Pakistan Economy - News & Updates - Archive

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WB offers $359m to improve highways


KARACHI: The World Bank has offered over $350 million for national expressways project under National Trade Corridor Improvement Programme, aimed at reducing the commercial traffic time and cutting vehicle operating cost.

A document issued by the Bank with project details says it has decided to offer a total of $359.10 million for the development of two different highway routes in Punjab province.

“The proposed project comprises development of two access-controlled, four-lane, 75 miles an hour design speed expressway facilities along new alignments adjacent to two existing two-lane provincial highways between Wazirabad-Pindi Bhattian and Khanewal-Lodhran,” said the project information document of the World Bank.

“The civil works involve construction of four new lanes, fence, grade-separated interchanges, over and under passes, toll plazas, rest and service areas, and truck parks.”

It said a preliminary economic analysis indicated economic internal rate of return (IRR) of about 12 per cent. The policy support and institutional strengthening component would be defined during project preparation based on the needs for support to implement sector reforms, added the document.

Currently together the ports, road and railways along National Trade Corridor handle 95 per cent of external trade and 65 per cent of total land freight serving the regions of the country which contribute 80 per cent to 85 per cent of GDP.

Main objective of the NTC initiative is to reduce the cost of trade and transport logistics and bring it up to international standards in order to reduce the cost of doing business in Pakistan and ultimately enhance export competitiveness and the country’s industrialisation.

The World Bank document said to execute the project, National Highway Authority (NHA) would prepare and provide the bank a sectoral environmental assessment (SEA), environmental assessment and environmental management plans (EMPs) and social assessment and a resettlement policy framework (RPFs) for the two civil works contract’s under the expressway development component.

“The EAs will detail the measures to mitigate the impacts on land resources in the corridor of impact during the construction phase, define the responsibilities for implementation and supervision, and arrangements for monitoring of impacts,” it said.

“The EMPs will define frameworks for monitoring along the project corridor and arrangements for institutional and policy support to National Highway Authority (NHA) and other stakeholders.”

It said the EMPs developed by the NHA would help the organisation address the adverse environmental and social impacts, enhance project benefits, and introduce standards of good environmental and social practice for highway construction and operation within the organisation and in the country.

The government has already announced it is taking a strategic and holistic approach to the transport sector and launched an initiative to improve the trade and transport logistics chain along the north-south NTC linking Pakistan’s major ports in the south and south-west with its main industrial centres and neighbouring countries in the north, north-west and east.

A task force of prime minister under the chairmanship of deputy chairman Planning Commission has been leading the NTC initiative through six sectoral committees, which include highways, railways, civil aviation, ports and shipping, trucking, trade facilitation in partnership with the private sector and development partners.

“The Task Force has identified key reforms and actions that are necessary to achieve the objective of the initiative,” said the World Bank.

It said the prime minister had endorsed the reform agenda, targeted outcomes and deadlines and was personally monitoring implementation on a quarterly basis.

 

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$1bn worth of mobile phones imported in 2005-06

LAHORE: The total value of mobile handsets imported into Pakistan crossed US$1 billion in 2005-06 and cellular subscribers witnessed an average increase of 1.7 million per month during the same period, showing an augmented mobile penetration of 22.2 per cent.

According to a report prepared by the Pakistan Telecommunication Authority (PTA), the authority forecast 25 per cent annual growth in the import of mobile handsets and estimated that 65 million subscribers would be added by 2007.

The authority observed that net addition made to total subscriber base per month from July to December 2005 was 1.3 million whereas almost 22 million subscribers were added in the first six months of 2006.

Mobilink made the highest net addition among all operators as 1.1 million subscribers were added to its total in the month of June 2006.

The number of mobile subscribers in 2005 was 7.7 million which increased to 21.7 million in 2006. With such an increased penetration, there are still large number of rural and semi-urban areas that are inaccessible.

The penetration in Balochistan grew by more than 125 per cent in just one year. According to the break-up, mobile penetration in Balochistan was 8.1 per cent in 2006, 12.2 per cent in NWFP, 23.9 per cent in Punjab and 27.3 per cent in Sindh.

The mobile handset market is affected by global market trends in addition to growth in local subscriber base. Import of handsets through proper channel is increasing and reduction is observed in availability of smuggled sets.

The PTA stated in its report that according to estimates provided by local resellers, the number of imported handsets stands at around 750,000 to 800,000 per month.

Advanced technology and sophisticated sets are now commonly available in the local market and handsets with camera are becoming very popular and this trend is likely to grow in the next two years as these features will become standard in the future.

The PTA said that the handset market was dominated by four major players in which Nokia was leading with 55 per cent market share, Sony Ericsson 22 per cent, Samsung 17 per cent and Motorola 5 per cent.

The PTA estimated that there were 12 to 15 thousand mobile phone shops across Pakistan and this large number of handset shops is generating huge employment opportunities. Indirectly, they were employing more than 60,000 people within the industry.

 

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Technical education being aligned to meet market needs

ISLAMABAD: A 6-member delegation, comprising senior officials of Australian Department of Education, Science & Technology and AusAID, is visiting Pakistan on the request of Prime Minister Shaukat Aziz to help Pakistan in its efforts to realign its TVET according to the market needs.

Chairman National Vocational & Technical Education Commission (NAVTEC) Altaf Saleem in a meeting with the delegation here on Friday said that Technical and Vocational Education and Training (TVET) was being revamped in the country and was being aligned with the needs of the economy.

Chairman NAVTEC solicited Australian government’s support for developing standards for TVET as well as mechanism for monitoring and evaluation.

