Pakistan Economy - News & Updates - Archive

[Owais]

Rs 25 billion projects to be completed in Gwadar


ISLAMABAD (November 03 2006): Work on plethora of development projects worth more than Rs 25 billion has been expedited in Gwadar aiming to transform it into a modern and developed city equipped with all basic amenities.

The construction of 350-bed hospital with the estimated cost of Rs 550 million, 250 acre sports complex, central park and a number of small recreational parks on western side would be completed within a period of next five years, PTV reported.

Work is nearing completion on two main boulevards of the city, Jinnah Avenue and Awaran Avenue. Numerous under-construction high rise buildings are enhancing the charm of the city and also providing job opportunities to the locals.

The government has recently allocated an additional amount of Rs one billion for expediting infrastructure development ventures being continued on accelerated pace in the city. Likewise an additional Rs one billion has been provided for the Gwadar international airport.

Gwadar Port would also have two modern fish harbours and would soon be the biggest port in the region making Pakistan the maritime hub for the region linking Europe and the West with the Central Asian states.

Planning has been finalised to set up water purification plant having capacity of providing 35 million-gallon clean water to the inhabitants. The government has allotted 2,000 acre of land for establishing Gwadar Industrial state.

 

[Neo]

Pakistan ahead of many nations in reforms' implementation: PM

LAHORE: November 03, 2006: Prime Minister Shaukat Aziz said here on Friday that Pakistan is ahead of many countries in implementing economic reforms and improving governance.

"Pakistan has been ranked as one of the top ten reformers globally, and the top reformer in the South Asian region," he said while delivering the keynote address at the regional conference of Young Presidents Association (YPO) at a local hotel.

Aziz said that the country is now very well positioned to make the best of available opportunities.

"We in Pakistan are determined to ride the tide of globalisation and turn this challenge into an opportunity," he said.

Talking about government efforts to develop Pakistan as a modern developed Islamic state, he said that the country has opened up to take advantage of opportunities presented by global economic integration.

"We are also striving to shore up our national security and domestic economy to safeguard national interests and to promote the welfare of our citizens," said the PM.

Referring to the difficult times Pakistan was passing through seven years ago, he said that the present government, since then, has implemented an ambitious and all-encompassing reform agenda, covering all aspects of national life -- political, administrative, social and economic.

"This has brought about massive change in the country and the process of national renewal is well underway," Aziz said.

He said that liberal economic policies had attracted huge foreign direct investment in various sectors. Cellular telephony alone received FDI worth US $ 295 million recently, he added.

He said that the government is endeavouring to attract foreign investment in sectors like power generation and tourism.

 

[Owais]

Pakistan, Italy ink 'debt for development' swap agreement


ISLAMABAD (updated on: November 04, 2006, 17:06 PST): Pakistan and Italy signed an agreement on Saturday in connection with 'debt for development' swap of approximately $85 million which is 50 per cent of the total Italian debt that Pakistan owes to Italy.

The agreement was signed by the visiting Italian Deputy Foreign Minister Gianni Vernetti and Minister of State for Economic Affairs Hina Rabbani Khar.

Hina said, in May 2006 Italy had already agreed for cancellation/adjustment of the first 50 per cent of Italian debt towards GoP's expenditure up to $85 million incurred on Afghan Refugees related projects.

This portion of loan will stand cancelled by the end of 2008. The servicing of the whole Italian debt - ODA has however been stopped from May 2006 as agreed upon by the government of Italy.

As per agreement signed, the loan under the swap is proposed to be off set in five equal tranches (2009-2014) commencing from the formal cancellation of first 50 per cent in 2008.

Hina said the payments eligible for swap operations will be made from budgetary resources of the government of Pakistan and shall be spent on jointly agreed social and development projects.

Priority will be accorded to rehabilitation and reconstruction in the earthquake area and also rural development, poverty alleviation and improvement in education sector, she added.

She said that the pace of co-operation and work with the Italy is very fast.

We moved very fast for promoting bilateral co-operation during the last two years than compared to the previous 20 years, the state minister said and assure that this debt swap will be used for development.

