Pakistan Economy - News & Updates - Archive

[Owais]

SCRAs improve to reach $304.8 million

KARACHI (November 15 2006): Special Convertible Rupee Accounts (SCRAs), balances in which plummeted to $298.8 million on November 10, improved on November 13 to reach $304.8 million after fresh receipts of $7.6 million from USA.

Accordingly, USA's overall cumulative flows during the year so far rose to $127.4 million on November 13. On November 6 USA's balances stood at a record high level of $139.5 million.

On the withdrawals front, largest withdrawal of $0.9 million was recorded in the case of Singapore followed by smaller withdrawals of $0.7 million and $0.2 million in the case of UK and Hong Kong respectively. Negligible withdrawals also occurred in the cases of Guernsey, Qatar, and Switzerland.

As of now, USA is leading the list of top players followed by Singapore, UK and Hong Kong with their net cumulative flows during the year to November 13 amounting to $102.7 million, $90.4 million and $13.6 million, respectively.

At the stock market, mixed trend prevailed until the close of the market which ultimately witnessed a gain of 4.39 points in the KSE 100 index which rose to 10743.84 points on November 13. The KSE-30 index also showed a gain of 4.07 points closing at 13177.56 points. Both these indices use market capitalisation as the basis of comparison.

The BRIndex-30 Index, which uses turnover as the basis of comparison, however, shed 30 points over the level obtaining on the previous day to stand at 11,183 points indicating low trading in the shares covered by the Index.

 

[Owais]

Overall fiscal deficit contained to Rs 260 billion

FAISALABAD (November 15 2006): The Overall Fiscal Deficit (OFD) (excluding earthquake related expenditure) has been contained to Rs 260 billion, 3.4 percent of GDP in 2005-06 as against the target of Rs 285 billion, 3.8 percent of the GDP. While the OFD, including earthquake spending has been worked out at Rs 325 billion, 4.2 percent of the GDP during the period.

According to Finance Division's Budget Management Report 2005-06, prudent fiscal management is the foundation of a stable macroeconomic environment. Weak fiscal balances had been the major source of microeconomic difficulties in Pakistan.

The Overall Fiscal Deficit averaged above 7 percent of GDP in 1990s. After five years of extensive efforts, through reforms in the tax system and tax administration, the present government has succeeded in gaining fiscal stability.

The report said, total revenue receipts collected during 2005-2006 amounted to Rs 1077 billion as against the target of Rs 990 billion indicating an increase of Rs 87 billion. The tax revenue collected by CBR during 2005-2006 amounted to Rs 712 billion as against the target of Rs 690 billion indicating an increase of Rs 22 billion and 21 percent higher as compared to the last year's collection. Non-tax revenue receipts for the year 2005-2006 amounted to Rs 273 billion as against the target of Rs 215 billion ie an increase of Rs 58 billion. The major increases were on account of dividends' and other receipts.

Total expenditure during 2005-2006 was Rs 1402 billion as against the revised estimates of Rs 1415 billion. Current expenditure for the year 2005-2006 amounted to Rs 1035 billion out of which debt servicing and defence expenditures were Rs 237 billion and Rs 242 billion respectively.

According to provisional accounts, development expenditure for the year 2005-2006 has been booked at Rs 365 billion ie, 4.7 percent of GDP, which is higher by 0.5 percent than Overall Fiscal Deficit at 4.2 percent of GDP.

The OFD amounting to Rs 325 billion has been financed through net external borrowing of Rs 149 billion, non-banking borrowing of Rs 8 billion, bank borrowing of Rs 71 billion and from privatisation receipts Rs 97 billion.

Meanwhile, Corporate Finance Wing looks after the economic, financial and corporate affairs of all public sector entities (PSEs), which are working under the administrative control of the federal ministries/divisions. The financial support is provided to the PSEs for their re-structuring programme, in the shape of equity injection, and advancing government's loans for the working capital requirements and provision of subsidy to meet any shortfall through the GOP's budget.

Moreover, the PSEs are also allowed to avail Bank Credit to meet their financial needs. The government's policy decisions are implemented, relating to the issues for picking up of the government guaranteed liabilities and non-collectable loans, provided by financial institutions.

The financial and operational re-structuring of various public sector loss-sustaining entities was done to make them profit-earning. In this connection, the financial improvement plans (FIP) were drawn up by setting up the operational targets, which are being monitored regularly by the Finance Division. With respect to this, the necessary financial support is being provided regularly by the Finance Division.

The government also provides the financial support in the form of subsidy to PSEs, like TCP and USC in order to meet the objective of providing essential and primary food commodities to the consumers at reasonable and subsidised rates. The financial support is also provided through bank credit to the provincial food departments, Passco and TCP for the procurement of food and crop items and the guarantees issued to the Banks, in order to ensure availability of reasonable stock of commodities with the government departments.