The delegation members appreciated NAVTEC strategy of active contact with market with futuristic focus. The delegation head Ross Muir while appreciating the recent initiatives of skills training said, “Our mission has observed real commitment by all stakeholders to improving the TVET sector.”

The chairman informed that on the directive of the President and under the Prime Minister’s special initiative, pilot projects for skills development have been started in sectors facing skills shortage.

Pakistan has 28 million young people aged 15-19 years, said Altaf, adding that these short training programmes shall turn the young manpower into a useful and productive human resource.

“Technical education directly benefit the business,” said Altaf. Therefore we are engaging with industry to become our partners in skills training. It also directly benefits the workforce as they get gainful employment immediately.”

Altaf Saleem informed the delegation about NAVTEC plans to increase the capacity to train one million people annually by 2010 from the present annual capacity of 320,000. He said that such training programmes will focus on quality and relevance to domestic and international market. He informed that foreign exchange earnings from Pakistani workforce working abroad amount to 25 per cent of exports and that can be further increased provided exported manpower have technical skills.

NAVTEC chairman also shared plans to start second shift for technical education in government schools. This will increase the intake capacity and will help overcome shortage of trained manpower.

 

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First liner put Karachi on world sea cruise map: president

KARACHI: November 05, 2006: President Pervez Musharraf on Saturday said Karachi has been placed on the map of world sea cruise with the launch of first ever sea cruise liner.

Pakistan is blessed with a unique landscape - loftiest mountains, vast plains, deserts, coastlines, rich cultural heritage, ancient civilisations and cradle of different religions.

Karachiites must see up North and northern area people must see coastal lines", he noted while addressing the select gathering of diplomats, senior officials, leading businessmen, bankers and notables on-board Gulf Dream Cruise Liner at Karachi Port.

The president noted that more than 500 destinations are covered by sea cruise operators and Karachi has now been added to that list.

He asked KPT to provide more facilities to attract more cruise operators. He noted that more has to be done in the form of port infrastructure, passenger services, amenities to facilitate cruise operations.

He asked Pakistanis to promote tourism within the country by self to attract foreign tourists into Pakistan. He asked people to first see the unique places of the country. It would help in development of hotels, motels and other tourism facilities at the tourist resorts, he noted.

"Pakistanis themselves must travel to see their own tourist attractions. Then foreign tourists will come", Musharraf said.

Musharraf said Pakistan is a land of exotic and picturesque pleasure and its people should explore these tourist attractions. Pakistan offers varied temperatures starting from 50 degrees plus Celsius to minus 50 degrees.

The country is blessed with difficult terrain and virgin coastal line with coastal towns like Ormara, Gwadar. He said the government was developing Gwadar as an industrial and tourist town and its town planning was already done. It will emerge as one of the most beautiful towns of Balochistan and Pakistan in next 15 to 20 years, he said amid thunderous applause.

He said the plains of Punjab and Sindh and the inhospitable deserts in Punjab and Sindh offer great tourist attractions. "In the North, you will find some of the highest mountains of the world."

Talking of cultural heritage, president Musharraf said Pakistan is blessed with 8000- year- old Meher Garh civilisation in Balochistan, Indus civilisation, Gandhara civilisation, Mughal period landmarks and relics of Alexander's stay, etc.

He noted that Pakistan happens to be the cradle of three olden religions - Buddhism, Hinduism and Sikhism.

He said the government was trying to open up these attractions through road links connecting remote northern mountainous areas to main roads.

" We are linking Chitral, Hunza, Gilgit, Skurdu, Astore, Kaghan, Chilas. I strongly recommend Karachiites to explore their own country and its beauty. Travel, these are very safe areas. The most exquisite and most beautiful places of the world," he observed.

Referring to sea cruise, president Musharraf said it is most comfortable when the sea is calm. Launching of Karachi-Dubai cruise is for the first time in the history of Pakistan, he added.

He urged the cruise operator Rizwan Mohiuddin to also include Gwadar as one of the destinations.

Talking of his association with the water, the President said that he has promoted water sports in the country.

Earlier, Port and Shipping Minister Babar Khan Ghauri said more cruise liners have shown interest to operate from Pakistan due to the business friendly shipping policy of the country.

He said he was going to India by the end of this month to sign a shipping protocol to start shipping and ferry services between the two countries.

KPT Chairman Vice Admiral (Rtd) Ahmed Hayat said the port was encouraging more sea cruise liners. He said it was the fastest growing business in the world.

He said Manora (Island) was being developed as a tourist resort and its construction will begin in August next at a cost of Rs 2 billion.

 

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Saturday, November 04, 2006

Balance of trade improves by 42% in July-September

KARACHI: The trade balance of the country is continuously showing a declining trend on monthly basis and stood at $784 million in September this year from $1.114 billion on June 30, 2006.

“The trade balance has declined over by 42 percent or $330 million in last three months,” a market expert said. “Declining oil prices in the international market were the main reason behind shrinking trade gap,” the expert said.

The country’s export stood at $4.269 billion in first quarter of the current fiscal year with a growth rate of 2.8 percent, while the country’s import is at $7.429 billion with a growth of 30.3 percent compared to last year. Because of the high growth, the total trade gap had touched $3.159 billion.

The trade deficit was also higher than last year. The trade deficit of first quarter 2005-06 was $2.399bn. This quarter trade deficit increased by $760 million or 31.6 percent over last year’s trade deficit during the same period.

In the year 2005-06, the country’s export grew by 13.1 percent with a total export figure of $16.4 billion, while the import was at $28.5 billion.

According to the market experts the country’s import may touch $30-$33 billion in the current fiscal against its full year target of $28 billion. However, the export may hardly meet its target of $18.6 billion, the experts said.

They said the trade gap might further increase from $12 billion to $14 billion in the current fiscal year.