These include the projects of the federal government, provincial governments of local governments, Non-Governmental Organisations or channelled by relevant UN organisations such as FAO, IFAD and WFP.

The above two debt cancellation/swap agreements reached with the government of Italy is in accordance with the joint declaration issued during the visit of Prime Minister Shaukat Aziz to Italy (July 13 to July 15, 2005) which interalia include decision to speed up the finalisation of the agreement for debt cancellation and debt swap agreement.

The deputy Italian foreign minister, on the occasion, said we are interested in regional stability and development in Pakistan and this agreement is an opportunity to work together.

 

[Owais]

Sensitive Price Indicator up 10.33 percent

ISLAMABAD (November 04 2006): The Sensitive Price Indicator (SPI) year-on-year of 53 essential items for the week ending on November 2 has shown 10.33 percent increase as compared to the corresponding week of the last year. Last week's figures ending on October 27 with record surge in the index (11.86 percent) were not reported by the Federal Bureau of Statistics (FBS) due to Eid holidays.

However, this week's data on SPI, based on 53 items from 17 urban centres, showed that 23 items registered increase; 10 items showed decline; while prices of 20 items remained unchanged with reference to the last week prices.

The weekly bulletin of FBS shows that the rise in the prices of some necessities and kitchen items in 12 months has been substantial. These items are pulses, curd, milk (fresh), gas, kerosene oil, LPG, firewood, potatoes and onions, which directly hit the low-income group. Whereas, onions showed the highest increase of 145 percent, while sugar despite new high revised rates still registered 22 percent increase over last year.

Analysis of the data suggests 45 items showed increase over the last year. Out of these, 20 items of significance to low-income group include: onions, 145 percent; potatoes, 35 percent; sugar, 22 percent; salt, 25 percent; red chilies, 21 percent; gram pulse, 54 percent; moong pulse, 42 percent; mash pulse, 52 percent; gur, 17 percent; beef, 15 percent; milk, 11 percent; curd, 10 percent; tea, 11 percent; match, box 10 percent; firewood, 20 percent; petrol, 3 percent; diesel, 4 percent; LPG, 19 percent; kerosene, 7 percent; and gas increased by 20 percent.

Moreover, few items, showing decrease from the previous, week are still dearer when compared to corresponding week of the last year, which are onions, potatoes, gur, moong and mash pulse and LPG.

This week's lowest income group up to Rs3000 has been hit severely with 12.79 percent increment, whereas the income group of above Rs 12,000 remained the lowest affected with 9.89 percent. The intermediate groups of Rs3001-5000 and 5001-12000 showed percentage increase of 12.19 and 11.75, respectively.

 

[Owais]

Government unwilling to provide Rs 79 billion to Wapda

ISLAMABAD (November 04 2006): The government is reluctant to extend financial support of Rs 79 billion to the Water and Power Development Authority (Wapda) to cope with cash shortfall, official sources told Business Recorder here on Friday.

They said that the utility, in its case submitted to the Ministry of Water and Power said that it has incurred a cash shortfall of Rs 49.239 billion, and an accounting loss of Rs 29.136 billion due to continuation of consumer-end tariff despite increase in the prices of gas and furnace oil, higher establishment cost due to pay revision, village electrification, non-payment of Rs 10.87 billion by the Federally Administrated Tribal Areas (FATA) consumers and less availability of hydel energy.

The Ministry of Water and Power, while agreeing with the contents of the documents provided by the utility, had asked the federal government to waive DSL or convert it into equity, excluding the DSL or Faisalabad Electric Supply Company (Fesco) and Genco-1, and release cash deficit as cash grant to the utility.

The issue was discussed by the Economic Co-ordination Committee (ECC) of the Cabinet in its meeting on September 27, wherein it was decided that Finance Secretary and Wapda Chairman should discuss it with Prime Minister Shaukat Aziz.

Sources said that Wapda Chairman Tariq Hameed held a meeting with Finance Secretary as per the directive of Prime Minister, but the issue is yet to be resolved as Finance Ministry is not ready to accept the utility claim.

However, the ECC had approved a proposal of Wapda in which it had sought irrevocable guarantee from the GoP for raising Rs 7 billion emergency loan from a consortium led by National Bank, to overcome financial obligations of the Independent Power Producers (IPPs). The consortium had demanded irrevocable guarantee from the GoP for repayment of dues.

