Pakistan Economy - News & Updates - Archive

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15 MoUs to be inked during Chinese president's visit

ISLAMABAD (November 07 2006): Pakistan and China are going to sign 15 memorandum of understandings (MoUs) during Chinese president's visit to Islamabad, being scheduled for the last week of the current month.

A Pakistani officials team, headed by Planning Commission chairman Dr Akram Shaikh, is currently in Beijing to discuss modalities with Chinese public and private sector companies for preparing framework of the (MoUs).

The team includes Petroleum Secretary Ahmad Waqar and Planning Commission Member Infrastructure Dr Asad Shah. Sources told Business Recorder on Monday that Pakistan is expecting $15 billion Chinese investment in a number of key areas in next three to four years and Chinese president's visit will provide an opportunity to help Chinese companies invest in Pakistan in a big way.

The areas and projects for which Pakistan is willing to sign MoUs are exploitation of Thar coal, development of a special industrial city in Gwadar, setting-up of a big refinery at Gwadar Port and a pipeline to carry refined oil from the port to China.

Pak officials team will also prepare paperwork for signing MoUs for getting Chinese technical assistance to improve its agriculture sector performance.

The sources added Pakistan is seriously concerned over its shrinking per acre agricultural output and wants help from china in this regard. China has shown great interest in Gwadar Port development and offered Pakistan to develop it on the modern lines within short time.

Shinwa Group, a mining giant, is willing to get a contract from the government of Sindh for mining of coal at Thar. The Chinese company has already conducted a feasibility study, confirming Thar coal reserves as huge.

 

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Kuwait lifts ban on Pak labourers

KARACHI: Kuwait has removed ban on visa for Pakistani labourers, lifting the local operators’ hope, which eye the Arabian state as potential importer of more than 50,000 country’s workforce within a year after the latest development.

The fresh move came after series of meetings between Kuwaiti authorities and high ups of Pakistan’s federal ministry of labour, manpower and overseas Pakistanis, sources privy to the development said.

“The Kuwaiti government in fact stopped issuing visas to Pakistani labourers on undisclosed grounds more than six months ago,” said a source in trade of manpower export and close to the authorities.

“The federal minister recently visited Kuwait and held talks with the authorities concerned and managed to convince them for the removal of such ban. The new visa policy for the Pakistani labourers would be effective within next few days.”

He said the local Overseas Employment Corporation (OEC) had also called a meeting of local operators to brief them on the new Kuwaiti policy, which would accelerate the process of manpower export to the Arab country.

Hundreds of thousands of Pakistanis fly abroad every year since early 1970s to get better employment opportunities. The overseas Pakistanis have been instrumental in managing good foreign reserves during last three years and bridging trade deficit through remittance they sent back to home.

The country faced more than $12 billion trade deficit during the last two financial years, which was offset to some extent through more than $8 billion remittances sent home by the overseas Pakistanis during the same periods.

Kuwait, which has been main importer of Pakistani manpower, however remained unpredictable during the last two years on off and on bans on the Pakistani labourers and in consistent visa policy. However, the latest move as overseas local overseas employment promoters may appears as lasting.

“Kuwait has a potential of importing 100,000 Pakistani labourers in a single year,” said Hanif Rinch, Chairman Pakistan Overseas Employment Promoters Association (POEPA). “Due to the continued violence in the neighbouring Iraq, such figures do not appear achievable but still there is a potential to attract thousands of Pakistani workers.”

He said strategy of Arab countries to localise the labourers input was the main reason behind the ban on Pakistani manpower in Kuwait and the trend had also caused serious decline in overall manpower exports from the country.

The least hiring of Pakistanis in Saudi Arabia and banned put by Qatar, Kuwait and Bahrain on Pakistani manpower imports have emerged as threats to hit the permanent manpower export feature from the country.

During 2005 total 91,773 people flew abroad against 173,824 Pakistanis left the country in 2005. This shows a negatives difference of 47.2 per cent in a single year and the gap has been on the rise this during 2006.

The operators say declining trend in manpower export may affect the country’s foreign exchange reserves negatively, as overseas Pakistanis have been one of the major sources in forex reserves rise during the last few years.

 

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Bidding for refinery near Hub cancelled: Govt to sign accord with UAE company

ISLAMABAD, Nov 6: The government has cancelled its decision to hold International Competitive Bidding (ICB) for setting up of a $4-5 billion coastal refinery at Khalifa Point near Hub in Balochistan, and instead, has decided to sign an agreement with a UAE-based company for the project without any bidding.

In the process of shelving ICB, the estimated cost of the project has increased by more than 100 per cent to over $4 billion from $1.7 billion over a period of just six months.

