Pakistan Economy - News & Updates - Archive

[Owais]

Auto industry expansion programme: government announces pre-determined five-year tariff

ISLAMABAD (November 18 2006): The government has responded to the auto industry with a clear long-term future road-map by announcing pre-determined five-year tariff, to carry out expansion programmes, in the Draft Auto Industry Development Programme (AIDP), designed to strengthen the auto sector by making the vendors and manufacturers more inter-dependent and encouraging the new entrants to invest in Pakistan.

Engineering Development Board (EDB), Chief Executive Officer (CEO), Imtiaz Rastgar stated this while briefing newsmen on the new draft AIDP on Friday.

Rastgar said the government was sensitive to the industry's demand of a long-term policy to carry out their expansion programme, which has been provided in the new AIDP.

He said the efforts were made to include all the recommendations of stakeholders in the policy to make the auto sector and vendor industry sustainable.

EDB CEO said the auto industry development programme had been designed to expand the base of the industry enabling it to export parts worth $300 million and to check the liberal import of used cars.

He conceded that the existing industry was working under high protection tariff and it subsequently led to absence of competition, which resulted in low quality, high cost, fewer models, long delivery times and poor service to the customers. The advent of new entrants in Pakistani auto industry would create competition and eventually the people would have quality cars, he observed.

"We have responded the industry with a clear future roadmap by announcing pre-determined five-year tariff so that they could carry out expansion program to increase production turnover of the auto industry and annual export of parts which are envisioned in AIDP by 2011," he added.

He dismissed the impression that the permission of importing 100 Completely Knocked Down (CKD) kits at the rate of duty applicable to non-indigenised parts (35 percent) to the new entrants would harm the local vendor industry saying that new investors would have to develop the local vendors industry as they would not be able to import every part.

Giving details of the plan, Rastgar said it would discourage import of used cars through tariff measures, calls for introduction of a computerised registration system on a uniform basis, projects increase in production turnover 185 percent, envisages development of two auto-parts vendor clusters to reduce the existing monopolistic tendencies of the existing manufacturers by encouraging new entrants.

The plan to seeks 5.6 percent auto-sector's contribution to GDP and the share in manufacturing sector to 25 percent by 2011, projects employment level to 250,000 as direct jobs and 2.5 million indirect jobs and proposes a phased reduction in the tariff.

Zahid Yaqoob, an EDB official, who has been one of the key members involved in preparing the AIDP and accompanied the CEO during the media briefing, deplored that there was a mechanism ie deletion programme but it was not supported by any policy document and AIDP, in fact, would be the first policy of its kind.

When asked what guarantee would be given to the investors that there would be no other policy regarding auto sector in the presence of AIDP as was seen lately when the Ministry of Industries and Production moved a summary seeking reduction in the tariff on CKD and CBU, he said the EDB wanted consensus of all the stakeholders and acceptability of the AIDP.

However, it is difficult to predict that the fate of auto industry development programme would be different from that of textile and other policies.

 

[Owais]

Inflation turns into double digit

ISLAMABAD (November 18 2006): The inflation, in terms of Sensitive Price Indicator, turned into double digit of 10.37 percent during the week ending November 16, 2006, over the past one year as a result of 0.33 percent increase during previous week.

According to weekly price review released by Federal Bureau of Statistics (FBS), the SPI of 53 items of daily use, with the benchmark of 2000-01, reached the level of 150.05 during the period under review.

The hardest hit, again, were the households with incomes up to Rs 3000 per month with the increase in SPI of 0.53 percent over the previous week. It rose by 0.46 percent for households for the income bracket Rs 3001-5000 by 0.36 percent for those with incomes between Rs 5001 and Rs 12000 and by 0.14 percent for those with incomes above Rs 12000.

Compared to the corresponding period of last year, the SPI shows an increase of 13.07 percent for the lowest income group, of 12.41 percent for those with incomes Rs 3001-5000, of 11.84 percent for those with incomes of Rs 5001-12,000 and of 9.74 percent for the highest income group.

The significant feature of the weekly bulletin was that year-on-year the rise in the prices of some necessities and kitchen items was exorbitant. These items were sugar, potatoes, firewood, gur, LPG, and all kinds of pulses and higher gas charges, which hit the low-income group. It is pertinent to point out that due to manipulations of stakeholders, sugar prices would soon see a rise.

The bulletin on SPI, based on data collected about 53 items from 17 centres, showed that 22 items registered increase, seven items showed decline, while prices of 24 items remained unchanged. Noteworthy was the behaviour of the price of onion. Its average price showed an increase of 11.53 percent over previous week.