The Water and Power Ministry also complained against Finance Ministry for not dispatching its comments on summaries in time, which caused delay in taking decisions. Sources said that the Prime Minister took serious note of Finance Ministry's attitude, saying that the ministry should give its views on the summaries promptly, whenever it is called for.

 

[Owais]

Norway cancels $20 million Pakistan's debt


OSLO (November 04 2006): Norway said on Friday it had agreed to cancel 20 million dollars of debt owed by Pakistan on the condition that the money is used for reconstruction efforts following a 2005 earthquake that killed some 74,000 people.

"We are pleased that this money can be used to help rebuild Pakistan after the 2005 earthquake," aid minister Erik Solheim said in a statement.

The funds are to be used to help rebuild social infrastructure, such as schools and health care centres, by the end of 2008. The Norwegian debt relief represents almost half of Pakistan's 46 million dollar debt to the Scandinavian country.

 

[Owais]

MoC and PC to launch $25 million trade, transport facilitation project

FAISALABAD (November 04 2006): Planning Commission and the Ministry of Commerce will jointly launch 'Trade and transport facilitation project - II', to be completed with 25 million dollar technical assistance of the World Bank over a period of five years.

According to official sources, during the project preparation and implementation, partnership and collaboration with ADB, JBIC, UNDP and EC would further be developed.

The project development objective of the proposed technical assistance is to improve the performance of the trade and transport logistics system and bring it up to international standards with the aim to reduce the cost of doing business in Pakistan and ultimately enhance trade competitiveness and the country's industrialisation.

The government would achieve this objective through policy reforms targeted within the framework of National Trade Corridor Improvement Programme (NTCIP), investment projects relating to railways, road, ports and shipping, aviation, trade facilitation and capacity building and increased institutional capacity to develop and implement the changed sector environment.

Direct recipients of the proposed technical assistance project are NTCMU, TTFU, National Trade and Transport Facilitation Committee (NTTFC), and respective public agencies (ministries, operating authorities). The initial beneficiary will be Pakistan's private sector trading community, which will have better opportunities to enhance their competitive position in their international markets, and under competitive pressures, reduce costs to consumers.

This should in turn generate additional employment and growth opportunities. Pakistani consumers should also benefit from the resulting reduced costs of imports. Specific targets and their benefits would be set during project appraisal, the sources added.

The Pakistan government and WB have agreed on financing NTCIP through programmatic DPLs, specific project investment lending and a technical assistance loan, and also agreed that a multi-sector policy-oriented operation to support implementation of reforms acting as triggers for specific project investment lending would be most effective.

The technical assistance loan will help prepare and monitor reforms through establishment of co-ordination units within the Planning Commission and the MoC and provide additional analytical underpinning and training opportunities.

The project consisting of (i) capacity development in the entities directly concerned with the implementation of NTCIP, (ii) support for the implementation process of NTCIP through analytical work on trade supporting infrastructure and services needs, (iii) strengthening of the private sector participation through TTFU and NTTFC, (iv) establishing sustainable monitoring and evaluation system and (v) manage the external communications strategy for the NTCIP.

The project's five components will finance the institutional set up of NTCMU and TTFU, and national and international consultancy services resulting in underlying studies, research, and training. The funds will be proportionately divided in both units.

Many of the technical assistance and capacity building requirements facing the implementation of the NTCIP are institutional and technical in nature, which is difficult to address in investment operations. The relatively under-developed private sector in Pakistan has a major role to play by adopting itself to the changed environment.

The WB project report said that Pakistan's economy had expanded by over 6.5 percent per annum during the past four years. A wide-ranging program of economic reforms launched in 2000 has played a key role in the country's economic recovery. These reforms have done much to boost Pakistan's share of total trade in GDP (rising to 30 percent in 2005). Exports have strongly performed in recent years, growing to about US 14.4 billion dollars in 2005, and investment has rebounded. To sustain sufficient momentum for this growth in the coming decade, Pakistan is now focusing on reducing the cost-of-doing business and increasing productivity and international competitiveness. A major initiative has therefore been launched to improve the trade and transport logistics chain.