Similarly, instead of saving time required by doing away with ICB, the project completion date has been delayed by more than a year to an unspecified date in 2011-12 instead of December 31, 2010, official document revealed.

The government would hand over about 1,000 acres -- out of a total 1,800 acres belonging to State Petroleum Refining and Petrochemical Company (Perak) -- to the UAE-based investors free of cost but this would not be treated as its equity but a facilitation incentive in addition to complete tax holidays as available to other Export Processing Zones (EPZs) in the country and crude imports will be completely duty-free.

To be the largest refinery in Pakistan so far, the capacity of Khalifa-Coastal Refinery of up to 13 million tons would be higher than the country’s total existing capacity of about 12.5 million tons. The refinery would now be a joint venture between International Petroleum Investment Limited (IPIC) and Pak-Arab Refinery Limited (Parco) on 75:25 per cent basis. The IPIC is a company directly owned by the Abu Dhabi government while Parco is a joint venture between Pakistan and Abu Dhabi government.

As such, IPIC’s total shareholding in the refinery would come to 84 per cent but IPIC would have maximum voting rights of 74 per cent, said Muhammad Rasheed Jung who is managing director of Multan-based Parco and has been given the assignment to complete the Khalifa-Coastal Refinery.

He has so far set up three refineries including one in Pakistan that he now heads as managing director.

On April 14 this year, the prime minister-led Economic Coordination Committee (ECC) of the cabinet decided to set up a $2 billion mega oil refinery at Khalifa Point for commissioning by December 31, 2010.

Dr Ashfaq Hassan Khan, the government spokesman on economic issues had announced that the ECC directed the ministry of petroleum and natural resources to award the contract through an international competitive bidding on BOO basis.

M/S Enar Petrotech Services, the consultants appointed by the petroleum ministry, prepared a “BLUE BOOK” and worked out the project cost at $1.7 billion. The blue book containing terms and conditions and incentives was shared with a number of interested investors and as a result a number of Chinese, Japanese, Saudi and other Arabian companies showed interest in the project, official documents suggest.

Mr Jung, who was transferred by IPIC to Pakistan to set up Parco in 1989, told Dawn that he convinced secretary petroleum and his team that there was no need for the ICB since the project would be export-oriented and the products to be marketed in the domestic market would be sold under the existing pricing mechanism available to all other companies and hence his parent company "IPIC" be facilitated to set up the project that would bring in a sizable foreign direct investment, so direly needed by the country.

He said the secretary petroleum and director general oil visited the UAE last month and within three days of their stay, the IPIC management issued a letter of acceptance to set up the project as per terms and conditions approved by the government of Pakistan but without ICB.

With the completion of Khalifa Refinery, the UAE group would have a capacity to refine about 17.5 million tons (including 4.5 million tons of Parco) of petroleum products in a total refining capacity of 25.5 million tons, compared with just eight million tons capacity of all the remaining five refineries - an ideal situation for POL monopoly.

Mr Jung said following IPIC’s consent, the ECC withdrew its April 14 decision of holding ICB. Instead, it decided on October 31 (last week) to allow IPIC to enter into a joint venture with its subsidiary Parco to set up the refinery “at an estimated cost of $4-5 billion for commissioning by the year 2011-2012,” says the relevant summary.

Dr Ashfaq said after the ECC meeting on October 31 that IPIC of the UAE and Parco jointly owned by the governments of Pakistan and Abu Dhabi had been allowed to set up a $4-5 billion coastal refinery at Khalifa Point to have the capacity to process 200,000-300,000 barrels of oil per day. He declined to comment about the bidding.

According to the summary, out of IPIC’s 75 per cent stake, half of the stake would be retained by IPIC while the remaining half to be taken over by other UAE government institutions including companies from the Emirates of Abu Dhabi and Dubai. Parco will be the operator of the new coastal refinery.

The Asian Development Bank (ADB) has also shown interest to be the partner in the project and Parco would be at liberty to sell its 20 per cent shareholding to the ADB with the GOP’s approval. As such, Pakistan’s shareholding would practically reduce to about three per cent in view of envisaged 20 per cent offloading of shares by the Parco.

The refinery would be a state-of-the-art deep-conversion project with hydrocracker and delayed cocker facilities and would produce high quality middle distillates and other value added products and would not produce furnace oil and hence overcome diesel deficit which currently stands at about 4.5 million tons per annum.

It would export motor spirit and generally produce EURO-IV specific products - environmentally much better than EURO-II products currently produced by local refineries, Mr Jung said.

At present the country consumes 16 million tons of petroleum products, of which 82 per cent requirement is met through imports. Total refining capacity in Pakistan currently stands at 12.8 million tons.