Potatoes, long a staple of the people of modest incomes, moved up to Rs 27.20 per kg from Rs 25.91 per kg of previous week. As compared to corresponding period, this meant an increase of 38.35 percent.

However, further analysis of the data showed that out of 22 items year-on-year basis 11 items were dearer by double digit. These include onions by 161 percent, potatoes 38 percent, red chillies 28 percent, tomatoes 27 percent, gur 22 percent, cooked beef 17 percent, garlic 15 percent, beef 13 percent, mutton 13 percent, fresh milk 12 percent, and curd price increased by 11 percent over corresponding week of last fiscal year.

Among these items, in a short span of one week, the prices of onion increased by 11.53 percent, potatoes 4.98 percent, farm egg 3.79 percent, garlic 2.12 percent, red chillies 1.55 percent and cooked beef prices increased by 1.04 percent over previous week.

The FBS figures further showed that though prices of 24 items posted no change during the week, compared to the corresponding week of last year, several items are now costlier. For example, gas charges increased by 20 percent, firewood by 18 percent, cooked dal 16 percent, tea (packed) 12 percent and tea prepared by 11 percent.

The bulletin further indicates that though the prices of seven items decreased compared to the prices of corresponding week of last year, items which showed increase in their prices were gram pulse, which is dearer by 49 percent, mash pulse 48 percent, moong pulse 28 percent, and sugar price increased by 22 percent.

 

[Owais]

CresBank accepts Saudi party's Rs six billion bid: Tarin's offer rejected

KARACHI (November 18 2006): The Board of Director of Crescent Commercial Bank Limited (CresBank) on Friday announced acceptance of a bid from a premier Saudi financial institution to invest Rs 6 billion (around $100 million), and rejected the offer of Rs 2.8 billion from a consortium led by former Union Bank boss, Shaukat Tarin.

According to sources, the said offer is from Saudi American Bank (Samba) Riyadh. Samba was originally a joint venture between Saudi business groups and Citibank. But Citibank pulled out its stakes and gave the management in 2003, after filing a trillion dollars legal case due to terrorist attack on September 11, 2001.

Now, 54 percent stakes are owned by the Saudi Government, through its various pension funds and other state institutions. Prince Waleed Bin Talal has less than 10 percent stake in Samba.

Samba operations are primarily confined to Saudi Arabia, and it is now attempting to break out into a regional bank. With 'Return on Equity' of 45 percent, the investors get the capital investment back in two years.

After the injection of Rs 6 billion in CresBank, its paid up capital would rise to Rs 8 billion.

Sources said that for no fault the commercial bank had to face advised market conditions due to the common group holding with Crescent Standard Bank Limited (now taken over by SECP). As a result, its deposits have struck from Rs 7.5 billion to Rs 3.0 billion.

Samba is expected to pour its money through a right issue, which will reduce the Crescent group shareholding from 38 percent to less than 10 percent, and give management control to the Saudi entity.

The Board of Crescent Commercial Bank Ltd (CCBL), in its 31st meeting held on November 17, 2006, after deliberating over definitive investment propositions from a number of potential investors, approved an investment of Rs 6.0 billion into the bank from a premier financial institution from Saudi Arabia. This investment is subject to the appropriate regulatory approvals and execution of definitive agreements.

 

[Owais]

Plan on anvil to make government insurance companies more business-friendly

ISLAMABAD (November 18 2006): Commerce Ministry is preparing a strategy to make the public sector insurance companies more business-friendly and efficient as compared to private sector to avoid international financial institutions' resentment on their privatisation, sources told Business Recorder.

The plan is being deliberated at a time when Asian Development Bank Financial Management Governance Program (FMGP) mission is coming here to discuss progress on the targets set for the government to qualify for an $80 million loan, sources said.

An official of Finance Ministry told this scribe that ADB is of the view that all insurance business should be handled by the private sector, as public sector entities are comparatively inefficient.

Sources said that Commerce Minister Humayun Akhtar had convened a meeting of all stakeholders in Islamabad a day before to discuss the weaknesses of public sector insurance industry and restructure it in accordance with future requirements. The World Bank has also asked the government to liberalise insurance industry in line with banking sector reforms.

"Insurance penetration is very low as compared to other countries at Pakistan's income level which requires further consolidation and liberalisation of the industry," sources quoted WB as saying. They said that the Commerce Minister also expressed dissatisfaction over the performance of public sector insurance companies, and directed them to attract more investment through improvement in their existing schemes.