 

[Owais]

Italian help sought for FTA with EU

ISLAMABAD (November 04 2006): Pakistan has sought Italy's help for inclusion in the EU initiative for free trade agreement (FTA) with Asian economies including India as WTO plus arrangement, official sources told Business Recorder.

They said that Commerce Minister Humayun Akhtar raised the issue of Pakistan's inclusion in the FTA arrangement with the visiting seven-member Italian delegation headed by under-secretary of state Gianni Vemetti who called on him here on Friday.

The Minister said that Pakistan needed to be accorded same treatment specially keeping in view its position in the context of the Safta. The Italian under-secretary of state assured that Italy in principle favours Pakistan's demand and would not support any action discriminating Pakistan.

The two ministers also reviewed the current bilateral trade and status of the joint ventures earlier agreed upon in the spheres of auto parts, marble, jewellery, gems, textiles and footwear sectors.

The Italian delegation stressed stability in the region and suggested an early meeting of the Joint Ministerial Commission to discuss bilateral trade in detail for promotion of economic and trade ties between the two friendly countries.

 

[Owais]

Pakistan and Italy agree to promote trade ties


ISLAMABAD (November 04 2006): A seven-member delegation from Italy, headed by Under-secretary of State Gianni Vemetti, called on Federal Minister for Commerce, Humayun Akhtar, on Friday. Commerce Secretary Asif Shah was also present on the occasion.

The Minister, after reviewing current bilateral trade, raised the issue of EU's embarking on initiating FTA with Asian economies, including India, as WTO plus arrangement.

He informed the visiting Minister that Pakistan needs to be accorded same treatment, especially keeping in view its position in the Safta context. The support of Italian government was requested in this regard.

The visiting Minister assured Humayun that Italy, in principle, favours his concern and would not support any action discriminating Pakistan. The Under-secretary of State stressed the need for stabilisation in the region and requested for more commercial exchanges. The Italians also requested for early holding of JMC with a view to draw a concrete agenda for promotion of economic and trade relationship.

 

[Owais]

WIEF to promote business and trade: Shaukat

ISLAMABAD (November 04 2006): Prime Minister Shaukat Aziz on Friday said that the World Islamic Economic Forum will promote business and trade activities and will lead to a better image of Pakistan as important leaders, intellectuals and professionals from all over the world will attend the Forum.

He was talking to Bob Hawke, former Prime Minister of Australia who called on him here at the PM House. Bob Hawke is visiting Pakistan to attend the World Islamic Economic Forum (WIEF), which will be held in Islamabad November 5-7.

The Prime Minister said Pakistan values its multifaceted relationship with Australia and is keen to further strengthen co-operation in a broad spectrum of areas particularly trade, investment, education, agriculture, agribusiness and livestock.

Emphasising the need for promoting interfaith, inter-civilisation, inter-cultural harmony, the Prime Minister said the gap between people belonging to different faiths is widening and the world needs to work harder and make dedicated efforts to bridge this gap.

"The more walls we create, the more challenging it will be for future generations", the Prime Minister said.

Bob Hawke appreciated the initiative taken by Pakistan to organise WIEF and said the Forum will be instrumental in networking of business community and new ideas and concepts will be generated as a result of it which will create economic opportunities.

He said a number of Australian companies are keen to invest in Pakistan and enter into joint ventures with Pakistani companies in the fields of energy and agribusiness.

 

[Owais]

Gwadar port: pre-bid moot held


KARACHI (November 04 2006): The Gwadar Port Implementation Authority (GPIA) held a pre-bid conference for the first prospective private port operators for Gwadar port. In a statement issued here on Friday.

It said the representatives of PSA International, Singapore; Globe Marine Services Co, Saudi Arabia; Pakistan International Container Terminal (Pvt) Limited, and Westport, Malaysia attended the conference.

ADL Consultants for the tendering process conducted the meeting in the presence of the tender committee, which comprises of board members of the management board and senior officers of both the Gwadar Port Authority (GPA) and the GPIA.