This 1800-acre land was purchased by the state-owned Perac in the 1980’s for setting up a refinery in the public sector in collaboration with Iran. However, the project could not materialise due to differences between the two governments over guaranteed rates of return.

Besides other incentives, 80/20 rule, which requires export of 80pc of total production to foreign countries, applicable for industrial units established under EPZA rules would stand relaxed for this project. There would be no restriction on import of crude oil. All crude oil imports would be exempt from customs duties and tax. All other incidental charges associated with the import would, however, be applicable.

Moreover, the government would facilitate the installation of supporting infrastructure including Single Point Mooring (SPM), sub-marine pipelines, product pipelines and electric power supply from national grid. The government would, however, not provide any guarantee for return on investment and the refinery would have to optimise its own operations for reasonable margins.

 

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Tuesday, November 07, 2006

IT sector to get $3b investment in 4 years

ISLAMABAD: Further investment of $3 billion is expected in country’s IT and Telecom sector by 2010 due to the consistent policies and incentives offered to the investors.

Senior Project Manager Ministry of Information Technology Salman Maalik Monday told that around 750 reputed IT companies were working in the country due to excellent profit margins and availability of cheap skilled labour.

Planning is being finalized to ensure judicious utilization of Rs 3 billion research and development fund. Universities would be equipped and provided excellent facilities to ensure production of skilled labour in the country, he said. World’s GSM association has already awarded Pakistan as a country providing mobile companies excellent opportunities to grow.

 

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Tuesday, November 07, 2006

Kalabagh and Basha Dams will change Pakistan’s fate: Hameed

* WAPDA chairman says Kalabagh will generate over $1b revenue annually
* Kalabagh to be used only as a water storage and power generation facility

ISLAMABAD: The construction of the Diamir-Basha and Kalabagh dams will change Pakistan’s fate, said WAPDA Chairman Tariq Hameed in a briefing to members of the National Assembly’s Standing Committee on Planning and Development on Monday.

Hameed said that tender documents of the Kalabgh Dam had been finalised and the dam could be built in six years in an estimated cost of $6.1 billion. “This dam – the last on the Indus River, if built – will have a storage capacity of six million acre feet (MAF) of water with a power generation capacity of 3,600 mega watts per day,” he said. “As far as the relocation of people is concerned, the dam’s construction will affect 78,000 people in the Punjab and 42,000 in the NWFP on 27,000 acres of land in Punjab and 3,000 acres of land in the NWFP,” he added.

Hameed said that the dam would be used only as a water storage and power generation facility with no irrigation purposes except control of the Down Kotri water flow for better distribution of water.

He said the construction of the Diamir-Basha Dam would be completed in 2016 with an estimated cost of $7 billion, a water storage capacity of 6.5 MAF and power generation capacity of 4,500 MW. He added that the dam would affect 22,000 people living in the area. The chairman said that WAPDA planned to relocate the affected people within five kilometres of their present locations. “We have planned nine modern villages on both sides of the Basha Dam lake and 29 for the Kalabagh Dam out of which 16 will be in Punjab and 13 in the NWFP,” he added.

Hameed said the annual accumulated income of Kalabagh would be more than $1 billion while Basha would generate an income of Rs 82.3 billion.

Responding to members’ questions on the distribution of money to the affected people, Hameed said that WAPDA would distribute the money to the provinces since it was a provincial matter. He dispelled the notion that big dams were not being built in the world because of their ecological fallout, saying that 59 big dams were being built in China, 35 in Japan, 22 in Turkey, 28 in Iran and 6 in India, while Pakistan was constructing only four big dams.

He told committee members that other countries stored 40 percent of their natural flowing water while Pakistan was currently storing only 13 percent. “We started with 18 percent, but have reached 13 percent due to salinity in the dams. Even if we build Basha by 2016, we will be storing only 13 percent of the natural flowing water keeping in view the salinity ratio in the old dams,” he added.

Earlier, opposition members staged a walkout to protest the briefing on the Kalabagh Dam. The opposition members, including the PPPP’s Hizbullah Bughio and Khalid Iqbal Memon and the MMA’s Razia Aziz, were joined by Syed Javed Ali Shah, a member of the PML-F – a coalition partner of the ruling PML.

However, committee chairman Sardar Bahadur Khan Sihar persuaded opposition members to end the boycott and attend the meeting. The protesting members said that they were not against the construction of big dams, but were opposed to the construction of Kalabagh Dam against the wishes of the three smaller provinces.

They said that the government should refer the matter to the Council of Common Interest (CCI) to win the support and confidence of the smaller provinces.