"Insurance companies have been asked to bring improvement in their existing schemes besides introducing new schemes to attract more investment," sources quoted the minister as directing the heads of insurance companies.

Commerce Ministry also fears that if right and in time decisions were taken to improve the insurance sector, Finance Ministry, which has lost its control over banks after privatisation, would detach insurance sector from it.

Sources said that ADB had committed $260 million loan to restructure the insurance sector and the Securities and Exchanges Commission of Pakistan (SECP), of which the bank had released $100 million as first tranche, while $89 million was given in September last.

The remaining $80 million tranche would be disbursed as and when the government fulfils the commitments ie amendments in SECP laws, improvement in governance standards and restructuring of insurance sector. Most of the commitments the government made with the bank have not yet been fulfilled and, according to sources, the scheduled mission would certainly express its displeasure on these issues.

 

[Owais]

Romania sees good prospects for joint ventures in Pakistan

KARACHI (November 18 2006): Deputy Prime Minister of Romania, Bodgan Pascu said that good prospect exists to have joint ventures in alternative energy, agriculture and information technology with Pakistan. Addressing members of Karachi Chamber of Commerce and Industry (KCCI) on Thursday, he said that Pakistan and Romania had many areas in which they could cooperate and develop joint venture units.

He informed that Romania was developing its garment sector and Pakistan could help it in this regard. The Deputy Prime Minister said that the purpose of his visit was to further strengthen trade and economic relations of both the countries. "We want to build a strong bridge of relations between Pakistan and Romania", he said.

He pointed out that Romania was going to become European Union (EU) member from January 1, 2007, adding that Pakistan could benefit from Romanian membership by exporting more and more goods to EU countries in collaboration with Romanian counterparts.

He invited Pakistani business community to invest in Romania and establish industrial units. He noted that the balance of trade was in favour of Pakistan. Total export from Romanian to Pakistan come to 11.1 million dollars whereas total imports come to 14.7 million dollars.

Bodgan Pascu informed that he was responsible of Small and Medium Enterprise (SME) development in his country and offered his co-operation in development of SMEs in Pakistan.

He said that besides other sectors Romania also offers good opportunities to Pakistan manpower in construction sector. He said that Romania had decided to recruit around 10,000 peoples from Pakistan in different fields. Earlier, President KCCI Majyd Aziz present welcome address.

 

[Neo]

Core inflation dip to 5.7 percent in October: SBP

KARACHI: November 18, 2006: The State Bank of Pakistan (SBP) has said that the core inflation as well as headline inflation declined during the month of October 2006.

According to the SBP monthly publication, 'Inflation Monitor' which has been released on Saturday, core inflation measured as non-food non-energy (NFNE) was recorded at 5.7 percent and trimmed-mean core inflation was 6.4 per cent during the month under review compared with 7.8 and 7 percent respectively in the month of October last year.

The SBP Inflation Monitor says the headline inflation exhibited a lesser growth of 8.1 per cent in October 2006 compared with the growth in preceding month (September). It was less than the same month of the last fiscal year.

Non-food inflation has declined significantly to 6.4 per cent in October, 2006 - the lowest level for the last two years.

In August and September, 2006, the non-food inflation was recorded at 7.4 and 7 per cent respectively. Nonetheless, pressure on food inflation still exists which is also evident from a considerably high rate of growth in SPI. However, WPI continued its declining trend and came down to 6.7 percent during the month under review, says the Inflation Monitor.

A closer look at price movements of individual items included in the CPI food group reveals that prices of 49 commodities including fresh milk, beef, sugar, chicken, pulses gram, mash and moong, cooked mutton, honey, tomatoes, chilies green etc. exhibited double digit inflation with a combined weight 52.4 per cent in total food group. On the other hand, prices of 14 commodities like apple, ginger, pulse masoor declined during the month under review. The rest of items, having a weight of 35 per cent in food group, exhibited subdued or moderate inflation.

In the non-food group, House rent index (HRI) maintained its declining trend, which started after February 2005, and recorded a moderate increase of 6.9 per cent in October 2006 compared with about 11.1 per cent in the corresponding month of the last fiscal year.

Inflation in Fuel and Lighting declined to 11.3 per cent in October 2006 compared to 12.1 per cent in the preceding month. Most notable decline was recorded in transport and communication that already had been showing a continuous decrease since November 2006: Year on Year (YoY) inflation of 3.8 per cent in October 2006 compared with 22.7 per cent in the same month of the last fiscal year.

On the other hand, Medicare registered a significant increase in prices with a rate of 9.9 per cent in the month under review compared with 1.6 per cent growth in the same month last year.