The conference ended with a positive vibe for further visit of participants to the data room at Gwadar port office, Karachi and subsequent site visit to Gwadar port.-PR

 

[Owais]

Indus Motors intends to expand manufacturing plan


KARACHI: Indus Motors Company intends to manufacture 1,50,000 units pr month through expanding its plant till 2015, Pervez Ghayas, the corporation chief executive, told Geo news.

Explaining the reasons for delay in expansion programme, he said the company's expansion would require increase in supply to vendors, adding that Indus was also negotiating with Toyota to increase its production.

Currently, the company manufactures 50,000 units monthly.

 

[Neo]

Plan to attract investments in export zones

ISLAMABAD, Nov 3: The government has asked the ministry of industries, production and special initiatives to formulate a long-term plan for attracting local and foreign investment in the country's export processing zones (EPZs).

Official sources told Dawn on Friday that Prime Minister Shaukat Aziz believed that EPZ was a great idea that "failed to take off" in Pakistan. It had big potential but somehow it kept on drifting away from its objectives, he said.

On the directives of the prime minister, the ministry of industries directed the Export Processing Zone Authority (EPZA) to develop a well thought-out strategy, which should include an aggressive marketing plan keeping in view the methodologies adopted by Malaysia, Thailand, India and Bangladesh for attracting investment in EPZs.

Based on that strategy, series of short-term plans will be worked out for proper execution and monitoring to ensure adequate foreign investment in the zones.

The marketing plan will be executed individually by the EPZA in association with the Board of Investment (BoI). The proposal for organisational restructuring and corporatisation of EPZs has also been, in principle, approved by the government.

Sources said that the prime minister was critical of the performance of the EPZA and said that it never had a vision or the strategy to pursue its objectives, therefore, it was imperative that the organisation's culture be changed by charting out an aggressive plan and by hiring dynamic people to execute it.

Sources said that the emphasis will be laid to attract prestigious and reputable investors, who have viable plans to execute their investment proposals. Top global investors installing even assembly operations would be a good beginning as their best practices bring an element of respectability to the organisation.

It was said that the infrastructure was scarce and an expensive commodity should not be wasted along with misuse of land and duty free vehicles. The authority has been asked to revamp its contracts, systems, procedures, and sanctions in such a way that transition to good corporate governance becomes smooth and seamless.

Sources said that the development of the Karachi Export Processing Zone (KEPZ) phase-II will be carried on fast track basis, which will include building of 5-story building, having recreational areas and a snack bar. They said that all possible legal remedies will be taken to reclaim the land for KEPZ phase-III along with the idea of having a jetty for direct transportation from the nearby port.

A decision has also been taken that the zones at Sialkot, Risalpur and Gujranwala will be revisited and plans for their re-vitalisation or viability be considered afresh. The establishment of an EPZ at Gwadar will be executed in the light of the guidelines given by the ministry of industries and production so as to make it a "model zone".

Similarly, all taxation and tariff related issues, including the Research and Development support for garment units in EPZs will be comprehensively examined in consultation with the ministry of commerce and the Central Board of Revenue (CBR) and the case will be submitted to the prime minister for his consideration.

Sources said that Karachi was making substantial contribution in software exports and the future prospects seemed even brighter. There were reports, they said, that US firms were on the look-out to software houses and call centre firms that can perform well.

The major reason is that Pakistani market is 30 per cent cheaper than that of India and it has under-utilised pool of computer science graduates and English language speakers.

It has been learnt that Pakistan Software Export Board is in the process of conducting a feasibility study but its exact scope is not known. Besides that, no credible survey is available, which could shed light on the potential demand of space for hi-tech businesses.

In this behalf the government has asked the concerned officials to conduct a feasibility study, which will not only help EPZA achieve its objectives, but will also be useful for the government to ascertain the gap, which will emerge in future demand and supply.

 

[Neo]

German diplomat vows to raise trade to $2bn

KARACHI, Nov 3: Consul General of Federal Republic of Germany Hans-Joachim Kiderlen has expressed confidence that his country’s business and economic relations would attain a new peak and the two-way annual trade volume will touch the $2 billion mark.