Through the privatisation proceeds, the federal government is taking different measures to reduce the balance of payments in current fiscal year and had announced globally depository receipt (GDR) of the government holding in National Bank of Pakistan (NBP), Habib Bank Limited (HBL) and Allied Bank Limited (ABL). However, the privatization commission had also announced to conduct GDR of government entities in Oil and Gas Development Company Limited (OGDCL), which may help raising above $2 billion to shrink the gap of balance of payments.

The government had already given a $4 billion target of foreign direct investment including the portfolio investment while the overseas employees would remit above $5 billion in the current fiscal year. Last year the government received over $4.8 billion remittances from overseas Pakistanis.

The banking sources said the country can easily managed the balance of payment in the current fiscal year if the government receives foreign currency donation from the international donors agencies. The US government had already sanctioned around $800 million aids for the country.

 

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Saturday, November 04, 2006

Pakistan economy ill prepared for world trade scenario: experts

ISLAMABAD: Pakistan’s economy and its various sectors, particularly the domestic industry, are ill prepared for the changing international trade scenario mainly due to lack of good governance, shortsighted policies, implementation issues and a serious lack of response to the competitive world market.

These views were expressed by speakers at a roundtable, “WTO, FTAs and RTAs: Implications for Pakistan Economy with Special Reference to Auto Sector,” organized by the Institute of Policy Studies.

Masud Daher, CEO of MilleZum Consult Pvt Ltd, was the main speaker at the event, which was chaired by Mr. Fasih Uddin, former chief economist and Chainman IPS Working Group on the WTO.

The speakers noted that the deadlock in WTO negotiations was the major reason behind spurring regionalism and bilateralism; many free trade agreements (FTAs) and Regional Trade Agreements (RTAs) were being negotiated and implemented by countries – including Pakistan with regional and global partners.

Mr Daher, mentioning a study by the World Bank, said: “Pakistan lacks the best practices required to benefit from free trade agreements.”

Citing an example, he said both Pakistan and India have bilateral FTAs with Sri Lanka and the three countries are also members of SAFTA, which becomes a complicated arrangement for Pakistan. “There is no mechanism to check Indian goods being re-exported to Pakistan via Sri Lanka”, he added.

He opposed the import of used cars in the country terming it a disaster for the local auto industry. The view was supported by Mohammad Sulaiman, a consultant with the Engineering Development Board. “It amounts to making Pakistan a junkyard of old cars”, said Mr Sulaiman.

Khalid Rahman, the Director-General of the IPS, while responding to a suggestion, said the IPS would continue to interact with different stakeholders, including the government, for intensive debate on such issues of national importance.

While concluding the session, Mr. Fasih Uddin said FTAs and RTAs were tools of convenience and complications “Multilateral-ism remains the best choice,” he said.

A select gathering of international trade and industry experts, government officials, intellectuals and businessmen was present on the occasion.

 

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Saturday, November 04, 2006

Pakistan ahead of all others in implementation of reforms: PM

* Aziz says foreign direct investment touched highest ever mark this year
* Says economy back on track

LAHORE: Prime Minister Shaukat Aziz said on Friday that Pakistan was ahead of several 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,” Aziz said while delivering a keynote address at the Young Presidents’ Association’s (YPO) regional conference, which was attended by the Punjab governor.

“We are determined to ride the globalisation tide and turn this challenge into an opportunity,” Aziz said, adding that the country was taking advantage of opportunities offered by global economic integration.

Referring to the “difficult time” that Pakistan passed through seven years ago, he said the current government had implemented an “ambitious and all-encompassing” reform agenda covering all aspects of national life — political, administrative, social and economic.

Aziz said that “liberal” economic policies had attracted huge foreign direct investment (FDI). The government was trying to attract foreign investors to sectors like power generation and tourism, he said, adding that all sectors of economy were open to FDI, and foreigners could hold up to 100 percent equity. He said the process for launching businesses had been made “extremely simple”. Investment in the economy had reached 20 percent of the GDP, and FDI had touched its highest ever mark at $3.5 billion this year, he added.

He said that political institutions had been reformed, with greater representation for women and minorities and the institutionalisation of democratic norms. About reforms introduced to devolve administrative authority to the local level, he said that these reforms were aimed at improving decision-making.

“We have also successfully implemented a stabilisation programme and structural reforms, which have put the economy back on track for sustainable growth and poverty alleviation. We are now one of the fastest growing economies in the region, and we hope to sustain a growth trajectory of 6 to 8 percent,” the prime minister said.

“Our strategy has reduced the number of people below the poverty line from 34.5 percent to 23.9 percent.” He said that economic reforms were driven by deregulation, liberalisation and privatisation, while the central thrust of the government’s strategy was to create an environment for the private sector to become an “engine of growth”.

Aziz said the government wanted to maintain a stable macro-economic environment, and push ahead with the second generation reforms aimed at increasing productivity and competitiveness, improving key governance institutions and maintaining a consistent policy framework.

The prime minister said that Pakistan was fully committed to promoting peace and stability in the region and the world.

“We are keen to promote peace and cooperation with our neighbours by resolving outstanding issues.” He said that Pakistan was pursuing economic diplomacy as a major aspect of its foreign policy.

Condemning terrorism, he said the menace had affected Pakistan “more than any other country because of our geo-strategic location”.

 

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Iran offers cheap electricity to Pakistan

ISLAMABAD Nov 4 (Online): Iran has offered to provide cheap electricity to Pakistan which could be further expanded to India through Pakistan like gas pipeline agreement, told a press release issued here Saturday.

According to the press release, Iranian Ambassador in Pakistan H.E Masha-Allah Shakeri made this offer in a meeting with Federal Minister for water and power Liaqat Ali Jatoi here in his office Saturday.