Wage inflation that started declining from the start of FY-07 continued its decelerating trend in October 2006 resulting from lower wages of both skilled and unskilled workers on account of slow down in construction activities, the Inflation Monitor added.

 

[Neo]

Case being made for getting concessions: Overall exports falling

KARACHI, Nov 17: Not only the textiles, but almost all major key items of Pakistan’s export have been hit hard by the extreme slump in the current fiscal year and exporters are trying to make a case for getting a wholesome fiscal concession and relief package that should bail out the export trade from the present crisis.

“It is an almost across-the-board slump,” argued a top business leader who is now under pressure of his members to make a case for the export trade rather than for the pampered segment like textiles. “It is not only the textiles, but other items like leather, sport goods, carpet and rugs, surgical instruments, petroleum products, fish, cutlery, gems and jewellery, fruits and vegetables, cement, chemicals, furniture, tobacco, handicrafts and a variety of other key exportable items are on decline,” he pointed out.

Exporters complain that textile business enjoy a clout and influence in the government and in assemblies and has managed to get one concession after the other. After getting rebate on export of virtually on all textile products, reduction of interest rates on export refinance, swapping of high interest loans with relatively low interest rate bank loans, the textile lobby recently won another major concession on sales tax exemption on energy.

“Why other business sectors are being overlooked,” is a question that is now being discussed and debated in all the business meetings as leaders of leather industry, sport goods, surgical instruments, chemicals and others argue that they have equally been hit by the high cost of doing business.

The rising financial and mounting energy and transport costs, according to them, have pushed the cost of their goods up rendering them uncompetitive in the international export market.

Exporters have noticed that the government is now releasing, with an inordinate delay, the international trade statistics every month and that too in two instalments. In the first release, last on Wednesday, the government informed the public of aggregate exports in July-October at $5.55 billion and imports at $9.4 billion, showing an imbalance of more than four $4 billion.

The detailed and item wise import-export figures are expected to be released by end of this month but exporters say that the declining trend of more than two dozen key items that constitute the core and development categories has become more pronounced in October.

In the first quarter (July-September) 2006-07 all the 10 key textile products including raw cotton have shown declining trend as compared to their performance in the same period last year. Export of knitwear during first quarter of 2006-07 stood at $472.88 million which is 10pc lower compared to $525.90m the same period last year.

Bedwear export was down by more than 19 per cent to $449 million, cotton cloth export declined by about 15 per cent to $464 million. The knitted and crocheted fabrics export came down by more than 29 per cent. The art silk and synthetic fabric export lost 25 per cent as it could realise only $48.67 million. Export of towels was down by about 5 per cent to $147.68 million and raw cotton export came down by more than 56 per cent.

The slump in textile sector has come after getting export rebates and announcement of fiscal package that may cost government anywhere from Rs25 to Rs30 billion this year.

But the other key items of core category and development category also beg for same treatment as these are equally hard-pressed as amply manifested in the official trade statistics.

In first quarter of this fiscal, the export of carpets fell by about 42 per cent to $38 million, surgical instruments declined by more than 37 per cent to $39 million, surgical instruments also by 37 per cent to $255.59 million, petroleum products by 17 per cent to $152.69 million, leather garments by more than 42 per cent to over $109 million, leather by 17.50 per cent to $561.76 million, footwear by more than 33 per cent to $23.65 million.

The export of gems and jewellery was also under tremendous pressure and fell by 69 per cent to only $2 million. The export of chemicals showed about 16 per cent decline, fish about one per cent, engineering goods more than 27 per cent, fruits by about 45 per cent, vegetables by about 53 per cent, cutlery by about 33 per cent, poultry by about 99 per cent, cement 22 per cent, spices 34 per cent, furniture 31 per cent and tobacco by 43 per cent.

“Majority of these export industries are labour-intensive and a slump can cause unemployment at a time when elections are round the corner,” the business leader warned.

With inflation hovering near double digits for the second consecutive year, the government is showing no inclination to bring down oil prices in domestic market and there is a determination to increase revenue collection to Rs1 trillion next fiscal from Rs835 billion this year.

The business is trying to make a case for direct 10 to 12pc decline in rupee-dollar exchange value. The inflation rate in most of our trading partner countries is less than 5 per cent while Pakistan has an average 9 per cent for the second consecutive year and hence businessmen plead for a realistic parity.

But a devaluation of 10 to 12pc in one go has its own perils. Whether a rupee devaluation will make Pakistan’s export competitive is a doubtful proposition but it certainly will push up debt burden and debt servicing, import bill and cost of invisibles in the foreign exchange budget.

