remittances. Additionally, infrastructure that supports delivery of financial services provides a channel for multiple other services such as education that can further bolster development and entrepreneurship in rural and remote areas.

Speaking on experience of Philippines in using technology for greater financial services outreach, Jose G. Vega of Globe Telecom explained about the G-Cash product and its social and economic impact on mobile money transfer to more than 10 million Filipino migrant workers all over the world and improved access of the un-banked population to microfinance services in Philippines Allen Hammond of the World Resources Institute (WRI) discussed emerging technology models including (i) mobile wireless (cellular) networks; (ii) fixed wireless technology (WiFi, WiMax); and (iii) a new generation of satellite networks (VSAT) designed for data transmission. In this respect, he demonstrated on how applications for financial services, agricultural services, and health services can be addressed using VSAT technology as done in a pilot project in rural Viet Nam.

ADB’s John Forbes highlighted some of the key issues and challenges involved in the convergence of telecom and financial services and its effects on Anti-Money Laundering/Wire Remittance Operations, and Know Your Customer (KYC) standards.

In addition, legal and regulatory challenges were discussed and areas for international cooperation were identified. Mehr Shah of Pakistan Microfinance Network provided an overview of the current state of the microfinance sector in Pakistan, issues, and opportunities, and challenges it faces with respect to technology integration in its operations.

While concluding the seminar, Azhar Kureshi, Adviser to Governor on Development Finance highlighted the importance of pragmatic analysis of technological innovations for the financial sector.

He further apprised the participants about the efforts being made by SBP in connection with improving access to the financial sector, especially in the context of remittances of overseas workers.

It may be pointed out that this seminar was jointly organized by the State Bank and the Asian Development Bank as a part of regional information exchange and sharing of experiences in areas of mobile money transfer, emerging technology models and strategic options for getting connectivity into rural areas.

The senior representatives from SBP, major commercial banks, micro-finance banks and institutions, exchange companies, government departments, non-governmental organizations and major donors attended the seminar.