 

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PM wants development, infrastructural growth in tandem

ISLAMABAD (updated on: November 07, 2006, 19:38 PST): Prime Minister Shaukat Aziz has said that the development and growth of infrastructure in the country has to move in tandem with the growing economy and the government is building quality infrastructure to improve productivity, efficiency and competitiveness.

The prime minister said this while talking to Marcus Fedder, Chairman Pakistan Infrastructure Fund, who called on him at the PM's House on Tuesday morning.

The prime minister said that Pakistan's economy is growing by six to eight percent per year and the government is committed to building dams, roads, ports and airports to facilitate the process of economic development.

Providing electricity and natural gas to the people to transfer the benefits of high economic growth at the grassroots level is another key priority of the government, he added.

The prime minister said that logistics chain throughout the country is being improved to ensure ease of doing business and reduce travel time and cost of transportation of goods and services. He said the government encourages the setting up of Pakistan Infrastructure Fund so as to allow investment in the country.

Fedder told the prime minister that with its headquarters in Dubai the Fund would be launched with $500 million having an international investor base comprising international investors around the world. He said that the Fund would be executed through public-private partnership.

 

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Infosat launches first broadband satellite hub in Pakistan

KARACHI, Pakistan, Nov. 7 /CNW/ - Infosat Communications, Inc., Canada's
leading satellite solutions provider, announced that it has formally completed
its 22% investment in Pakistan's Comstar ISA Ltd. This venture will see both
companies emerge as pioneers for the introduction of the latest in satellite
communications technology into Pakistan for the very first time. The expansion
into this growing market for broadband solutions is already being seen as a
turning point for businesses, enterprises, and government agencies in Pakistan
wanting reliable operability and coverage for their communication needs.

The Satellite Broadband Hub is now commercially available throughout the
country and will be known as the "Connect" solution. A VSAT network not unlike
the ones which have made Infosat Communications an industry leader in North
America - its ability to meet the needs of various sectors, including banking,
oil and gas, and government organizations is well on its way to fruition with
several key projects already implemented.

Infosat's brand represents unparalleled expertise and customer support,
both of which has helped to build its vast portfolio of clients since 1985 by
introducing innovative products and customized solutions to assist companies
with their communication requirements. Further to this, Comstar ISA is
Pakistan's leading satellite service provider with nearly 15 years experience
in the telecommunications sector.

"We are truly excited about incorporating the capabilities and reputation
of Comstar with Infosat," said John Robertson, Infosat President and CEO.
"This investment represents a unique opportunity for both companies to
solidify their foothold in Pakistan where the use of satellite technology is
still in its infancy, but the demand is ever-increasing."
"We feel confident that we now have the market presence and backing
required to satisfy the demand for satellite technology," said Sami Bajwa,
Comstar President and CEO. "Infosat is well known in North America, and has
experienced solid growth year over year, expanding their operations
successfully into Europe and Africa. Without a doubt, their decision to
explore the market potential in Pakistan alongside Comstar will be a rewarding
one."

Carey Healey, Senior VP and GM of Infosat states, "This investment
represents a progression towards a truly global service whereby multi-national
companies are able to efficiently connect their voice and data circuits back
to their head offices in North America and beyond. No matter what remote area
their new project is located in, Infosat and Comstar can provide a solution
that is scalable and unique to their business."

 

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SSGC to raise Rs4 bln for 28pc supply rise

KARACHI (updated on: November 08, 2006, 21:11 PST): The Sui Southern Gas Co Ltd (SSGCL) said on Wednesday it would raise 4 billion rupees ($66 million) via bank loans and a domestic Islamic bond to fund a roughly 28 percent increase in the gas volumes it distributes.

The firm, which is 70 percent government-owned, has entered into an agreement with a consortium of banks to borrow 3 billion rupees next month, said Abid Sherani, chief financial officer of SSGCL.

SSGCL is also high on the government's privatisation agenda, and Islamabad plans to sell a 51 percent stake along with management control.

The company has embarked on an infrastructure development programme to update and expand its distribution network, which is part of the government's overall plan to reduce dependence on imported fuel oil.

SSGCL trades in gas from the country's largest field at Sui in the troubled Balochistan province.

The violence has included attacks on gas pipelines, but analysts say it is unlikely to keep investors away given the high potential for profit from the company.

PRIVATE BOND PLACEMENT

Sherani also said a 1 billion rupee Sukuk Islamic bond would be privately placed this month.

"Presently we are negotiating yields on the bond with the arrangers, but the rates will be floating," Sherani told Reuters. He said the five-year bond would pay interest linked to the six-month Karachi interbank offered rate.