 

[Neo]

Airport privatisation ‘not happening soon’

Workshop costs raise eyebrows

KARACHI: The Director General of the Civil Aviation Authority, Pakistan’s aviation sector regulator as well as operator of the country’s airports, has clarified that while airports will be handed over to private sector, “this does not seem to be happening any time soon.”

Speaking to The News, Farooq Rehmatullah, who has been brought in from the private sector to improve the functioning of the CAA, said that the ultimate goal may be privatisation in one form or another, this is something that has to be planned and thought through.

The interesting development this week has been that after hiring a foreign firm to develop a plan forward for the CAA, its management has now acquired services of a private university to train employees who see these steps leading to privatisation.

As part of Rs3.5 million consultancy agreement with Lahore University of Management Sciences (LUMS), a three-day training workshop for CAA officers started on Friday in Karachi, a little over three months after government contended reports of CAA’s bifurcation in a Senate session.

Documents available with this scribe suggest that Dubai-based McKinsey and Company was hired for $0.5 million to prepare a business plan, which suggested certain initiatives for ‘reorientation of the organisation’.

Soon after his appointment, Farooq Rehmatullah, the former head of Shell Pakistan, set up a CAA Restructuring Team to assist the agenda of introducing drastic changes within the regulator, a CAA official, who wished not be named, said.

“Although these initiatives are aimed at improving the working of the organisation, the officers feel lost and confused, not sure of where they are headed,” he explained.

He confided that excessive amount of money is being spent to accommodate the participants of the workshop. DG CAA Farooq Rehmatullah told the inaugural session of the workshop that the changes in CAA were part of a constant process to meet the requirements of modern day aviation industry, which would help achieve better results.

The three-day workshop on the restructuring of CAA was being conducted by a two-member LUMS team to give an outline of a strategic plan for the transformation of the regulator. “CAA is to be steered towards a new direction so that it can function in harmony with modern day aviation sector and therefore had a working set-up accordingly,” DG CAA said in his address.

He said the present era of information technology warranted adoption of modern way of conducting CAA operations. “Success is awaiting us but for this every one will have to work hard to switch over to meet modern day requirements, which is the objective of this workshop.”

 

[Neo]

Pakistan rail link next year: minister

Tehran, Nov 18, IRNA

Minister of Roads and Transportation Mohammad Rahmati said here on Saturday that Iran's railway network will link up with Pakistan's in a year with the completion of Kerman-Bam-Zahedan railroad project.

According to the ministry's Public Relation Department, the minister told the secretary general of the Economic Cooperation Organization (ECO) that with the linking of Iran's railway to Quetta, Pakistan, the country will be connected the Central Asian countries and Turkey.

He underlined, "Quetta railway should to be reconstructed and its current situation is not suitable for optimum use in this respect." Turning to the completion of Iran's railway link to the Turkish network, he added that in the preliminary stage, the railroad of Van Lake should be completed under a finance project.

For his part, the new ECO Secretary General Khurshid Anwar expressed satisfaction with his visit and underlined the effective role of transportation in expanding cooperation among members of the organization.

"Trade, energy and transportation are considered the three major activities of the organization, and without transportation the two other factors will not be materialized," he added.

He noted that ECO Insurance Committee was established by Iran, and expressed hope that Tehran will play a key role at the committee meting.

http://www.irna.ir/en/news/view/menu-237/0611187495185719.htm

 

[Owais]

ADB not satisfied with Wapda's successor companies

ISLAMABAD (November 19 2006): The Asian Development Bank (ADB) has expressed dissatisfaction over the financial management and governance systems of successor companies of Water and Power Development Authority (Wapda), official sources told Business Recorder here on Saturday.

"Lack of generation capacity, constraints in the transmission and distribution systems, financial management and sustainability of the sector entities and corporate governance structure are the key challenges for the successor companies of Wapda," the sources quoted the bank's fact-finding mission saying in a report recently submitted to the government.

The mission, which discussed overall performance of the power sector, was of the view that Pakistan's power sector is facing major challenges in supporting the government strategy to increase electricity supply to its urban and rural population.

"Nearly 45 percent of the population does not have access to electricity and the power sector, a key infrastructure provider will have to increase its capacity to sustain economic growth target of the MTDF," the bank observed.

According to the government plans, Central Power Purchase Agency (CPPA) was scheduled to start its operations as an autonomous entity in July 2006, but the government has faced difficulty in achieving this goal because of the complex nature of the entity, which would act as the centre of the demand and supply of the electricity market.