The CF wing implemented the government's decisions to provide financial assistance to the corporate sector, during FY 2005-2006 as follows:

-- Wapda's debt servicing liability (DSL) towards the GOP, amounting to Rs 6.397 billion, was converted into the GOP's Equity in Wapda. Moreover, the GOP also injected new equity of Rs 384 million in KESC as per the sale purchase agreement signed at the time of privatisation of KESC.

-- Subsidy amounting to Rs 6.548 billion was provided to KESC for making it's cash shortfalls during the period from July 7, 2005 to November 29, 2005.

-- The Finance Division cleared inter-corporate circular debt of Rs 238.049 million payable by KESC to PSO/PKGCL.

-- Subsidy amounting to Rs 8515 million was provided to Pakistan Railways to meet its operational shortfall during FY 2005-2006.

-- Bank credit was arranged for the procurement of wheat by PASSCO, the provincial food departments and other entities. Moreover, subsidy of Rs 8.900 billion was provided to TCP on the import of wheat, fertiliser and sugar. An amount of Rs 0.957 billion was provided to PASSCO for wheat operations (Local procurements).

-- The Finance division continued to pay the instalments of mark up and principal amount of GOP's guaranteed loans/GOP Bonds, issued to Banks, against the liabilities of various PSEs during FY 2005-2006. In this connection an aggregate of principal amount of Rs 4926.297 million and mark up amount of Rs 2443.600 million was paid.

-- The Finance division provided an amount of Rs 1721.919 million as subsidy/grant and compensation to various PSEs, including Pak Dairy Development Company, Atta Relief Package and Ramazan Package to USC, compensation to Fauji Fertilisers, Bin Qasim Ltd (FFBQL) and Ghulam Ishaque Khan Institute (GIK) etc. An amount of Rs 250 million was injected as GOP's Equity in the capital of Pak Textile City Ltd and Rs 145.045 million were paid to Banks against servicing and re-payment of loans against the liability of USC and Peoples Steel Mills Ltd, which was treated as GOP's Equity in these entities.

Moreover, an amount of Rs 190.278 million was paid to Banks for servicing of loans against the liability of Pakistan Oilseed Development Board (PODB) and Heavy Electrical Complex (HEC), which was treated as GOP's loan to these Entities.

-- The Finance Division arranged local and foreign currency Bank loans, amounting to approximately Rs 6 billion to PIAC, against the GOP's guarantee. Moreover, Rs 1529.550 million were paid for servicing and re-payment of debt against the liability of the Entity, which was treated as GOP's Equity in the capital of the Company.

-- The Finance Division also undertook the financial and operational restructuring of Karachi Shipyard & Engineering Works (KS&EW).

With regard to this, the GOP's loan liability of Rs 816.00 million would be converted into GOP's Equity. Furthermore, GOP will also provide the guarantee against foreign currency credit and local loans to be borrowed by the Entity.

 

[Owais]

FTA with China finalised, says Humayun

ISLAMABAD (November 15 2006): Commerce Minister Humayun Akhtar said on Tuesday that Pakistan and China have finalised Free Trade Agreement (FTA), which would be signed during the visit of Chinese President Hu Jintao.

"There is no hitch now, as negotiating teams of both countries have resolved all concerning issues and paved the way to sign the pact," he said while talking to journalists after addressing a press conference regarding replacement of 43-year-old Export Promotion Bureau (EPB) with 'Trade Development Authority of Pakistan' (TDAP).

Asif Shah, Secretary, Commerce, Tariq Ikram, Chief Executive Officer (CEO) of the Authority, Naveed Arif, Secretary, TDAP, FPCCI President Saeed, and Additional Secretary Ashraf Khan were also present at the press conference. The newly constituted Authority which, according to the minister, is expected to be operational within six to eight months, would have all administrative and financial autonomy for achieving its stated objectives, including powers to hire manpower at market rate.

The minister said that TDAP mandate has also been expanded to include trade development, rather than only export promotion, as was the case of the defunct EPB.

He admitted that exports growth rate was going down, while imports were on the rise. However, he said, the government was conducting different studies to give special attention to competitiveness at the global level and production cost.

Regarding qualifications' criteria for the CEO, and whether the government would follow them, he said that Commerce Ministry believes that Tariq Ikram has all the abilities and qualities which have been mentioned in the Ordinance.

Asked if he would enjoy the status of Minister of State after the replacement of EPB with TDAP, Commerce Minister said that a summary had already been submitted to the Prime Minister, and decision was still awaited.

"It is our intention that the CEO should be an experienced and dynamic person with all powers to take decisions, and be responsible to the Parliament," he added.

Humayun said that TDAP would establish and manage its export development centres, business support centres/facilities, information centres and exporters' training institutes. In reply to another question, he said that the government had studied different international models, and the most favourable model was selected for Pakistan. He added that his view was that all such decisions should be taken very carefully.