Sherani said the funds raised would be used to expand the company's gas supplies to customers to 1,800 million cubic feet per day (mmcfd) by 2008. Currently, the company is supplying 1,400 mmcfd to its 1.9 million customers.

The company plans to raise its distribution capacity by more than 200 mmcfd by the end of 2007.

Sherani said the company planned to invest a total of 10 billion rupees in the current fiscal year to finance its projects, which entail 70 percent debt financing and 30 percent through the company's own resources.

"A total of 6 to 7 billion rupees are expected to be raised this year through various instruments ... the money is going to be raised as and when it is required," he added.

The firm's Sukuk will be the country's second in the domestic market after state-utility Water and Power Development Authority sold a 8.0 billion rupee Islamic bond in February.

Dubai Islamic Bank and Standard Chartered Bank are the main arrangers of the bond.

 

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Overseas Pakistanis investing in housing: 60 per cent flats booked

KARACHI, Nov 7: About 60 per cent of flats in newly announced housing projects are booked within two weeks. Expatriate Pakistanis are active in the property business in Karachi and their share in new deals is not less than 30 per cent.

These facts emerged from a survey conducted by Dawn. A number of stakeholders in the property business were contacted and their views were sought over the demand, viability and possible future of housing schemes advertised.

It has been observed that builders prefer pre- and post-Ramazan period to announce new schemes. Among others a reason could be the fact that most of overseas Pakistanis visiting the country in a year come during this period.

Association of Builders and Developers (ABAD) Chairman Hafiz-ur-Rahman Butt told Dawn that some six new projects of flats and apartments had been introduced by the builders which would be completed in three to four years and so far these projects had received a good response.

He said that builders had been flooding the print and electronic media with advertisements for the last few years especially on two religious occasions in order to lure visiting expatriates Pakistanis. There are hardly any big projects for new houses and bungalows because of high cost of land.

He said that the local immigrants, who migrate from various cities to Karachi, were not active in the property market as they preferred to stay on rent. Besides, majority of them were too poor to afford property in the mega city, he added.

“Pakistan faces over six million houses backlog and every year a new demand for 600,000 houses crops up for residential purposes. More than 50 per cent of existing housing stock is over 50 years old. It is also estimated that 50 per cent urban population now lives in slumps and squatter settlements,” he observed.Both the private and public sector jointly provide 300,000 units every year, he added. “Improper infrastructure and lack of bank loaning facility for housing sector (like on the pattern of car leasing and financing) are the main impediments in meeting the rising demand”.

It is assumed that the new projects especially apartments will put a burden on the Karachi Electric Supply Corporation (KESC), which has already been infamous for record load-shedding in last summer and even till today. The KESC will have to make extra efforts in managing the additional load of power when these projects mature in the next three to four years.

Mr Rahman claimed that the KESC had already approved the power load for new projects.

He said ABAD had already discussed the power and water situation with Prime Minister Shaukat Aziz recently and apprised him about the new projects.

KESC Chief Spokesman Sultan Hassan told Dawn that by July 2007 the mega city would have additional power of 500-mw when Combine Cycle Power Plant would be installed. “The plant will be imported from Italy at a cost of Rs25 billion,” he added.

Power consumption is expected to reach over 2,500-mw next year. Last year in summer Karachi consumed 2,350-mw in which Wapda provided 750-mw while 250 mega watts were shared by two Independent Power Producers and the rest was generated by the KESC. In start of winter this year, power demand is 2,100-mw while in December, January and February it will range between 1,800-1,900-mw.

“We have a short-term arrangement for future power requirement but we can’t tell about our long-term plans,” he said while replying a query how the KESC would handle the power situation in view of upcoming mega housing projects.

He said that power demand was increasing by seven to eight per cent every year keeping this tempo in view the city would need additional 1,000-mw by 2009-2010. “We expect that power consumption in the city will reach between 6,000-7,000-mw by 2015 in case the 7-8 per cent economic growth is maintained,” he said, adding that the KESC could increase the load consumption in short-term only.

He said the KESC load sanctioning depended on availability. Last year there were some pending cases of builders for 250-300-mw but it could not be executed, he added.

Media Adviser Karachi Water and Sewerage Board (KWSB) Azizullah Sharif told Dawn that there was no water problem and even it would not be in future when new mega projects would mature after three to four years.

The real problem is distribution. Some 30-35 per cent out of total present water supply of 629 million gallons per day goes into losses due to leakage and pilferages, he said, adding that the KWSB has already divided the city into three zones in order to check water losses.

The city’s current water demand is 648 MGD.

The city gets 577 MGD from Indus Source, 100 MGD from Hub and two MGD from Dumlotte Well. Besides, 100 MGD is also being supplied from K-III project which started four months back. Out of 100 MDG from K-III, domestic consumers get 80 per cent supply while the rest is provided to the industries, he said.

