Pakistan Economy - News & Updates - Archive

[Neo]

Germany keen to strengthen economic ties with Pakistan

KARACHI: December 12, 2006: Germany is keen to further promote the economic ties with Pakistan, Consul General of Germany in Karachi, Hans-Joachim Kiderlen said here on Tuesday.

He was talking to reporters after the inaugural session of a conference organised at a local hotel by the Goethe Institute in collaboration with the Area Study Centre for Europe, University of Karachi.

On the occasion he also delivered a keynote address on " The basic right of religious freedom as the foundation of inter- religious dialogue".

"We have good chimerical, economic relations which we would like to promote and rise more again", the German Consul General remarked with regard to trade ties with Pakistan.

He said, the two countries enjoy many more relations and added Germany has an interest in the Pakistani culture particularly Sufism and archaeology.

He said that science is another topic and pointed out that Pakistan's Higher Education Commission (HEC) is actively seeking the cooperation of Germany like some other European countries for the setting up of the technical universities as well as institutes of technologies.

The Consul General pointed out that Germany would be setting up one such institution in Lahore with the collaboration of the Pakistani authorities.

He also spoke of Pakistan's important role for the stability in this region.

Kiderlen was of the view that it is a broad array of different elements, which characterise German-Pakistan relations.

In her welcome address, Director of the Area Study Centre, University of Karachi, Prof. Dr. Naveed Ahmad Tahir, hoped that at this conference the scholars will contribute more original thinking on the modus operandi needed for protecting the basic principle of freedom of expression while ensuring the religious sensibilities are respect.

She said that no doubt the principle is intrinsically good for human race. However, there must be a distinct line drawn between freedom and license especially as regards religious beliefs.

Dr. Naveed further said that although dissent is often tolerated in political milieu, religion is a matter of unquestioning belief and therefore must not be challenged in any manner by others.

Speaking on the occasion, the Director of Goethe Institute, Dr. Petra Raymond, said that for this conference we have invited journalists, scholars and representatives of Muslim and non- Muslim organisations from Germany, Turkey, Pakistan and Bangladesh to an open exchange forum with students and multiplicators from general public initiating stimulated discussions.

She said that with this conference, the Goethe Institute in Karachi intends to continue the dialogue with the Islamic world, which started after its reopening in 2004.

 

[Neo]

Engro Chemicals to set up new fertiliser plant

ISLAMABAD: Engro Chemicals Private Limited on Monday offered Rs101 million as bid for allocation of 100 million cubic feet per day (mmcfd) gas for setting up a new fertilizer plant near Qadirpur gasfield.

Minister for Industries and Production Jehangir Khan Tareen and Secretary Industries Shahab Khawaja also witnessed the bidding, says a press release. Speaking on the occasion Tareen said that bidding was held in a transparent manner in which four parties including two foreign companies had shown interest.

He said that to make the bidding process transparent for allocation of 100 MMCFD gas for establishment of a new fertilizer plant, the prime minister had constituted a committee. He said only Engro Chemical Private Limited participated in the final bidding and offered Rs101 million.

Minister informed that four companies namely International Petroleum Investment Limited, Orascom Construction Industries Limited, Fauji Fertilizers and the Engro Chemicals were short listed but on the day of final bidding only Engro Chemicals participated in the process.

The minister said that fertilizer plant after completion would produce 1.3 million tonnes urea per annum in the country thus help save a big amount from the import bill. He added this would also help promote agriculture sector and benefit the farmers. The minister for Industries said the fertilizer plant would be on board in three-years.

He hoped that they would establish a state-of-the-art fertilizer plant and play their role in the promotion of the agriculture sector. Chief Executive Officer of Engro Chemicals Asad Omar said the plant would be completed in three years and will produce 1.3 million tonnes urea per annum.

 

[Owais]

Kalabagh Dam to be built as part of water vision: Musharraf


RAWALPINDI (updated on: December 12, 2006, 20:04 PST): President General Pervez Musharraf said on Tuesday that Kalabagh and all others dams including, Bhasha, Munda, Gomal Zam and Kuram Tangi would be constructed as part of his water vision 2025.

He was addressing on the occasion of Silver Jubilee celebration of Pakistan Agricultural Research Council in Islamabad.

He emphasised that agricultural growth could only be sustained by constructing new water reservoirs and said

"If new reservoirs are not constructed now, the country would be facing acute water shortage with serious implications in its agriculture and economic growth".

President Musharraf said the Mangla Dam raising project being undertaken at an estimated cost of sixty two point five billion rupees would make available two point eight million acres feet of additional water.

Musharraf called for optimising country's potential in the agricultural sector especially through value addition in live stock and dairy.