The government would spend 1.1825 billion dollar to streamline the system of which the ADB would extend 950,000 dollar as technical assistance.

Commenting on the impact and outcome of technical assistance, the bank said that it would improve efficiency in the power sector in lowering the cost of electricity for consumers.

The merit order implementation further enhanced by the CPPA would foster the incentives and environment for power generators to actively seek cost efficiency in their operations and act to set benchmarks for the power sector, the bank maintained.

However, the bank said that financial viability and credibility of CPPA is vital for Independent Power Producers (IPPs) since the new organisation is intended to be the counterpart of power purchase agreement.

The CPPA function has made up most of the losses for National Transmission and Dispatch Company (NTDC). However, currently, the generation tariffs have adjusted to reach cost recovery but the consumer tariffs have lagged behind.

The gap is accumulated in NTDC accounts as losses and the outstanding receivables from distribution companies have also burdened the financial accounts of NTDC.

However, the financial legacy of the CPPA function would be passed on to the autonomous entity and the financial viability of the entity would affect the attractiveness of the power sector for future investment by the commercial participants, the bank questioned.

It is worth mentioning that the World Bank (WB) is not satisfied with the pace of restructuring process and expressed reluctance to fund projects until power sector companies are made completely independent.

 

[Owais]

Musharraf calls for knowledge-based economy

LAHORE (November 19 2006): President General Pervez Musharraf on Saturday called for developing knowledge-based economy through promotion of quality science and technology education in the country.

"Only natural resources are not enough to make progress; we have to develop our human resource base to make the country economically stronger," he said at the ground-breaking ceremony of University of Engineering, Science and Technology (UEST) to be set up with the assistance of University of Technology Graz (Austria) some 25km from here.

The President regretted that education sector had been ignored in the past and added that the present government has evolved a comprehensive strategy to develop education system at all tiers. He said that the budget of Higher Education Commission (HEC) alone, which used to stand at a meagre allocation of Rs 500-600 million a few years ago, had been raised to Rs 22 billion.

"We have set the economy right; so, there are much more resources available for education sector," the President said. He said that education had to be universalised at primary level, and there should be a primary, middle or high school within one kilometre radius from the home of a student.

He said that after matriculation, the students should have a choice to join technical or general education. He said that promotion of technical education would create skilled manpower, much needed by different sectors of the economy.

About the plan for setting up nine universities of engineering, science and technology, he said that establishment of these universities, with the help of countries like Austria, Sweden, France, Germany, Italy, China and South Korea, would cost Rs 250 billion over a period of 10 years.

He said these engineering, science and technology universities would help Pakistan to have better qualified human resource needed for economic development. About the University of Engineering, Science and Technology, Lahore, he suggested that the university should be named as Pakistan-Austria University (PAU).

He expressed hope that the university would add a new jewel to the crown of Lahore, the biggest seat of learning in Pakistan. He said that work on the establishment of a university in Karachi with the assistance of France had begun, while the ground breaking of another university, to be set up in Sialkot with the help of Sweden, would be held soon.

He said that Pakistani youth would have access to world class engineering and technology education, while the Austrian companies, investing in Pakistan, would have good human resource. Musharraf said that low quality education and lack of skilled manpower were responsible for backwardness in the Muslim world. The President regretted that of 500 top universities in the world, none belongs to any Muslim country.

OUR CORRESPONDENT ADDS: Musharraf praised the role of Corps Commander Lahore, for the promotion of higher education. He said Lieutenant General Shafaatullah Shah has generously donated 100 acres of land worth Rs 5 to 6 billion in Defence Housing Authority (DHA) exclusively for the purpose of promotion of quality higher education in Pakistan.

Musharraf said that Corps Commander Lahore has donated a valuable tract of land measuring 100 acres for the establishment of University of Engineering Science and Technology on the request of Chairman Higher Education Commission, Dr Atta-ur-Rehman.

The President said Corps Commander has also given consent to donate 30 acres more land for this project, which is being established in collaboration with the University of Technology, Graz Austria. The new varsity will be situated in phase seven of DHA.

Musharraf mentioned that he visited last week the Lahore Institute of Technical Education (LITE) being manned by Lahore Garrison, where students are being imparted training of steel fixer, shuttering carpenter, fabrication, tailoring and plumbing etc.

It may be mentioned that LITE is functioning under the management of Lahore Corps through its existing resources and has been affiliated with National Vocational and Technical Education Commission (NAVTEC) and Punjab Board of Technical Education. The parameters laid down through NAVTEC are being implemented.