In the meeting both the sides exchanged views on bilateral trade relations especially in power sector between the two brotherly countries. They agreed to extend cooperation in water and power sectors and to establish a joint investment company to gain goals and objectives in this regard.

The federal minister informed the Iranian Ambassador that power sector is viable business in Pakistan, which has attracted the foreign investors in this sector. "Presently sixteen Independent Power Producers companies (IPPs) are generating 6500 MW electricity under the Power Purchase Agreement between the government and companies", he added.

He further told that the growing demand of electricity is 18000 MW while the existing availability power is 13500 MW in the country. He invited the Iranian government to come forward and participate in mega hydropower projects in Pakistan.

The Iranian Ambassador appreciated the growing economic situation in Pakistan and offered investment in water and power sectors particularly in construction of dams for producing electricity in Pakistan.

 

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Pakistan proposes creation of Islamic Economic Union

ISLAMABAD (November 06 2006): Pakistan has proposed creation of an Islamic Economic Union by entering into multilateral free trade agreements and promoting free flow of capital, labour, goods and services.

The proposal was by made by Prime Minister Shaukat Aziz in his keynote address, 'The way forward for Muslim Economic Renaissance' at the inaugural session of the three day Second World Islamic Economic Forum Conferences 2006 here on Sunday.

PRIME MINISTER SHAUKAT PUT FORWARD A SEVEN-POINT ACTION PLAN, WHICH INCLUDED FOLLOWING INTEGRATED AND CALIBRATED MEASURES:

i) The OIC must evolve an effective dispute resolution mechanism to resolve its issues and problems and put in place a sound framework for mutual co-operation, besides promotion of unity amongst and within the member countries, broaden and deepen economic relations and ensure energy, water and food securities.

ii) The Muslim World must undertake necessary political, economic and social reforms to create an enabling environment for harnessing our individual and collective potential by ensuring political stability and continuity, good governance, transparency and accountability as well as consistent economic policies and improved delivery of social services especially in health and education.

iii) The OIC member countries must focus on education and catch up in the field of science and technology, skill development through vocational training which are in demand in national and international markets.

iv) The Islamic countries should evolve a comprehensive growth model to provide a strategy for balanced development and provide for sharing of financial and commodity surpluses through institutional mechanisms driven by public-private partnerships.

v) The less endowed Muslims countries should develop absorptive capacity to make optimal use of scarce domestic capital and to benefit from cross-border flows.

vi) Depending upon individual comparative and competitive advantage, the Islamic countries should try to specialise and carve out niches for themselves in vital economic sectors such as energy, telecom, IT, banking, mining, agriculture, services etc; and

vii) OIC and Islamic Development Bank need to be repositioned and re-invigorated and create a world-class capital market to attract international capital which would enable the Muslim countries to finance their growth and development.

He said that the Muslim world is rich in human capital as well as physical resources and has immense potential for growth, progress and prosperity. "We constitute one-fifth of world population and our people are intelligent, industrious and enterprising and possess 70 percent of the world's hydrocarbon reserves" he said.

However, he said, that "our economic performance is not commensurate with our true potential, since a vast majority of Muslims live in poverty and backwardness; nearly 39 percent of the world's Muslim population lives below the poverty line.

Muslim world makes up 19 percent of the humanity but only 6 percent of its income. Its share in global trade is barely 7-8 percent while only 13 percent of its total trade is among its member countries. Sadly, no Muslim nation is among the group of developed industrialised countries.

Shaukat said that the new world order is characterised by economic integration, technological advancement, predominance of knowledge economy and diffusion of democratic idea which has brought three fundamental changes, namely (i) new governance paradigm whereby the private sector is leading the process of economic growth and governments have become policy makers, facilitators, regulator and enablers; (ii) supra-national institutions are laying the rules of the game and nation-states are called upon to operate within that framework; and (iii) buoyant expansion of global trade and capital flows as well as free exchange of ideas and technology provide vast opportunities for growth and also pose challenges.

He said that the way forward in this highly competitive and inter-dependent world is through improved governance and reform within individual Muslim states, on the one hand, and by exploring new avenues of mutual cooperation based on commonality of interest, on the other.

Shaukat said that one of the biggest challenges facing the Muslim world is on account of insecurity emanating from disunity and dissensions "within our ranks, which not only sap our energies and resources but also undermine our prospects of meaningful co-operation."

"Muslims in Iraq, Afghanistan, Palestine, Lebanon and Kashmir continue to face insecurity, death and destruction," he added.

The Prime Minister emphasised that "we should not allow ourselves to become hostage to the actions of a minority within ourselves who have taken to extremism for one reason or the other and approach the current-day realities with open minds and adopt futuristic vision to resolve our issues and problems.

He said the world community has a responsibility to remove the causes of injustice and frustration so that a lasting solution to the scourge of extremism and terrorism can be found.

He said that under the leadership of President General Pervez Musharraf the government has carried out comprehensive and multidimensional reforms in the political economic and social spheres to rejuvenate its position in the world.

In the political field, he said, the government has ensured good governance through accountability and transparency and empowered the people from grass root to the national level.

In the economic sector, he said, the government's reforms based on the principles of deregulation, liberalisation and privatisation have ensured an upward growth trajectory and 14 million people have come out of poverty in just four years.

He said in the social realm, the government is focusing on improving and enlarging the delivery of health and education in order to develop and a healthy and educated workforce that would shore up Pakistan's knowledge based economy.

In the opening session, Prime Minister of Malaysia and Chairman of OIC Dato Seri Abdullah Ahmad Badawi also presented his special keynote address "enhancing global competitiveness and trade among Muslim countries.