One of the main issues was adjustment of Commerce and Trade Group officers, besides the regular employees, which has been resolved amicably, he said. The Commerce Minister said that Auditor General of Pakistan would conduct audit of TDAP in the light of financial rules to be finalised by Finance Ministry. Asked why the government was in a hurry to establish TDAP through an Ordinance before the start of National Assembly session, he said that he did not know that National Assembly had been summoned.

Tariq Ikram, who claimed he would work on the existing perks and privileges, said that the government had kept three things in mind while formulating the Authority. These include: enhancement of trade, removing weaknesses of Pakistan's trade, and 50-year export requirements. He said that trade associations always registered complaints of delaying on the part of EPB in release of funds but now this process would be started through online. He added that several other steps would also be taken to facilitate exporters.

He said that there was need to enhance production capability to meet the targets, but duplication with other organisations would be avoided. "We will take decisions in consultation with all concerned ministries, but duplication will not be allowed," he added.

He said that some time would be required to implement the stated goals and so far the two consultants have been hired for this purpose. One consultant would help in developing the organisation, while the other would extend support to assess human resource.

He said that eight Executive Directors have been hired for the new organisation, and further hiring would be made in the days to come. He said that TDAP would also hire experts of different fields, including IT experts, to meet the requirements of the Authority.

 

[Owais]

July-October trade deficit expands to $4.01 billion

ISLAMABAD (November 15 2006): Pakistan racked up $4.01 billion foreign trade deficit during the first four months (July-October) of the current fiscal year 2006-07, which is about 17.94 percent higher than that of corresponding period of last year ($3.39 billion), Federal Bureau of Statistics (FBS) said on Tuesday.

During these four months, exports totalled $5.55 billion against $5.47 billion of last year, and imports were to the tune of $9.56 billion and $8.87 billion, depicting a huge deficit. The worse thing is that the gap is steadily widening.

The provisional data of the FBS shows that Pakistan's economy pulled in 7.69 percent more imports during this period while its exports depicted an increase of only 1.34 percent. The high growth in imports and slow pace of exports are responsible for the burgeoning gap.

It is worth mentioning that the government has targeted imports of $28 billion and exports of $18.6 billion allowing a trade deficit of $9.4 billion. Now, in July-October (2006-07), the trade deficit stands at $4.01 billion. At this rate, the deficit at the end of the year could be about $12 billion, if no corrective measures are taken.

During the period under review, the slow growth in exports may make it difficult to achieve the exports target of $18.6 billion. However, it is significant to note that exports during October 2006 further declined by 3.24 percent to $1.282 billion as also imports declined by 8.33 percent to $2.13 billion.

According to provisional figures, exports during October 2006 declined to $1.28 billion against $1.42 billion in September 2006, showing a decrease of 9.47 percent.

 

[Owais]

ADB raises $800 million fund for Karachi project

KARACHI (November 15 2006): The Asian Development Bank (ADB) has raised the cost of the biggest ever development package - Karachi Mega City Development Project - started in the history of Karachi from $400 million to $800 million which comes to about Rs 48 billion.

City Nazim Mustafa Kamal, during his visit to the ADB head office in Manila, met the bank's high officials and succeeded in convincing them that fast track activities in Karachi have been started for infrastructure development, therefore, there is need for sustaining this pace so that the shortcomings experienced due to halted development process in the past could be met with.

In the light of bank's successful talks with Mustafa Kamal it increased the amount of the Karachi Mega City Development Project from $400 million to $800 million while releasing $13 million, which comes to approx. Rs 80 million for the study of Karachi's development projects set-up a Local Support Unit here.

Meanwhile, a representative delegation of he Asian Development Bank consisting of ADB Director G.H.K. Dr Jim Arthur, Transport specialist James A. Leather and Urban Economist Shane Rose, which is, at present, on a visit to Karachi, met City Nazim Syed Mustafa Kamal at his office and talked on development package, and said it is the bank's desire to see that work on development projects for Karachi may start at the earliest.

On the occasion, the City Nazim said after preparation of the Karachi Master Plan, there would be no utility of wasting time on the study for development projects because all the plans and projects have been clearly defined in the Master Plan.

He pointed out that for the first time in the history of Karachi, a comprehensive and co-ordinated Master Plan has been prepared, therefore, now all development works will be carried out as per Master Plan.

For the development of Karachi, he said the city government held talks with the government at the lower level and bureaucracy for uniform development of Karachi and had full consultation on the city projects and finalised the same.

Mustafa Kamal said the city government's present leadership had steered the city to the path of development in a short period of one year and this journey of development will continue and will get a further spur with the ADB financial assistance.

The ADB representatives praised the City Nazim's vision, saying the ongoing development activities show that Karachi is developing fast and the ADB will fully assist in this programme.

They evinced interest in the projects of solid waste management, Katchi Abadis, employees training, Master Plan, and Water Board. The delegation also had separate meetings with DCO and EDOs and had a detailed exchange of views on projects.