Chairman Higher Education Commission, Dr Atta-ur-Rehman said on the occasion that Pakistan had below-25 year population of 85 million, which formed a huge pool of creativity. He said that knowledge and technology had become the key drivers of growth in the world. 'Pakistani universities were presently producing 300 PhD scholars at present. After 3 to 4 years, the number of PhD scholars would touch the mark of 1,500, he added.

He further said that students at Pakistani universities had now in access to more than 20,000 international journals and added that Pakistan would soon become the first country in the world to have video lecturing for students.

Punjab Governor Khalid Maqbool, Lahore Corps Commander Lieutenant General Shafaatullah Shah, Austrian Minister for Education, Science and Culture Dr Elizabeth Gehrer, Austrian Ambassador in Pakistan, Federal Minister for Population Welfare Shahbaz Hussain, Punjab Minister for Non-Formal Education Hussain Jehanian Gardezi and a number of Austrian and Pakistani educationists attended the ground-breaking ceremony

 

[Owais]

Cement output to touch 47 million tons by 2009

ISLAMABAD (November 19 2006): Cement production will be around 47 million tons by year 2009 with the expansion in production capacity of the existing 28 units, which will be enough to meet both domestic and export needs, it is learnt.

Sources said that three investors, from UAE, Egypt and Qatar, are also considering setting up cement plants here. However, they said, the final decision to this effect would be taken by January next year whether to set up these plants in Sindh or Balochistan. The production from these units would be in addition to 47 million tons that is anticipated from the present 28 units.

The demand of sulphur-resistant (SR) cement, white cement and blast furnace slag cement from Gulf states has been increasing, besides the ordinary Portland cement (OPC) from Afghanistan.

The biggest export market of Pakistan's cement is Afghanistan, where competition is growing among the Central Asian States, Iran and Pakistan. However, Pakistan is in a better position because of low freight charges. The cement sector has seen production of 6.32 million tons during the last four months, bringing total production till October to 33 million tons from 21 million tons during January 2006.

This production is expected to rise to 38 million tons by the end of December as a result of on-going capacity enhancement by existing units. Attock Cement has completed its expansion project and the expansion program of Bestway Cement would be completed soon. D G Khan Cement's new unit in Chakwal is likely to start production soon, whereas the other units have either started their capacity enhancement program or are planning.

Cement manufacturers see growing demand of the commodity at home due to planned construction of dams and increase in reconstruction activities in Afghanistan.

Cement crisis last year had forced the government to intervene. As a result, the government allowed import of unlimited quantities of cement without any customs duty and withholding tax through the private sector to meet the growing demand. The government had also earmarked an amount of Rs 720 million in the budget to arrest cement price hike.

The government has been paying substantial subsidy to cement importers to stabilise the prices.

Sources said that cement import has already been stopped because of much reduced prices in the domestic market. The government hopes that cement prices will remain under control because of the commitment of local manufacturers to raise the level of production and increase production capacity.

 

[Owais]

ADB mulling over $300 million grant for IAFSP

FAISALABAD (November 19 2006): Asian Development Bank (ADB) is considering providing $320 million for Improving Access to Financial Services Programme (IAFSP) in Pakistan to provide significant benefits and will have positive impacts on the poor.

According to a project study report of Julie Rogers, Principal Financial Sector Specialist of ADB, the reduction of poverty is of the highest priority for the Government of Pakistan.

Despite the high level of economic growth averaging over 7.5 percent for the past three years, 24 percent of the population, or 36 million people, continue to live below the poverty line. Further sustained economic growth requires a financial sector that is stronger and more effective in mobilising savings and allocating these to productive use.

Building an inclusive financial sector means broadening the outreach and deepening the service, while at the same time striving for efficiency and ensuring sustainability. Although the sector has made good progress, the small outreached achieved in contrast to the vast numbers of unbanked has shown that new measures are needed in Pakistan to improve access to financial services.

Project report revealed that the goal of the proposed IAFSP is to assist the Government to reduce poverty, build an inclusive financial sector, and promote sustainable economic growth utilising modern technologies and applications to lower cost of delivery of financial services and to improve efficiencies.

The programme will contribute to this goal by achieving its objective of ensuring access to sustainable institutional financial services for a majority of poor and low-income households and their micro enterprises at competitive prices.

The programme will support the government to improve performance and efficiencies of the financial sector; promote diversification and innovation in product and services delivery; and increase outreach in rural and remote areas. The programme will support the government's core reforms to increase access and accelerated growth nation-wide, including programmes for literacy.

ADB sources hoped that this programme will provide significant benefits and will have positive impacts on the poor.