He said that the Muslim nations are faced with economic, social and political problems, which they cannot address without assistance from other Muslim countries and co-operation with the West.

He said that there is a wide urban and rural divide in the Muslim countries because of economic, social, and cultural disparities which, is hampering poverty alleviation in the OIC member countries.

He said that Muslim countries must allocate more funds to provide quality education to its new generations and take urgent steps to reduce unemployment of the youth, which is highest in the world.

Badawi said the governments of OIC member countries must strive to end sectarianism, ethnicity and promote culture of tolerance, enlightenment and higher education to meet complex challenges of the contemporary world.

Presenting his paper entitled 'Challenges of Social Development to Islamic World' President of Islamic Development Bank Dr Ahmed Mohammad Ali assured the conference that IDB would extend maximum financial assistance to member countries for poverty reduction programmes.

Chairman of World Islamic Economic Forum and former Deputy Prime Minister of Malaysia, Tun Musa Hitam, also addressed the conference and highlighted future programmes and vision of WIEF.

At the end of the inaugural session, two memorandums of understanding (MOUs) were signed to increase co-operation among the Muslim countries in various social and educational fields. Pakistan, Bangladesh, Malaysia and Indonesia signed an MOU to provide vocational training to youth in their countries.

 

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Malaysia agrees to build three highways

ISLAMABAD (November 06 2006): The Malaysian government agreed on Sunday to construct three vital highway projects, including Karachi Northern Bypass, on build, operate and transfer (BOT) basis.

Both Pakistani and Malaysian governments will soon sign a memorandum of understanding (MoU) to undertake construction work on Rawalpindi-Tarnol Interchange, Rawalpindi Bypass and Shahdara Interchange, Lahore, besides Karachi Northern Bypass.

The announcement came after high-level talks between the two delegations led by Federal Communication Minister Shamim Siddiqui and Malaysian Works Minister Dato Seri S. Samy Vellu here in the communication ministry here.

In a significant move, the Malaysian government has also given a go-ahead signal to make M-4 (Faisalabad-Khanewal) project in which Pakistani authorities would share the construction work as well.

During the meeting, Shamim Siddiqui appreciated Malaysian government's contribution to the development of communication sector in Pakistan and suggested visiting Malaysian minister to construct three projects on BOT basis.

He said more than $600 billion projects in the communication sector were in the pipeline in near future. He, therefore, said there was great opportunity for Malaysian contractors to take part in these projects and join hands with the Pakistan government.

Vellu told the meeting that he would make a study of projects, whereas one Malaysian contractor said his company has already made the study of Tarnol Interchange and Rawalpindi Bypass that is viable for even BOT basis.

It, however, was decided by both sides that for construction of these three projects, MoU would be signed very soon.

The Malaysian minister designated Secretary General, Ministry of Works, who would visit Pakistan again during the month to sign the MoU with the Pakistan government.

The MoU to build M-4 has already been signed between the two countries, but the Malaysian government was not ready to build the project on BOT basis and has regretted to build the M-4.

However, the Malaysian side has reviewed its decision and pledged to make motorway section with the joint efforts of Pakistan government.

Shamim Siddiqui requested his Malaysian counterpart for transfer of technology and for the training of technical staff, which Seri S. Samy Vellu agreed to provide all types of training facilities in the construction industry and transfer of technology to Pakistan.

The minister also introduced the President and General Secretary of All Pakistan Contractors Association with the visiting delegation and hoped contractors of both the sides would make joint venture in realising the projects in Pakistan.

Responding positively, the Malaysian minister asked the communication minister to send a delegation of Pak contractors to Malaysia.

The Malaysian delegation comprised Dr Dennis Ganendra, Mohammad Azri Abdullah, Hamzah Hassan, Tan Boonseng, N. Puvanendran and Selathurai Nadseson, whereas Additional Secretary Muhammad Abbas, Joint Secretary Firdaus Alam, NHA Member (Planning) Raja Nosherwan were among the Pakistani delegation.

 

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Joint investment company to be set up

ISLAMABAD (November 06 2006): Pakistan and Malaysia on Sunday agreed to set up joint investment company and announced that the Free Trade Agreement (FTA) between the two countries, to be signed by the end of 2006, would give further boost to their trade and economic relations.

Prime Minister Shaukat Aziz and his Malaysian counterpart Abdullah Ahmed Badawi, during their one-on-one meeting and later at the delegation level talks, covered a wide spectrum of bilateral ties between their countries.

"I am happy at the outcome of bilateral talks...It is my hope to see our bilateral relations are further expanded and deepened," the Malaysian leader told reporters at a joint press briefing with Prime Minister Shaukat at Prime Minister House.

Shaukat said that Pakistan and Malaysia have agreed, in principle, to set up a joint investment company to provide institutional framework for investment in each other's country.

He said that the two countries already have an 'Early Harvest Programme', and would conclude the FTA by the end of this year that would lead to further increase in their trade and economic ties.

He noted the deep and close ties between Pakistan and Malaysia and said that the two countries share common faith, heritage and desire to promote peace, progress and development in the world.

In the context of bilateral diplomatic ties, Prime Minister Shaukat briefed the Malaysian leader about the latest situation in the region and Pakistan's desire to resolve all disputes in South Asia.

He briefed him on the ongoing composite dialogue process with India and Pakistan's desire to resolve all outstanding disputes including the core Kashmir dispute for durable peace in the region.

The two leaders also discussed Pakistan's desire to engage with Asean as Prime Minister Aziz thanked his counterpart for his country's support to Islamabad to attain full dialogue partner status with the strong regional grouping.