 

[Owais]

Rs 1332 billion spent on poverty reduction in five years

FAISALABAD (November 15 2006): Over the last five years the government has spent Rs 1332 billion on poverty-related and social sector programme to cater to the needs of poor and vulnerable sections of the society. An update annual performance report said the strong economic growth had created employment opportunities and reduced unemployment.

According to Labour Force Survey 2005 (First two quarters), since 2003-2004 and until the first half of 2005-2006, 5.82 million new jobs had been created as against an average job creation of 1.0-1.2 million per annum. Consequently, unemployment rate, which stood at 8.3 percent in 2001-02 declined to 7.7 percent in 2003-2004 and stood at 6.5 percent during July- December 2005. The rising pace of job creation is bound to increase the income levels of the people. The IT sector alone has created 114,737 new jobs in 2005-2006.

Headcount ratio, ie, percentage of population living below the poverty line has fallen from 34.46 percent in 2000-2001 to 23.9 percent in 2004-2005, a decline of 10.6 percent. The report claimed that the percentage of population living below the poverty line in rural areas has declined to 28.10 percent from 39.26 percent, while in urban areas, it declined to 14.9 percent from 22.69 percent during this period.

Poverty Reduction Strategy Paper (having completed its three years of implementation in June 2006), final touches are being given to the PRSP-2, which will take into account the recent socio-economic developments while addressing the main shortcomings of the original PRSP.

The poverty headcount, which stood at 34.46 percent in 2000-01, has come down to 23.9 percent by 2004-2005- a substantial decline of 10.6 percent. Rural areas have witnessed a higher fall in poverty, where the headcount ratio declined to 28.1 percent by 2004-05, as compared to 39.3 percent in 2000-01, while urban poverty fell to 14.9 percent from 22.7 percent during this period.

Cumulative PRSP expenditures (budgetary as well as non-budgetary) during 2001-05 amounted to Rs 1,124 billion, with the budgetary expenditures averaging 4.1 percent of the GDP during this 5-year period. Out of which, on pro-poor sectors in the FY 2004-05 the government had spent Rs 316.2 billion. This has exceeded the target of Rs 278 billion by Rs 38 billion.

During FY 2005-06 at the end of third quarter, Rs 250 billion had been spent in pro-poor sectors. The education and health sectors have absorbed half of the pro-poor budgetary expenditures, which are reflected in the improved outcomes in these sectors. Results of the survey show that during 2002-2005 the literacy rate had gone up by 8 percent to reach 53 percent in 2004-2005, while the gross enrolment rate at the primary level had risen from 72 percent in 2001-2002 to 86 percent in 2004-2005.

Results for the health sector show that immunisation coverage of children aged 12-23 months increased by 24 percent during 2001-2005, reaching 77 percent in 2004-2005. In addition to the on going efforts for poverty alleviation, the government during FY 2005 initiated the Khushal Pakistan Programme-2 (KPP-2) and the Khushal Pakistan Fund (KPF). The KPP-2 is a special programme for initiating small development schemes all over the country, for which an amount of Rs 20 billion had been allocated in the current fiscal year under the Public Sector Development Programme (PSDP).

The development schemes to be carried out through this programme include, small roads including farm to market roads, small water supply schemes, construction, repair of small rural roads, pavement of streets, drains and storm channels in villages, sewerage and garbage collection schemes, essential repair of primary and higher schools, basic health units/ rural health centers, rural electrification and provision of gas to villages.

The KPF will be used for financing various small development schemes in the whole country, which are outside the scope of the PSDP. The Fund will be replenished on yearly basis. The development projects to be covered will include schemes for provision of clean drinking water, sanitation, district link roads, infrastructure and capacity building for improvement in service delivery of health and education sectors.

According to official sources, the KPP-2 and KPF will continue under the PRSP-2, aiming at increasing pro-poor budgetary expenditures to over 5 percent of the GDP during its first year of implementation. Social protection in the country is currently being provided through various programmes and institutions in the public sector, which include the Zakat, Pakistan Bait-ul Mal, Employees' Old-Age Benefits Institution and Workers Welfare Fund (WWF).

 

[Owais]

Pakistani industrialist gets international recognition

LAHORE (November 15 2006): A Pakistani industrialist Iftikhar Ali Malik, who is also Chairman of Pak-US Business Council, has been given due recognition in the widely published latest edition of "The International Who's Who" 2006.

The International Who's Who since its first publication in 1935 has become the standard reference work on the world's most famous and influential personalities.

Following is the text reproduced as published: "Malik Iftikhar Ali; Pakistani industrialist and trade union official; 30 December 1944, Lahore; employee with Auto spare parts, Auto filter, Chairman Executive committee, Pakistan Automobile Spare parts Importers and Dealers Association, Member executive committee Lahore Chamber of Commerce and Industry (LCCI), 1980s, former President, LCCI, 1990, Vice President, Zonal Chairman and life member of Federation of Chambers of Commerce and Industry 1994.