The president said this must translate into increased economic gains for the country and poverty reduction.

He said there is a need for a quantum jump in the agricultural sector through area and yield intensification and stressed the need for value addition in live stock, fruit and food processing.

He said Pakistan has tremendous potential in the agro-sector as it has fertile land and favourable climate with abundance of water resources.

Referring to various steps, the government has taken for achieving self-sufficient in food grains, President Musharraf said increase in support price of wheat has helped the country achieve surplus wheat crops.

About the importance of development of live-stock, the president said the country which is the fifth largest milk producer in the world must value add in this sector in order to enhance its exports.

He said, for this purpose organisational capacity must be enhanced to optimise country's potential through value addition in all areas especially in dairy products.

Underlining the importance of food self reliance President Musharraf underscored the need for area and yield intensification through advance research in the field.

The president also underscored the importance of drip and sprinkling irrigation especially for the benefit of small farmers and said the use of laser levellers would not only help conserve energy but also make available more water precious of the agriculture of the country. He called for extensive use of lesser levellers by the farmers for achieving better crops.

Referring to Rs66 billion brick-lining project, the president said this would make available additional water to the farmers and help boost country's agriculture.

He said fifty percent of brick-lining of 86000 canals would be completed in the current year while the remaining work would be completed in the next two years.

The president urged the farmers to benefit from the agricultural loans and said the Zarai Tarqiati Bank was offering 30 billion rupees to the farmers in the past and now as a result of government initiatives all commercial Banks are offering agro loans to the tune of 160 billion rupees. He called for ensuring that the small farmers stand to benefit from these loans.

He also gave excellence award to eminent Scientists of the Pakistan Agricultural Research Council for their commendable services in the growth of agro sector through the meaningful research.

 

[Owais]

WB for boosting forex to maintain rupee value

ISLAMABAD: Pakistan needs to strengthen its foreign reserves and further tighten monetary policy to maintain the rupee value at the present level with the existing trade deficit, said John Wall, Country Director of the World Bank.

He was talking to journalists on the occasion of ‘2006 Unesco Asia-Pacific Heritage Awards’ announcement ceremony held on the premises of the World Bank.

Wall said there should not be an artificial movement to maintain the rupee value at the existing level, rather the market forces should play their role in determining the dollar-rupee parity as they are determining on their own the value of rupee. “The rupee is currently floating and it should remain competitive.”

He said there is a need to pile up foreign reserves, reduce import and surge exports to an optimum level to overcome the widening trade deficit owing to which the value of rupee can be compromised. He said that to avoid devaluation of rupee, the government also needs to further tighten the monetary policy.

Responding to a question, Wall denied that the World Bank has suggested devaluation of rupee to the government. He said reduction in exports in the first quarter is not a healthy sign.

About recommendations of the International Monterey Fund (IMF) seeking devaluation of rupee, he said it is just an analysis and it is up to the government to decide about the exchange rate assessment of rupee.

Wall said Pakistan’s existing foreign reserves are enough for imports, but not ample for maintaining 6 to 8 per cent GDP growth in the country.

However, an official of the Ministry of Finance told The News that the foreign exchange reserves are enough to meet 20 to 25 weeks’ imports and with the input of OGDC GDR receipts the level would further improve.

He said the government is keeping strict vigil on the market forces so that they could not hurt market stability and enjoy any illegal benefit out of it.

 

[Neo]

Govt plans to develop 97000 MW power with renewable energy

ISLAMABAD: December 12, 2006: The government will develop renewable energy for 9,700 MW power generation employing small hydro, wind and solar technologies by the year 2030.

This was stated by the Chairman Alternative Energy Development Board (AEDB) Shahid Hamid in an interview on Tuesday.

He said under the policy already approved by the PM, the universal access of electricity will be ensured to all parts of the country, especially the rural areas.

The chairman said technologies like small hydropower plants up-to 50 megawatts, solar photovoltaic and thermal energy and wind will be introduced for power generation.

He said under the short term programme of the policy during the period upto June 2008, very liberal and attractive incentives would be provided to attract investment to put the country on the renewable energy map of the world.

Private sector will also be encouraged to undertake commercially viable renewable energy-based power generation projects, he added.

 

[Neo]

Difficult choices amid worsening economic trends

A single line hint “the Central Bank may have to make a difficult choice, if large external imbalances persist” dropped by the State Bank of Pakistan in its annual report of 2005-06 economy has drawn extreme but conflicting views from the economists and businessmen.

“What this difficult choice for the central bank can be?’’ There is a possibility of further tightening of the monetary policy to discourage consumerism and depreciation of rupee’s exchange value. What are the implications, the economic, financial, social and political fall out of such an option that State Bank also considers “a difficult choice”.