“The trade balance is at present in our favour and we realise that it is not a sustainable relationship and we are keen to see imports from your side go up,” remarked Mr Kiderlen on Thursday evening at a welcome dinner hosted by Pakistan German Business Forum (PGBF), which was attended by a large number of business executives representing most of the 200 members of the forum.

President of Karachi Chamber of Commerce and Industry Majyd Aziz, who is also a member of the PGBF, attended the dinner.Mr. Kiderlain arrived in Karachi about one and a half months ago to take charge of the consulate recalled the historic role played by Karachi in economic development of Pakistan and promotion of country’s business relations with the world.

---He pledged on the occasion to play his role as a diplomat to invite foreign businessmen and government representatives in Karachi.

Besides business and economic relationship, the German consul general said that his country enjoyed relations with Pakistan in cultural field, education and municipal services. “My mission is to further strengthen and expand relationship in these areas,” he announced.

Reviewing trade between Pakistan and Germany he said Pakistan mostly exported textile products and imported machinery from his country. “Pakistan’s exports need to be diversified,” the German consul general advised Pakistani businessmen.

Earlier President of the PGBF Qazi Sajid spoke of the role of the forum in promoting German investment in Pakistan and development of the two- way business relations. The German companies, he pointed out, were playing a key role in economic development of Pakistan and making valuable contribution in social sectors.

The PGBF was founded in December 1997 and has 200 companies on its membership list. The German ambassador in Pakistan is the patron-in -chief of the PGBF. The PGBF works in close relations with different chambers and trade bodies in Pakistan. In September 2002, it signed an MoU with Chamber of Commerce and Industry Rahein-N Mannhiem, Germany (IHK). The IHK has more than 5,000 members from German industrial and trade segments.

President Pervez Musharraf visited Germany in June 2003. The visit was reciprocated by German Chancellor Gerhard Schroeder in October. Since then Pakistan and Germany has several contacts at the foreign ministers’ level and at non-governmental levels.

 

[Neo]

Warid gets a $500m loan for expansion in Pakistan
4 November 2006

ABU DHABI — Warid Telecom (Warid), the fastest growing mobile cellular operator in Pakistan, has signed a loan agreement for $500 million to finance its nationwide EDGE-compliant mobile network expansion supplied by Ericsson in Pakistan.

The signing ceremony was held in Abu Dhabi which was attended by top global executives of EKN, ABN Amro Bank N.V., Standard Chartered Bank PLC, Ericsson, and Warid Telecom.

The $500 million loan mainly supported by Exportkreditnämnden (EKN) Sweden (The Swedish Exports Guarantee Board), is structured as a buyer credit facility and arranged by ABN Amro Bank N.V. and Standard Chartered Bank PLC as the Joint Lead Arrangers.

In addition, ABN Amro Bank N.V. is the Facility Agent and EKN is the agent, while Standard Chartered Bank PLC is the Intercreditor Agent. The disbursement of the facility is subject to necessary approvals including the approval from the State Bank of Pakistan.

The loan will be utilised by Warid for financing its GSM network equipment supplied by Ericsson in 2006 and 2007. Ericsson has been the key network equipment supplier for Warid. The financing will facilitate Warid's expansion plans and enhance its mobile network capacity. It will also further enable Warid to leverage its strengths and take advantage of the huge market potential and customer growth rates in Pakistan.

The transaction carries a few firsts: The Warid financing is the single largest EKN-backed telecom financing, not just in Pakistan but also throughout the Middle East and Asia; It is the largest corporate Export Credit Agency (ECA) backed transaction since 1998 and the largest cross-border capital expenditure related telecom debt financing into Pakistan.

Wateen Telecom & Taavun is currently undertaking the rollout of new mobile networks in Bangladesh and the Republic of Congo, alongwith the recent acquisition of a telecom licence in Uganda.

The group is also in the process of setting up a Global IT solutions company — Raseen in Pakistan — in partnership with Sir Terence Mathews, Chairman of the international IP Communications giant Mitel Networks Corporation.

Warid Telecom is owned by the Abu Dhabi Group — one of the largest groups in the Middle East. The group is led by Shaikh Nahyan bin Mubarak Al Nahyan and it is the single largest foreign investor group in Pakistan.