Former President Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and life member also. Life member of Saarc Chamber of Commerce and Industry, Pak-Indo CCI and ECO-CCI".

The Federal government in recognition of his meritorious services rendered for the promotion of private sector, has appointed Iftikhar Malik as member of the Board of Director of National Bank of Pakistan, while federation had nominated him as first Chairman of Pak-US Business Council for the two years.

It may be mentioned here that President Pervez Musharraf has given civil award Sitar-I-Imtiaz to Iftikhar Malik's father Muhammad Shafi Malik in recognition of his social services.

 

[Owais]

Twin islands' sale aimed at promoting investment: Ibad

HYDERABAD (November 15 2006): Sindh Governor Dr Ishrat-ul-Ibad Khan has said the sale of twin islands of Karachi is only aimed at promoting investment in the province and to bring a change in the living standard of the people.

He said this while talking to mediapersons after addressing as the chief guest at the third and last session of a seminar on "Corruption at lower level- causes, effects and remedies," organised by the Hyderabad District Government in collaboration with National Accountability Bureau (NAB) here at the Circuit House on Monday.

Dr Ishrat-ul-Ibad said billions of rupees would be invested on the coastal belt, which would bring prosperity in the area, and added the issue of twin islands was a matter between the Federal and provincial governments.

He said the prime objective of selling those twin islands was to attract investment. Those islands were being affected due to erosions and, therefore, this opportunity was being availed, he added.

The Sindh governor said this investment would not only bring development, but would also bring new job opportunities for the local people, and the entire economy would be revived with the development of those islands in Karachi.

To a question, he clarified that Adviser to Chief Minister for Health Faisal Gabol was not removed because of corruption charges, and added the government was working in a holistic manner to address the problem of corruption.

 

[Neo]

President not happy with PIA's performance

ISLAMABAD (November 15 2006): Taking strong notice of delays in Pakistan International Airlines domestic and international flights, President General Pervez Musharraf has directed the national flag carrier to improve its service forthwith.

Sources said that at a briefing given by PIA Chairman Tariq Kirmani here at the President's Camp Office on Tuesday, the President expressed dissatisfaction over the service of PIA. Prime Minister Shaukat Aziz was also present on the occasion. The President said that PIA's performance was not up to the mark, and the routine delays in flights of the national flag carrier was not a good omen.

The President said that the government was assisting PIA financially, so it must show better results and improve its image as national airline. President Musharraf also directed PIA Chairman to take good care of Haj flights schedule, and delay in Haj flights should be avoided at every cost to provide relief to pilgrims.

He said that the service on domestic and international routes should be upgraded and the complaints lodged by European Union about standard of PIA flights should also be addressed.

Prime Minister Shaukat Aziz said that bringing PIA out of deficit was the top most priority of the government. Therefore, new aircraft have been inducted in the PIA fleet, whereas several aircraft have also been hired on lease.

 

[Neo]

Chinese investment in Balochistan projects touches $1 billion

KARACHI (November 16 2006): China is the biggest foreign investor with an investment of one billion dollars in different projects in Balochistan province alone. Balochistan Economic Forum (BEF) President Sardar Shaukat Popalzai told Business Recorder here on Wednesday.

The investment already made, a further investment of 200 million dollars in Saindak gold, copper and 195 million dollars in Duddar lead and zinc projects was being made in the development of these projects by China.

According to Chinese Consul General Sun Chun Ye, Chinese companies would invest in macro and micro level projects in Balochistan, particularly in the Gwadar port city. This assurance was given by him while addressing a roundtable on 'China and Pakistan economic relations with reference to the province of Balochistan-Gwadar port city,' organised by BEF at a local hotel in Gwadar on Monday.

A message received here said that the Chinese Consul General, who especially flew to Gwadar from Karachi along with senior executive of leading Chinese companies to attend the roundtable, said that with every passing day, bilateral economic and business relations between Pakistan and China were touching new heights.

China would help the province of Balochistan to become an important strategic business hub of the region, he said, adding he was very optimistic about the high profile potential of Gwadar city.

Ignoring all security apprehensions, the Chinese companies were enhancing their commercial involvement in the province, he said. BEF President Popalzai, presenting an overview during the roundtable, offered an impressive economic profile of the province along with Gwadar port city. He said that China was leading foreign investor in Balochistan, and appreciated the involvement of local manpower in the Chinese projects.

He said that Chinese investments had given confidence to the local tribes and now businessmen were considering their direct participation in the economic development of the province. Senior executives, including President and Chief Executive Officer (CEO) of MCC Resources Development Company Limited Zou Jianhui made presentation on Saindak gold copper and Duddar lead-zinc project.

China Harbour Engineering Company Manager Haijun Sun made presentation on Gwadar deep sea port and chief representative of Beixin Road and Bridge Construction Company Limited Shen Ganhua made presentation on Gwadar-Turbat road.