Pakistan and Asean, he added, could be natural partners to create win-win situation for both. Aziz said they discussed the ongoing extensive co-operation between their countries in the field of defence.

The Prime Minister said the two countries have multifaceted co-operation in the defence field and was pleased to note that Malaysian companies would participate in the upcoming annual Defence Exhibition to be held in Karachi this month.

He expressed satisfaction over the growing trade ties between the two countries and noted that Malaysian investment in Pakistan had improved during last two years.

He said that with 40 companies, Malaysia has a strong presence in Pakistan in sectors like construction, IT, telecom etc. The Prime Minister said that Malaysia has excellent universities and Pakistan would like to benefit from their rich experience by sending its students there for education.

Prime Minister Badawi expressed full satisfaction over the outcome of talks and hoped that the trade and economic ties between Pakistan and Malaysia would further improve.

The two countries currently have a trade volume of around $700 million which, the Malaysian leader hoped, could reach the $1 billion mark.

In reference to the proposed joint investment company, Prime Minister Badawi said that presence of Pakistani investment companies in Malaysia would be yet another catalyst in further enhancing investment in the two countries.

He welcomed Pakistan's support to the World Islamic Economic Forum (WIEF) which is holding its second conference in Islamabad.

Prime Minister Badawi, who launched the WIEF last year, said that its first meeting in Malaysian capital Kauala Lumpur, also attended by Prime Minister Aziz, the Pakistan leader had proposed to have its second meeting in Islamabad.

He said it was a matter of great satisfaction to see that about 600 delegates from countries and business concerns were attending the three-day moot, including those from non-Muslim countries.

The Malaysian leader, who also hold the current chair of the OIC, hoped that the Forum would be able to expand economic relations between Islamic countries and also their commercial ties with other states.

"I hope that the Forum would be an important catalyst to increase the process of economic development in the OIC countries," he added. The Malaysian leader said that he also briefed Prime Minister Shaukat Aziz on the situation in southern Thailand.

Badawi said he had asked Thai Prime Minister to engage the people of southern part of his country in confidence-building measures to improve the situation. He expressed the hope that the new premier would be able to bring about peace and stability there.

In southern Philippine, he said, Malaysia has asked to have an international monitoring group there to initiate another round of talk that he hoped would help improve the situation there.

Responding to a question on the WIEF, he said it was too early to judge its performance, but added that the aim was to improve economic co-operation within the OIC countries. He said he was confident that the second meeting of the Forum would be very successful.

On exporting manpower from Pakistan, he said the process is on and his country would continue to export labour from the country as the opportunities arise.

Prime Minister Shaukat Aziz also expressed satisfaction and said that currently 15,000 workers were employed in Malaysia, but added that the export of manpower was always demand-driven, but the countries had made good progress this area.

About the WIEF, he said that that crux of any economic co-operation was to engage private sector of different countries.

He hoped that the Forum would institutionalise private sector networking and connection within the Ummah and beyond. "In the world of globalisation, we have to look at all countries to interact with each other," he said.

The primary focus of the Forum, he said, was the private sector from Islamic countries, but stressed the imperatives to engage everybody so that it provides one of the best platforms for interaction with the private sector.

He noted the immense interest of world business leaders after the Forum's first meeting and said that its second moot was being attended by more than 600 delegates that include cabinet level representations from many countries.

"The most important feature of any forum like this is bilateral network, which has been encouraged and provided for in various sessions," he added.

The Malaysian Prime Minister, when asked about the possibility of having one Eid within the Muslim Ummah, said his country has adopted a formula whereby it calculates the date for the sighting of the moon.

The two leaders also discussed how Zakat could be used for poverty alleviation. Pakistan would send a ministerial-level representation to Malaysia to attend a conference later this month on the subject.

The two leaders also discussed the issue of Dengue fever and Pakistan sought the advice from Malaysia for technical know-how and help to tackle this disease.

Earlier, Prime Minister Aziz welcomed the Malaysian leader at a formal ceremony held at the Prime Minister House.

At the ceremony, national anthems of the two countries were played. The Malaysian Premier inspected the Guard of Honour. Later, Prime Minister Aziz introduced the distinguished guest to the Services Chiefs and members of his Cabinet. Prime Minister Badawi also introduced members of his entourage to Prime Minister Aziz.

 

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ADB funding to implement 'water financing projects'

FAISALABAD (November 06 2006): The Water Financing Programme (WFP) will be implemented through Asian Development Bank's regional and private sector operations departments in Pakistan, India, Indonesia, Vietnam and other Asian countries during 2006-2010 and more than $15 billion would be provided for the project.

According to ADB sources, for 2006, the programmed level of water investments already exceeded $2.4 billion. When the programme is expanded to 2009-2010 on a pro-data basis, total delivery could reach $12 billion over five years, exclusive of co-financing. While planned water investments will continue across the region, WFP will focus in its first phase on India, Indonesia, Pakistan, PRC, and Vietnam, which together account for about 80 percent of the current pipeline of water investments.

ADB's regular lending programmes in these countries will also offer the greatest opportunity to explore an expansion of water lending beyond current levels.

To complement higher levels of lending, ADB will pursue additional bilateral co-financing partnerships to increase technical assistance in support of water investments. "Our aim is to increase assistance from the current level of approximately $12 million to $20 million per year for national water sector reforms, project preparation, monitoring and capacity development," said ADB sources.

In implementing WFP, ADB will further strengthen collaboration with civil society, including knowledge partners and the academe, development and advocacy NGOs, parliamentarians and support for media networking.

To ensure successful implementation, ADB's Regional and Sustainable Development Department would monitor the programme through funding support, innovation, knowledge sharing and the provision of special advisers to regional departments and the private sector operations.