“The International Monetary Fund (IMF) may be asked to share Pakistan’s foreign exchange management responsibility if foreign inflows fail to match the extraordinary trade deficit and the resultant imbalance in current account’’ is one view. Mr Akbar Zaidi, a noted economist, says that IMF and the World Bank may be engaged but “only after the elections have been held and not before’’.

Dr Ashfaq Hasan Khan, a government advisor, accepts that widening imbalance in external sector is a challenge but says that it will be faced with right policies to augment foreign inflows. He is confident of a net increase in foreign exchange reserves at the end of the day. “We faced successfully much bigger challenges in the near past and will overcome this challenge too’’, he said from Islamabad.

Businessmen are surprised over a press release issued by the State Bank of Pakistan on Tuesday which suggests that all concessions and incentives offered by the government by way of Rs137 billion refinance, Rs22 billion loans swapping and about Rs11 billion rebates have been misused. Instead of showing improvement, the textile exports are showing negative results in the current fiscal year. “Too little and too late’’ remarked a textile industry leader on the concession package offered to them which, he said, has failed to push up exports.

A retired bureaucrat blames rising consumerism now being officially promoted, at the cost of bank money and remittances, for bringing Pakistan’s economy under the direct impact of the much feared double edge sword—the inflation and ever widening current account imbalance.

Released with inordinate delay early this month, the report in its assessment of remaining half of the current fiscal year, notes with concern risks to the economy. One is the inflation that ``may remain above 6.5 per cent annual target ‘’ and another is widening external current account deficit. Extraordinary trade deficit of over $12 billion in the last fiscal year, which is showing no signs of respite in the current fiscal year, is the main cause of widening current account imbalance.

The State Bank wants the government to reduce import expansion and to boost exports which is easy to say but difficult to do.

There are two ways to deal with this situation. One to continue the tight monetary policy and to further increase the interest rates but then the central bank cannot overlook the “inherent danger of excessive tightening that may hurt the growth”. “A further rise in interest rates could risk considerably slowing the growth momentum of the economy’’, the report apprehends, and the second is a sharp depreciation in rupee value that is fraught with a frightening consequence of economic de-stablisation.

The State Bank’s hint at making a difficult choice comes in context of these two difficult options which has thrown wide open all speculations as to what direction the national economy is taking. Mr Zaidi considers the last five years after 9/11 a period of missed opportunities. “Our foreign exchange reserves are stagnant at $12 billion though there have been about $20 billion remittances during this period, ’’ he said.

Mr Zaidi has a point because a casual glance of the foreign exchange reserves of emerging markets in Pakistan’s neighbourhood shows that these are constantly on the rise. Chinese foreign exchange reserves are now close to a trillion dollars from only $168 billion in the year 2000. , China is amassing $17 billion every month in its reserves. China relies heavily on its expatriates all over the world to contribute to the economic growth of the mainland.

India too has mobilised expatriate Indians who are making contributions in the economic development of their country. India was alarmingly bankrupt in foreign exchange reserves in 1990-91, but now has about $170 billion reserves.

Singapore has $129 billion reserve, Indonesia $39 billion, Malaysia $79 billion, Philippines $18 billion and even tiny Viet Nam about $11 billion.

Pakistan benefited from the 9/11 outfall and managed to attract substantial foreign exchange inflows that helped it build up $13 billion reserves in just two years. But for past two-three years, these reserves are stagnant while import bill, and financial outflows in services is increasing.

“Privatisation of the PTCL, the Habib Bank and the UBL helped to a great extent in plugging foreign exchange hole last year’’ the retired bureaucrat said who warned that once the foreign investors start repatriating their profits back home the real problem would hit Pakistan. This year, the OGDC`s global depository shares (GDS) fetched more than $800 million. The Privatisation Commission is in the process of finalising transaction of GDS of four other institutions in near future.

Dr Ashfaq Hasan disclosed that the Foreign Direct Investment (FDI) inflow in first four months of the current fiscal amounts to $1.1 billion. His estimate for the fiscal 2006-07 is about $4..5- 5 billion.. Remittances are picking up and are expected to give about $4.6- 5 billion. At the end of the year, he is confident, Pakistan’s reserves would show some improvement.

On the trade side, imports are expected to show a slow down because of lowering of international oil price. “The import of textile and cement machinery is now less,’’ Mr Ali Reza, President of the National Bank of Pakistan, disclosed. According to him Pakistan investors have opened letters of credits after booking import orders and for some time there will be less pressure.

However, the latest estimate of the Ministry of Commerce is that the current fiscal would end up with a trade deficit of $12 billion.