Former Gwadar district Nazim Baboo Gulab announced the establishment of Gwadar Business Council. Gulab, who is very active in promoting the economic interests of Gwadar port city, further highlighted the potential of the city and thanked the Chinese companies for developing the Gwadar deep-sea port.

Gwadar Industrial Estate's Project Director MB Magsi also briefed the participants about the progress made in the estate, and said that top priority was being given to the development of infrastructure and provision of water and power. All the plots in Gwadar Industrial Estate have been reserved and most of the investors are finalising their projects.

Gwadar District Nazim Ghafoor Kalmati, PACO Chairman Colonel Syed Akbar, and Director General of Gwadar Port Implementation Authority Syed Muzaffar Ali Shah also made brief presentations. A large number of businessmen, industrialists, bankers, representatives of public and private organisations, government officials and diplomats attended the roundtable.

 

[Neo]

'Pak-French trade at lowest ebb'

SIALKOT (November 16 2006): French Ambassador to Pakistan De Belenet has said that trade relations between France and Pakistan have much potential, but currently trade activities between the two countries are at lowest ebb.

Addressing a news conference here on Tuesday, he added that despite of this tendency, major French multinationals had established important subsidiary and there were bright opportunities of investment by the French private sector in Pakistan.

French Ambassador said that France and Pakistan were enjoying highly cordial and friendly relations in various fields since long, adding that those relations would be further strengthened with the passage of time. Replying to a question, he said that special attention had been focused on further accelerating the bilateral trade between the two countries.

He said we were very keen in augmentation of developing strong collaboration in all fields with Pakistan on top priority basis for enhancing the trade volume between the two countries. De Belenet was of the opinion that Kashmir issue was purely the internal issue of Pakistan and India. He appreciated the dialogue process between Pakistan and India and said this process would help in developing cordial relations between the two countries.

The dialogues were the best way for resolving disputes and defusing tension between Pakistan and Indian and the French government would support the outcome of dialogues, he added. Answering a question, the French ambassador said that Sialkot had special and unique export culture and the business community of the area was rendering laudable services not only for producing quality and standard products but also for undertaking mega projects of Sialkot International Airport.

 

[Neo]

Pakistan and France sign 40 million euro agreement

ISLAMABAD (November 16 2006): Pakistan and France signed a financing agreement of euro 40 million here on Wednesday to support the rural housing reconstruction sector of the earthquake-affected areas.

The financing agreement was signed by Secretary Economic Affairs Division (EAD), M Akram Malik on behalf of Pakistan and Ambassador of France to Pakistan Regis de BELENET on behalf of the French Government.

State Minister for EAD Hina Rabbani Khar and Chairman, Earthquake Reconstruction and Rehabilitation Authority (Erra) Altaf Saleem were also present on the occasion.

Hina Rabbani Khar said this agreement was in the context of the pledge made by the French government during the International Donors Conference held on November 19, 2005 in Islamabad for 80 million euro ($94 million) as soft loan for reconstruction and rehabilitation of the earthquake affected areas.

She said that half of this pledge-40 million euro ($47 million) would be utilised in the rural housing sector and remaining half would be used to fund the environment sector (water and sanitation). The French soft loan dedicated to the rural housing sector will be implemented through the French Overseas Development Assistance financial institution-the French Development Agency.

The loan will be repayable in the 20 years, including seven years grace period. The 40 million euro housing component of the project focuses on the reconstruction and rehabilitation of individual houses in accordance with para-seismic standards given by Erra.

These funds will be retroceded in the form of compensation to private persons to finance the reconstruction of their houses. A compensation of Rs 150,000 per house proposed for totally destroyed house will be paid to the beneficiary in three instalments based on the progress and quality of rebuilding work.

For partially damaged house, a compensation of Rs 50,000 per house will be disbursed as a single instalment. The implementing agency Erra will be in-charge of carrying out the project. This rural housing reconstruction project will have three components, including the compensation for reconstruction of destroyed or damaged houses on the basis of general scheme adopted by the Pakistani authorities.

 

[Neo]

Plan for development of auto industry unveiled

ISLAMABAD, Nov 15: The government has unveiled a pre-determined five-year tariff under the Auto Industry Development Plan (AIDP) to increase production turnover of the auto industry and annual export of parts to $10 billion (Rs600bn) and $650m (Rs39bn) respectively by 2011.

The plan discourages import of used cars through tariff measures and calls for introduction of a computerised registration system on a uniform basis for access across the country.

The annual gross sales turnover of the auto industry, at present, stands at Rs210 billion while export of auto parts are estimated at $35 million. As such, the increase in production turnover is projected to increase by 185 per cent while the exports of auto parts would make quantum jump.

The plan envisages development of two auto-parts vendor clusters near Port Qasim, Karachi and Motorway, Lahore and seeks to reduce the existing monopolistic tendencies of the existing manufacturers by encouraging new entrants.