He said a feasibility report was being prepared for another project to get another 100 MGD from the Indus Source. The report would be sent to the Ecnec for the approval.

 

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Infrastructure building govt’s top priority

ISLAMABAD, Nov 7: Prime Minister Shaukat Aziz has said that the country’s economy is growing at annual rate of six to eight per cent and the government is committed to building dams, roads, ports and airports to facilitate the process of economic development.

The prime minister was talking to Pakistan Infrastructure Fund Chairman Marcus Fedder who called on him at Prime Minister House on Tuesday.

The prime minister said that the infrastructure development had to move in tandem with the growing economy and the government was building quality infrastructure to improve productivity, efficiency and competitiveness.

Providing electricity and natural gas to the people to transfer the benefits of high economic growth at the grass roots level was another key priority of the government, he added.

He said that the logistics chain throughout the country was being improved to ensure ease of doing business and reduce travel time and cost of transportation of goods and services.

Mr Aziz said the government encouraged the setting up of Pakistan Infrastructure Fund so as to allow investment in the country.

Mr Fedder told the prime minister that with its headquarters in Dubai the Fund would be launched with $500 million having an international investor base.

He said that the Fund would be executed through public-private partnership.

Adviser to the prime minister on finance Dr Salman Shah and senior government officials also attended the meeting.

Talking to World Islamic Economic Forum (WIEF) Chairman Tun Musa Hitam who called on him on Tuesday, the prime minister said that Muslim countries which were facing similar challenges needed to adopt a common strategy to tackle them.

He further said that the WIEF had emerged as a platform for networking among business communities of the Muslim countries and it would also strengthen economic ties between the Muslim and non-Muslim countries.

Underlining the richness and diversity of Muslim world in human capital as well as physical resources, the prime minister emphasised the need for improved governance and reforms within individual Muslim countries and enhanced economic cooperation among them for the economic renaissance of the Ummah.

“Economic cooperation based on commonality of interest complementing each other will lead to economic revival of the Muslim world,” the premier said. The WIEF has received an overwhelming response which augers well for the economic development of the Muslim countries, he added.

Tun Musa Hitam said the feedback of the WIFE was excellent and it was shaping up nicely as a platform of economic cooperation and it was hoped that it would gradually emerge as the most important forum of the Muslim world.

 

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Malaysia offers joint venture

ISLAMABAD, Nov 7: Malaysian Minister of Plantation, Industries and Commodities Datuk Peter Chin Fah Kui has offered joint ventures in the field of olio chemicals to the members of Pakistan Vanaspati Manufacturers Association (PVMA).

Talking to a PVMA delegation led by its chairman Sheikh Amjad Rashid at the sidelines of the World Economic Forum (WEF) here on Monday, the Malaysian minister assured guaranteed availability of necessary inputs and other incentives to the joint ventures set up in Pakistan in the field of olio chemicals.

Mr Datuk asked the chairman PVMA to build a consortium of the PVMA member units for import of palm oil products from Malaysia, as it will benefit them while negotiating the price as well as chartering of a ship for transportation of palm oil consignments.The chairman PVMA promised to look into this proposal during the meeting of the association being held on November 13.

He informed the minister that the PVMA was facing multiple problems with the Malaysian exporters of palm oil products as a result of which the Malaysian volume of trade of palm oil was shrinking in favour of its competitor country, Indonesia, which was offering lower prices.

He said if remedial measures were not taken, the Malaysian exporters will lose one of the biggest markets of palm oil products in Pakistan. Mr. Amjad pointed out there was always shortage of vessels carrying palm oil from Malaysia to Karachi. The PVMA members suffered high losses as they were required to pay the freight, customs duty and other taxes to the government, which is about 70 to 80 per cent of the C&F price of the commodity received by the PVMA members at Karachi ports.

The delay in shipment of the consignments to the PVMA member units by the exporters was another big problem, which, in fact, should be in accordance with the shipment period agreed while executing a supply contract.

The chairman further informed the minister that the PVMA member units, after paying the full price while opening a letter of credit, have to wait for a long time for the receipt of delivery orders and other shipping documents for release of the consignments.

 

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DP World out of race for Gwadar
BY MUZAFFAR RIZVI

8 November 2006

DUBAI — DP World is no longer in the race to clinch the contract for Gwadar Port operations in Balochistan province of Pakistan after declining to submit an 'Expression of Interest' following the issuance of the revised tender last month.

"We have looked carefully at this opportunity and have decided not to pursue it," a DP World spokesperson told Khaleej Times yesterday.