THESE INCLUDES:

(i) a deeper financial sector that fosters broad-based, economic growth, reduces poverty and contributes to macroeconomic stability;

(ii) development of a sustainable market-oriented microfinance sector with greater outreach to the poor in rural and remote areas;

(iii) a developed regulatory and supervisory framework that promotes innovation and product diversification, private sector participation and lower cost, sustainable financial services;

(iv) improved credit information and land registration system to provide essential information for access to credit;

(v) improved capacities and efficiencies of financial service providers for new technologies and applications, including mobile money transfer and VSAT technologies to improve access to financial services in rural and remote areas; and

(vi) increased literacy (financial and basic) improving access of the poor to financial services.

The goals of the programme are reflected in the Government's Medium-Term Development Framework 2005-2010 and Strategic Directions to Achieve Vision 2030.

The government will also actively assist and support ongoing programme monitoring and evaluation by facilitating consultations with related agencies and other key stakeholders as appropriate.

In accordance with the simplified Disbursement Procedures and Related Requirements for Programme Loans, procurement of goods and services produced in and originating from ADB's member countries will be made with due consideration to economy and efficiency in accordance with standard Pakistan public sector procedures and normal private sector commercial practices acceptable to ADB.

 

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$1 billion handsets imported in Pak in 2005-06


ISLAMABAD: November 19, 2006: Pakistan mobile phone handset market is expanding with every passing year and during 2005-06 the total value of handsets imported in the country crossed US$1 billion and forecasted growth in this import is 25 percent annually.

Sources in the Pakistan Telecommunication Authority (PTA) told Online that there are 12 to 15 thousands mobile phone shops across the country and generated huge employment opportunities. They said that about 60,000 people directly and indirectly are employing in this sector.

They said that according to estimates provided by local resellers of the mobile phone handsets, the number of handsets imported currently at around 750,000 and 800,000 per month.

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

They said that four major players dominate Mobile Phone Handsets market, Nokia leading with 55 percent, Sony Ericsson 22 percent, Samsung 17 percent and Motorola 5 percent.

They said that due to the increasing trend of import of handsets through proper channel, the reduction is observed in availability of smuggled sets.

 

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Rs 1010.784 million loans for 1231 industrial projects

SIALKOT (November 19 2006): The Punjab government has advanced loans amounting to Rs 1010.784 million for setting up 1,231 industrial projects in different industrial towns of the Punjab.

Official sources told Business Recorder here on Saturday that the accomplishment of these new industrial projects would generate employment opportunities for 24,000 people in the Punjab. The present government had concentrated and working on to bring about the industrial revolution for ensuring strong industrial base.

The government had already introduced highly conducive polices for attracting foreign investment as a result of which German based Metro group would establish its ten stores with the initial investment of US 200 million dollars in Punjab. The volume of investment would be increased to 500 million dollars while number of stores would enhance to 25 stores.

Sources revealed that Metro group had started export from Pakistan and so far articles amounting to US 40 million had been exported and it is expected that export volume would be US 2 billion dollars in future.

In addition to this the government was actively considering establishing "Enterprises Development Organisation" shortly in the Province. The prime concept of the proposed enterprise development organisation was to organise the cottage industry and to provide solid footing to the artisans in the Province. Under the programme special step would also be taken for providing facilities to the artisans for promoting local products and to provide technical assistance and marketing facilities to the cottage industry and artisans in the Punjab.

The programme would surly encourage cottage industry especially artisans to produce local products using their home-grown skill. The programme would also ensure the considerable increase in the income of business community engaged with the cottage industries well as artisans.

Sources further revealed that under a phased programme 50 Cluster Development Centres of Technology Upgradation Centres would be set up in different major industrial cities of Punjab. Under the programme Product development Centre for composite based material for Sports goods industry (Sialkot), Business Support Centre for Electrical fittings Industry (Sargodha), Wood Furniture Facility Services Centre and showroom (Chiniot) and Support Centre for Development of Auto parts (Lahore) would be accomplished during 2006-2007.

Similarly, the establishment of Cluster Development Centre for Metallurgy casting die and agriculture (Daska), Cluster Development Centre for Technology of Domestic Electrical appliances (Gujranwala), Cluster Development Centre for Development and Promotion of Light Engineering Industries (Multan) and Cluster Development Centre for Light Engineering Industries special focus on Textile machinery and spare parts in Faisalabad had been included in current annual development programme and work these clusters would be carried out soon sources said.

The step was being taken to provide maximum assistance and extending support in technology upgradation to the business communities engaged with this business, sources added.