It seeks to enhance auto-sector’s contribution in GDP to reach 5.6 per cent and the share in manufacturing sector to 25 per cent by 2011. Likewise, the employment level has been projected to increase from 192,000 to 250,000 as direct jobs and from around one million to 2.5 million indirect jobs.

The new programme prepared by the ministry of industries and production and its affiliate Engineering Development Board (EDB), conceding that the existing industry was “working under high protection tariff” and a few manufacturers have “monopolised” the market. “The products are characterised by relative low-quality, high priced fewer models, long delivery times and poor service to the customers”.

The successor Tariff Based System (TBS) introduced last year, on the other hand, has created plus 400 tariff lines for the parts and components for the auto sector which nearly cover six per cent of total tariff lines.

This would remain a major challenge for the government negotiators on how to gain or provide market access to the partner countries in the future free trade arrangements. Final outcome of NAMA (Non-Agricultural Market Access) negotiations may also catch the industry unaware, says the plan.

It has proposed a phased reduction of tariff for the high tariff rates of localised items and the tariffs would come down by at least 15 percentage points for the localised components within five years but still remain higher than CKD (completely knocked down) tariffs for non-localised components.

As such, the tariff for vendors and manufacturers of parts and components which is currently zero for raw material, five per cent for sub-components and 10 per cent for components would be reduced to zero for all the three categories from next year. The import duty on completely built units (CBU) of cars would not be further lowered to encourage investment in the auto sector, components and manufacturing.

For localised parts of CKD cars, the tariff would reduce from 50 per cent to 45 per cent in 2008-09 and further to 35 per cent in the next two years. The tariff for CKD non-localised parts would be reduced from 35 per cent to 32.5 per cent in 2007-08 and would keep on decline by 2.5 per cent every year to 25 per cent in 2010-11.

The rate for CBU cars up to 1500cc, the tariff would be reduced from 50 per cent to zero next year (2007-08) and to be kept at that level thereafter. For CBU cars between 1500-1800cc, the current rate of 65 per cent would be reduced at the rate of five per cent annually to 50 per cent by 2010-11. For CBU cars exceeding 1800cc, the applicable rate of 75 per cent would be reduced at the rate of five per cent per annum to 50 per cent in 2010-11.

For LCVs, the tariff on CKD kits would be reduced from 20 per cent to 15 per cent at the rate of one per cent every year. However, the tariff for CBU LCVs, the rate would be reduced from 60 per cent to 50 per cent in a phased manner by 2010-11.

For two-wheelers, the tariff on CKD kits would be reduced from existing 30 per cent to 20 per cent in phased manner to 2010-1. Similarly, the tariff on CBU two wheelers would reduce to 60 per cent by 2010-11 from existing rate of 90 per cent.

For localised CKD parts of tractors and heavy commercial vehicles, the existing tariff of 35 per cent has been proposed to be reduced to 25 per cent in 2010-11.

For prime movers (up to 280 HP) the tariff for CKD would be reduced from 10 per cent to five per cent next year and then kept at that level onwards. Similarly, the tariff for CBUs would be reduced to 25 per cent next year and then kept at that level for the next five years. The tariff for prime movers (above 280HP) and would remain unchanged, while it would be reduced for trucks from 10 to five per cent and from 30 to 25 per cent next year.

The government has also proposed to allow the assembly of new entrants through import of 100 per cent CKD kit at the rate of duty applicable to non-indigenised parts. However, they would be asked to provide a commitment to develop and purchase local parts for fitment in the locally assembled cars. Some productive asset investment incentives would also be provided to the vendors and manufacturers.

The policy also envisages discouragement to the existing policy for the import of used cars and trucks. As such, the depreciation on import value of used cars would be reduced from two to one per cent per month and total depreciation limited up to 25 per cent only while transfer of residence and baggage rules would implemented strictly.

The registration of vehicles would be standardised throughout the country through a computerised system so that it is accessible on all Pakistan basis to help better data for the government, tax authorities, town planners and traffic authorities.

 

[Neo]

Pakistan’s defence exports surge to $200 million: DEP chief

Thursday, November 16, 2006
KARACHI: Pakistan has achieved substantial growth over the years in terms of defence related exports, which have presently surged to $200 million from $20 million in the year 2000.

This was stated by Maj General Syed Absar Hussain. Director General Defence Export Promotion (DEP) while briefing the representatives of the print and electronic media in connection with the preparations for the forthcoming mega defence show “Ideas 2006”, titled ‘arms for peace’, which is scheduled to start on November 21 to 24 at the Expo Centre, Karachi.

The mega event is managed by the Defence Export Promotion Organisation and it is organised by Pegasus Consultancy (Pvt) Ltd.

City Nazim Karachi, Mustafa Kamal also spoke about the various efforts by the city government to complete the different ongoing development schemes in the vicinity of the Expo Centre, venue of the defence exhibition. DIG Traffic, Falak Khurshid explained in detail with the help of charts about the different traffic diversions which would come into affect with the commencement of the mega event around the Expo Centre.