According to sources, PSA International of Singapore is still in the race and is considered to be a strong contender for Pakistan's first deep sea port, which is due to become operational by the end of this year after completion of the first phase.

Globe Marine Services of Saudi Arabia, Westport of Malaysia and Pakistan International Container Terminal (PICT), Karachi, are the other pre-qualified and short-listed bidders for the final competition.

The authorities concerned have directed the four pre-qualified port operators to submit their bids by December 4, 2006 to Gwadar Port Implementation Authority (GPIA) so that the handing over of port operations is finalised by the end of December.

According to sources, a policy board headed by the Prime Minister Shaukat Aziz will finalise the port operator after evaluating the bids to be submitted by the short-listed firms.

"The awarding of the concession for Gwadar Port on BOT basis is at an advanced stage and the government will complete the process by the middle of next month," sources said.

GPIA through Lloyds List on October 16 invited Expression of Interest (EoIs) from international port and terminal operators for Gwadar Port. The Authority approved four companies out of a total nine companies who had submitted EoIs within the stipulated timeframe.

Nine companies and consortia, who have submitted EoIs were Port of Singapore Authority (PSA) International Pte Ltd, Singapore; Pembianaan Redzai Sdn Bhd, Malaysia; Globe Marine Service Co, Saudi Arabia; a joint venture of Pakistani and French group-Pakistan International Container Terminal (PICT) and CMA-CGM group, Engro Vopak, Pakistan; National Company, Pakistan; Noor Investment Company, Saudi Arabia; Sea Trade Grains, Pakistan; and Mansour Al Mosal, Saudi Arabia.

The tender committee headed by Farooq Rehmatullah in consultation with Arthur D. Little (ADL), consultants for Gwadar Port, evaluated and short-listed four companies including PSA International, Singapore; Globe Marine Services, Saudi Arabia; Pakistan International Container Terminal (PICT), Karachi; and Westport, Malaysia. "The tender committee will make its recommendation by the December 10 to the Ministry of Ports and Shipping in order to get final approval from the policy board," he explained.

"It is expected that the signing of the agreement for the concession with the successful bidder will be finalised before the close of current calendar year," he said.

In answer to a question about participation of DP World in the bidding process, sources say DP World didn't submit its EoIs in revised tender process.

In answer to a question, he said the agreement would be 40 years lease on Built Operate and Transfer (BOT) basis and three companies would have to be set up to run different operations — port and terminal operations, marine services and free economic zone.

http://www.khaleejtimes.com/Display...usiness_November240.xml&section=business&col=

 

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Banks drive economic growth

PM seeks Malaysian expertise to develop Islamic banking

ISLAMABAD: Underlining the importance of a well-functioning financial sector for microeconomic stability, Prime Minister Shaukat Aziz on Tuesday said the banking sector in Pakistan had been transformed from a state-owned sector to a vibrant private industry, driving the economic growth of the country.

Talking to Dr Zeti Akhtar Aziz, Governor Central Bank of Malaysia, who called on him here at the PM House, the prime minister said Pakistan was working to establish Islamic banking as a parallel banking system comparable and compatible to conventional banking.

To achieve this, he said, the government would prepare a pool of Islamic financial practitioners who were innovators, agents of change and visionaries.

He said the sharing of experiences and expertise between Pakistan and Malaysia would enable both the countries to work closely and collaborate to spearhead the development of Islamic banking, finance and insurance.

The prime minister said the Memorandum of Understanding, signed recently between Pakistan and Malaysia in the field of banking, would help establish a framework of cooperation between the two countries for undertaking research, training and education in Islamic finance.

“Both countries will be able to benefit from each other’s perspectives of the industry as well as the pool of market practitioners, Shariah scholars, university professors, regulators and other service providers,” he said.

Dr Zeti Akhtar Aziz expressed the desire to further strengthen economic cooperation between Pakistan and Malaysia. She congratulated the prime minister and the government of Pakistan on the successful convening of World Islamic Economic Forum.

The meeting was attended, among others, by the Adviser to Prime Minister on Finance, Dr Salman Shah, Minister of State for Finance, Omar Ayub Khan, Governor State Bank of Pakistan, Dr Shamshad Akhtar and senior officials.

 

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Govt committed to enhance income of farmers: PM
Tuesday November 07, 2006

ISLAMABAD: Prime Minister Shaukat Aziz has said that government is making all out efforts to introduce an efficient supply chain in the country as it will read to reduction in prices, improvement in quality and enhanced incomes for farming community.
The Prime Minister said this while talking to Mr. Thomas Martin Huebner, CEO Metro Group, one of the largest Germany based wholesale Distributors in the world that plans to set up a chain of cash and carry outless across Pakistan. The Group is investing $ 200 million in Pakistan and scheduled to start its operation by the middle of next year.