The Asia Water Watch 2015 study, commissioned by ADB, WHO, UNDP, and UNESCAP, estimates that annual investments of $8 billion-at minimum will be needed over the next decade to meet millennium development goal (MDG) targets for safe drinking water and sanitation alone. Additional investments are needed for irrigation services, river basin management, flood management and mitigation, and wastewater management to ensure the future of this precious resource. Investments in water are also crucial to meet the broader MDG targets of reducing poverty, hunger, child and maternal mortality and the incidence of major diseases, and improving environmental sustainability.

WFP WILL ENSURE THE DELIVERY OF A SUBSTANTIAL INVESTMENT, REFORM, AND CAPACITY DEVELOPMENT PROGRAM IN THREE KEY AREAS:

(i) Rural water services to improve health and livelihoods in rural communities, including investments in water supply and sanitation, and irrigation and drainage.

(ii) Urban water services to support sustained economic growth in cities, including investments in water supply, sanitation and wastewater management, and environmental improvement; and

(iii) Basin water management to promote integrated water resources management and healthy rivers, including investments in the infrastructure and management of multifunctional water regulation and hydropower facilities developed in a basin context, flood management, and the conservation and improvement of watersheds, wetlands, and ecosystems.

The WFP focuses on combining increased investments in water infrastructure with capacity building, private sector participation, and improved water governance.

It is expected that such investments will be well over $2 billion annually, representing approximately 25 percent of overall ADB lending over a three-year moving average period, and a doubling of ADB's investments in water compared to 1999. WFP will also mobilise co-financing and additional investments from governments, the private sector, and multilateral and bilateral partners. An initial target of $100 million in bilateral grant assistance has been proposed to support the implementation of WFP.

 

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'Pakistan being recognised as economic leader'

ISLAMABAD (November 06 2006): International community is now recognising Pakistan as an economic leader. Minister of State for Economic Affairs, Hina Rabbani Khar talking to PTV said, "World Islamic Economic Forum, I think, is of a great significance to Pakistan because it shows to us at least that the world is now recognising Pakistan as an economic leader."

She said successful holding of second meeting of World Islamic Economic Forum will put Pakistan on the world stage as a country which is capable of hosting such event and a country which has been able to generate the type of interest in the world for hosting such events.

This forum has a unique significance as it is really for the interest of the Muslim World.

Federal Minister for IT and Telecom, Owais Ahmed Leghari said these forums usually provide a great opportunity for investors and business leaders within a certain region to be able to network with each other. It is not just these interactive sessions.

Question Answer sessions and interactive sessions that add a huge amount of value to the people who are actually the audience for them. But it is the opportunity outside these sessions in common areas to interact with the business leaders and success stories of this region to interact with each other and try to explore new opportunities, new areas in which mutual co-operation could be of economic benefits to all of them.

Minister of State for privatisation and Investment, Omer Ahmed Chumman said, more importantly, how globalisation is taking an impact on this investment scenario in Pakistan is that more and more investors from the Far East and the Middle East are coming into Pakistan thinking that there is a much better environment to investment into Pakistan because there was a transparency in the system, there was continuity in the policy, and obviously there is direction of the government in terms of promotion of investment.

Chairman Higher Education Commission (HEC), Dr Atta-ur-Rehman said the World Islamic Economic Forum is a major opportunity for the Islamic countries to come forward with a clear cut strategy and an action plan based on this vision to develop economy.

Advisor to the Ministry of Finance, Dr Ashfaq Hassan Khan said this forum will bring not only the Islamic World closer as far as the economic and financial integration was concerned but this will also dispel some of the misperception which had been projected outside Islamic world about the Muslim countries. These countries are also very active in business and financial world so this is a right step in the right direction. And for Pakistan this was a great honour, he added.

 

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Oil sector to get $4 billion more investment

ISLAMABAD (November 06 2006): Country's booming oil sector will be receiving another $4 billion investment in a joint initiative by the Pak-Arab Refinery. International Petroleum Investment Company and Associated United Arab Emirates International Petroleum Investment Company (IPIC) and Associated UAE Investors will take up to 75 percent stake.

While Pak-Arab Refinery (Parco) will take the 25 percent stake to set up the Khalifa Refinery.

This Refinery is planned at Khalifa Point about 50-km west of Karachi on the coast line and 25-km South West of the industrial town of Hub.

Parco Managing Director Muhammad Rasheed Jung told APP in an interview that the refinery will help overcome the diesel shortfall in the country and produce value-added products for the local market as well as for export.

"Our objectives is to establish a market leader in producing clean high quality middle distillates and other value-added products for domestic market and for export in the international market", said Rasheed. "It is after quite some time that the oil industry is receiving that voluminous investment," he added.

About 1000-acre of land is available for the project being planned close to Hubco power plant (1,250 MW) and in the vicinity of the Bosicor Refinery.

The refinery requires SPM, marine for receiving crude and product export and products pipelines connected to white oil pipeline terminal at Port Qasim. The Government of Pakistan (GoP) will facilitate it with infrastructure.

Rasheed said the refinery will have a capacity to process about 250,000 to 300,000 tonnes of crude oil and hence double the existing refining capacity of the country.

"Oil production at this refinery will help overcome the shortfall and meet the occasional shortfall like hydel energy and LPG," he said.

Rasheed said products over and above the local needs will be exported. As part of the incentives of the government for foreign investment the refinery location is being declared export processing zone (duty-free area) and all imports during project implementation and operation will be duty-free.

Rasheed said the desired product quality is based on Euro-IV specifications, a parameter in vogue in European and other developed countries.

The government has already set the 2011 as cut-off date for refineries to elevate their standards to Euro-III in phases, he said, adding the detailed refinery configuration will be finalised after scheme optimisation.