Maj Gen Syed Absar Hussain said that a variety of defence equipments including Al-Zarar tank, anti tank and anti-air equipments and Mashhak plane were sold to South Asia and South Asian countries and Gulf countries and it requires a wide range of modern equipments to cater their defence needs.

He admitted that some countries, keeping in view their weak financial position, were offered weapons on credit-terms.

In the context of the mega defence exhibition “Ideas 2006”, the DG of the Defence Export Promotion said that it would be one of the largest exhibitions of its kind in the history of the country, which would be participated by 200 plus exhibitors from 25 countries around the globe, which would display their defence products.

Some 80 delegates would participate officially in the defence exhibition from 50 countries, which includes ministers and different services chiefs.

Compared to previous exhibition, the “Ideas 2006” would be double in size as massive arrangements were made for the successful holding of the international defence exhibition. He applauded the Export Promotion Bureau (EPB) for enhancing displaying the capacity of the Expo Centre by constructing two huge sized exhibition halls in a short period of time which would help accommodate large number of defence items for display.

The equipments, which would be put on display, include armed personnel carriers, logistic vehicles, physical display of augusta sub-marine, improved version of Al-Khalid and Al-Zarar Tanks.

The DG DEP said that on the 25th of November, a grand cultural show would be organised including cultural and musical shows and army band display, which would be participated by the eminent artists of the country. The programme would be aired live on television channels.

He appealed to people of Karachi to cooperate with the government in the successful holding of the mega-event, as it would highlight image of the city worldwide.

Replying to a question about countries, which would take part in the international defence exhibition, he said they include US, Gulf countries, Germany, Australia, China, Turkey, and some European countries. City Nazim Karachi, Mustafa Kamal said that all targets given to the city government before the start of the defence exhibition was completed within time and it was an honour for Karachi to be selected for this international mega event.

http://www.dailytimes.com.pk/default.asp?page=2006\11\16\story_16-11-2006_pg5_6

 

[Owais]

Pakistan, Russia to promote economic, strategic ties


ISLAMABAD (updated on: November 16, 2006, 19:29 PST): Pakistan and Russia on Thursday agreed to further expand the co-operation in various fields including trade, economic, oil and gas and defence.

Foreign Minister of both the countries met here at the Foreign Office and reviewed bilateral relations and discussed enhancement of co-operation in a number of areas.

Foreign Minister Khurshid Mahmood Kasuri and his Russian counterpart Sergey Lavrov talking to newsmen following the meeting said they discussed regional and international issues of mutual interest.

They reiterated resolve to develop closer bilateral ties and enhancing trade and commerce, which currently stands at $500 million.

Russia expressed its deep concern and reservations about the growing Taliban and al Qaeeda insurgency on Pak-Afghan borders, and has stressed on encouragement and closer co-ordination between various ethnicities of Afghanistan.

Russia also expressed desire for direct investment in Pakistan, while regional issues pertaining to Iraq, Afghanistan, Middle East, and Pak-India peace talks also cropped up in the meeting.

It is pertinent to note that Pakistan is an active member of the Shanghai Co-operation Organisation, (SCO) and both countries co-operate actively in the aspects of terrorism and other factors for which joint working groups exists.

Russia has expressed deep interest in co-operation in the expansion of railways, energy and electricity, and coal thermo-hydel power projects, while Pakistan has also expressed its keen interest and expectations about the official visit of the Russian president to Pakistan.

Replying to a question Khurshid Kasuri said that both Pakistan and Russia have identical interests and views about the Afghan issue, and agreed about the worsening situation there, which was not conducive for a stable Afghanistan desired, and wanted all the groups to adopt a realistic and mutual approach towards the betterment of their country (Afghanistan).

Replying to a question, the Russian foreign minister said that both countries have held talks on strengthening war against terrorism, economic co-operation and security factors.

He said that Pakistan was a major power of the region, and is one of the most important of Islamic countries, besides being an active delegate of SCO, while talks are going on for its permanent membership of the Organisation, and promised Russian support for the purpose.

He said although Pakistan has not requested any defence co-operation, yet Russia was willing to discuss the co-operation in this field as well, and would be strictly within the framework of Russian policies and legislation.

Replying to another question, he said that Russia wants an end to the insurgency on its Afghan neighbouring border, and expressed his reservations and concern about the growing activities of al Qaeda and Taliban.

He stressed on inclusion and participation of all the Afghan ethnic groups in the (Afghan) political mainstream, and said that the framework for the return of multi-national forces from the country depended upon the Afghan masses.

Replying to another question, he said that a conducive dialogue for the solution of Palestine and Iraq conflicts between warring adversaries are imminent, while he also expressed his satisfaction over the ongoing peace talks between Pakistan and India.

He assured of an early visit by the Russian President while extending an invitation to Khurshid Mahmood Kasuri to Russia.