The Prime Minister said that the government is focusing on improving logistics and supply Chain through better roads, railways, warehousing to ensure, and efficient delivery system in the country to improve competitiveness and productivity and reduce the production.

Mr.Huebner updated the Prime Minister on the progress of his company's operation in Pakistan and thanked him for the help being extended to it in setting up its business.

He informed the Prime Minister that other German investors are keen to invest in agriculture business, especially the dairy sector as Pakistan ranks amongst the top six producers of milk in the world.

Mr. Huebner who is currently in Pakistan to participate in the world Islamic Economic forum (WIFE), said that he had no doubt that several foreign businessmen attending the Forum will be encouraged to invest in Pakistan in view of attractive investment opportunities it offers.

 

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Dwindling reserves threatening economy

ISLAMABAD, Nov 8: With higher imports and slowing down privatisation, the foreign exchange reserves have started to deplete alarmingly and could cover just three to four months of imports from about nine-month coverage two years back, Dawn has learnt.

The latest estimates put total foreign exchange reserves at about $12.4 billion, of which $10.2 billion are currently held by the State Bank. After accounting for more than $1.2 billion liabilities and selling of dollars in the futures market by the central bank, net foreign exchange reserves stand close to $8.5 billion.

This means that the country’s reserves can cover about 3-4 months of import bill - a situation better only than last few months of the Nawaz Sharif government when reserves were enough just for few weeks of imports, a senior executive of a foreign bank told Dawn.

This is despite the government’s policy statements over the last year that it would maintain reserves to cover at least six months of imports at all times.

Pakistan’s imports in the first quarter of the current year have amounted to about $7.43 billion, averaging at around $2.48 per month, which is much higher than last year’s monthly average imports of about $2.38 billion. The trade deficit at the current rate of about $1.054 billion per month was also likely to cross $12.7 billion and put an additional burden of about $600 million by end of the year.

Sources in the lending agencies said the Asian Development Bank and the World Bank have been pointing out the declining trend in the foreign exchange situation and advising the government to put in place fall back arrangements and avoid overvaluation of the local currency.

The World Bank, said these sources, asked the government recently to pursue "an appropriate exchange rate policy that will avoid overvaluation of the currency".

Compared with this situation, these sources said, the foreign exchange reserves were increasing about two years back, at the same time prepaying high cost loans through creation of a sinking fund of about $1.2 billion that led to prepayment of about $1.18 billion debt to the ADB. At one time, the reserves had reached $13 billion, enough for more than nine months of imports and that too after prepayment of loans.

These sources said Pakistan has started to rely heavily on foreign direct investment (FDI) but this source under the exchange rules can go anywhere at any time, whether it is in the equity or the capital market.

“What the government can do in case the FDI starts to go back to its original destination because it would then put big pressure on the exchange rate of rupee and the level of reserves would drastically come down,” said a source at a multilateral agency.

A major part of the FDI during the last 15 months or so has been through the privatisation process, instead of asset creation that may not be available in the days ahead.

On top of that, the repatriation of dividends would put additional burden on foreign exchange reserves, the source said, adding the privatisation of PTCL alone has increased profit repatriation by about $210 million. This meant that total flight of foreign exchange in the shape of dividends would touch about $800 million by end of this year.

Already, he said, an arbitrage has been created in favour of the dollar owing to increase in interest rates by the State Bank of Pakistan and a foreigner could gain about seven per cent just by selling dollar in the local market and then by buying it back because of a stagnation in the value of rupee over the years.

The ADB told the government recently in writing that “the heavy reliance on these non-recurrent and sometimes volatile inflows (US payments for logistic support, privatisation and foreign investment in equities) is a major issue for sustaining such high levels of both imports and the current account deficit, highlighting the government’s need to strengthen the underlying fundamentals of the balance of payments.

Last year, the US provided over $1.1 billion to Pakistan for logistic support which may not be available in the longer run. Another $1.5 billion was borrowed through Sukuk and Eurobonds last year and $3.3 billion through selling of the state assets.

“Other worrying features were that the current account deficit rose so strongly, despite receipts of $1.1 billion from the United States for logistics support; and that one third of current account deficit financing was non-recurrent, and related to inflows from privatisations and foreign investment in equities,” the ADB said.

According to the ADB, the burgeoning current account deficit, continuing high inflation, and latent power shortages are potential risks to the country’s medium-term economic prospects. Moreover, additions to the pro-poor measures already announced in the FY2007 budget may, in the lead up to the 2007 general elections, further weaken the budgetary position in the coming year.