Rasheed, However, said conceptually it will be a deep conversion refinery based on latest technology having isomerization, reforming hydrocracking and coking technologies.

Its major units will include crude distillation, vacuum distillation, isomerization, gas treating unit, Naptha HDS, Reformer, kero HDS, hydrocracker, delayed coker, sulphur recovery unit and hydrogen plant, he added.

Rasheed said the refinery will maximise middle distillates (diesel, jet fuels and kerosene) and current plans reveal that more than 60 percent of refinery production will be middle distillates.

Gasoline will be one of the major products with 2.1 to 3.0 million tonnes per annum that would be suitable for domestic and major markets with high RON/MON and low aromatic and benzene.

 

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Missing the big picture

At a time when Pakistan’s sprawling textile industry was confidently expecting large-scale increase in its exports, following the end of the textile quota, the foreign sales have come down by over 10 per cent during July-September compared to the same period last year.

According to present negative trends, the current quarter’s export performance, it is feared, may turn out to be far worse. Urgent remedial measures have to be taken by the government, industry and exporters, if the adverse trend is to be reversed decisively

The fall in Pakistan’s textile exports has come at a time when not only South Asian competitors in this sector are doing very well but even Cambodia in the Far East is said to be exporting more textiles than Pakistan.

This has happened despite the investment of five billion dollars on the expansion and modernisation of the industry and a million dollars more on the erection of factory buildings.

And this has happened despite the assertion of the ebullient textile industrialists that they will do far better in a textile quota-free world.

While Pakistan’s overall exports rose by only 2.9 per cent in the first quarter of this financial year, Indian exports went up by 37 per cent in the first half of its financial year ending September 30.

Pakistan’s July- September textile exports were for $2.449 billion against $2.73 billion in the first quarter of last year.

Official figures show that export of almost all textile items, except cotton yarn and cotton carded, recorded a negative growth despite the recent support package, fiscal and financial, announced by the government.

The concessions given to the industry by the government, instead of helping to boost the exports, appear to have brought down the prices of Pakistani textiles abroad and reduced their market size except for cotton yarn. Compared to that the more expensive export items of China and India had a far larger sale in the European Union.

The export of ready made garments from Pakistan dropped in the first quarter by 7.84 per cent and cotton cloth export declined by 14.61 per cent. But export of cotton yarn increased by 19.57 per cent.

Export of knit wear, a value added item declined by 10 per cent, bed wear dropped by 19 per cent and towels by 4.82 per cent.

Export of made-up articles including other textiles declined by 33.54 per cent and art silk and synthetic textiles came down by 24.57 per cent. These are indeed large losses, more so for those confidently hoping for larger exports.

Cotton yarn exporters are having an exciting time because of nearly 20 per cent rise in yarn exports. While that makes yarn more expensive for those manufacturing and exporting fabrics and other textiles at home, the yarn is sold at cheaper prices abroad by passing on a part of the benefit to the foreign buyers given by the government to the spinners.

While other textile exporters are protesting against the financial concessions given to the spinners, the spinners are asking for more subsidies. And the All Pakistan Textile Mills Association is supporting that demand as it is dominated by the spinners.

But other textile exporters want a check on yarn exports in the form of quota restrictions or a duty on exports of yarn so that they can get all the yarn that they need and at fair prices and make their products more competitive to sell abroad.

While the interests of the textile industry were being looked after by the ministry of industries and the ministry of commerce until recently there was clamour for a separate textile ministry. But now there is not only a cabinet minister for textiles, but also a minister for state which is wholly unnecessary.

And yet the textile exporters are protesting that all that the textile ministry is doing is to ask for concessions for the textile mill owners and not looking at the larger problems of the industry.

Evidently the three ministries have not been able to solve the problem of the textile industry in a highly competitive world where decisions have to be taken quick and actions follow immediately.

So, the textile exporters sought intervention of Prime Minister Shaukat Aziz. He has promised to do the needful and he has asked the Planning Commission to suggest measures to raise Pakistan’s exports from 13 per cent of the GDP to 15 per cent.

A small committee has been set up under Tariq Saigol to come up with urgent solutions. Both the bodies have yet to submit their reports.

It is not good for the country that the yarn exports flourish at the cost of cotton cloth, readymade fabrics and knitwear which have received serious setbacks on the export front.

The yarn exports are increasing at the cost of other higher priced textile exports at a time when the country has run out of its own cotton and it may have to import a million bales of cotton this year apart from importing finer cotton to make better textiles.

There is nothing glorious in extracting a great deal of concession from the government and then selling the yarn at cheap prices abroad. The textile industrialists should improve the quality of their products and become more venturesome in the exports. If the current policy results in a closure of about 300 knitwear units or eventually a million spindles, as claimed by the textile industry, that would damage the economy a great deal.

Instead of often rejoicing over higher exports, the mill owners should promote the value added goods and try to get far more for every pound of cotton textile. Pakistan cannot sacrifice its large economic interests for the small gains of the spinners.

The spinners have dominated the industry for too long. Now that we have no surplus cotton, the policy of rejoicing over the export of cheap yarn should give way to a more sound approach to textile export.

Textile mill owners should be far more enterprising and far less conventional, and should come up with new products on the basis of market studies abroad and new designs that reflect the new trends abroad. They should look for new markets, moving away from their quest for cheap markets and radicalise their trade.

They should participate in international trade fairs and fashion shows and improve the efficacy of their business practices.

They need more educated sales force and they have to keep up with the new trends in the world textile trade which has changed a great deal after the quota system ended and meet new market demands. And they have to prefer exporting more and more of the value added to cheap goods and emerge successful through a determined quest for success.