Exports, however, remain the worrying concern for the State Bank, businessmen and the government. “The competitive export market has taken a toll in terms of lower prices as well as a fall in export volumes of some products,” the State Bank report observes on the basis of analysis of export in last four months which is down by more than 10 per cent.

The State Bank does not support subsidies to support export as it “carries significant economic cost’’ and instead pleads for policies that should reduce cost of doing business by improving infra-structure, enhance labour skills, strengthen managerial capacity, reduce unit labour cost and provision of unhindered energy at competitive rates.

But this is exactly what textile exporters are asking and pleading. Textile leaders’ contention is that their products in USA and Europe have been out priced because the energy and labour cost in India, China and Bangladesh is much lower and that in addition there are subsidies being offered in financial cost and exemption from taxes. “Textile export is hardly 15 per cent of total Chinese export and about 30 per cent of Indian exports,’’ argues Aziz Memon, a leading garment exporter. But in Pakistan textile is 60 per cent of total exports, 11 per cent of the GDP and it generates almost 40 per cent of urban employment. A slight slump in textile business shakes the national economy in Pakistan.

India will have to struggle a bit to absorb any setback on textile business and China can easily adjust.

Mirza Ikhtiar Baig, Chairman of Textile Committee in the Federation of Pakistan Chambers of Commerce and Industry, has presented a comprehensive paper showing production cost comparison of Pakistan with neighbouring countries to establish that there is a case for giving a hard look to energy tariff, tax rates and impact of non-revenue taxes on the textiles and on business.

Prime Minister Shaukat Aziz and Commerce Minister Humayun Akhtar Khan are reported to have held several meetings with textile leaders and of other industrial sectors. The government is expected to offer a short-term salvage package to the industry in next one or two weeks.

 

[Owais]

Musharraf urges agriculture scientists to help raise per-acre yield

ISLAMABAD (December 13 2006): President General Pervez Musharraf on Tuesday emphasised the need for optimum utilisation of research and technology and urged the agricultural scientists to help the farmers achieve a quantum jump in per acre yield of crops to improve agriculture sector and alleviate poverty.

The President was addressing the inaugural ceremony of silver jubilee celebrations of Pakistan Agricultural Research Council here at the National Agricultural Research Centre. The President regretted that in last 30 years no dam could be constructed adding that the present government has started various projects to build dams.

He said work on Bhasha-Diamir Dam has been started while Merani Dam has been completed. He said all other big and small dams including Munda Dam, Akhori Dam and Kalabagh Dam will be constructed to provide adequate water for irrigation to the farmers.

President Musharraf said agriculture sector is backbone of the country. He said the country has tremendous potential, all types of fertile land and weathers but there is need to adopt co-ordinated efforts at all levels to get benefit from these natural resources to increase agricultural production.

The President said with 70 percent population depending on the agriculture sector, Pakistan is an agrarian society, therefore, it was the responsibility of the agricultural scientists and researchers to help the farmers to increase the production of their crops.

Appreciating the efforts of the scientists working in Pakistan Agricultural Research Council, the President said due to their efforts there was quantum jump in the wheat production and other crops.

Referring to availability of water, the President said the country has abundant water resources but there is need to build water reservoirs to store it and use it at appropriate time. The President said many canals including Thal canal, Rainy canal and Rikki canal are being constructed for better utilisation of the available water for irrigation.

President Musharraf said due to shortage of water, "We should utilise less water, so that we can irrigate more land by using laser levelling, drip irrigation and sprinklers."

He said laser levelling helps in reducing the use of power and water, therefore, the farmers should be motivated to use these technologies. President said more than 30 percent water, which was wasted in the watercourses was now being saved through brick lining of these courses.

He said the work on brick lining is in full swing and half of it has been completed while in all 86,000 watercourses would be completed within next two years. In Balochistan, the President said, besides the work on brick lining, the government was also improving water tanks to save water.

Musharraf asked the scientists associated with the agricultural research to project and promote their research in a proper way using the mass media. Referring to the importance of support price, the President said government increased the support price of wheat and it helped in improvement of per acre yield.

He however, emphasised the need to adopt a comprehensive market mechanism, so that there should be no need to increase support price and the farmers could get benefit from the market directly. Referring to loans for the farmers, President Musharraf said Zarai Tarqiati Bank of Pakistan Limited (ZTBL) has been directed to help the poor farmers. He said besides rupees 30 billion loans from ZTBL, now the private and other banks have also been providing loans to farmers and rupees 160 billion are available as agriculture loans.

Emphasising the need on value addition the President said Pakistan is the fifth largest milk producing country, but due to lack of facilities, it could not utilise the milk produced in the country. He said multinational companies like Nestle are increasing their activities in this sector the company is setting up its biggest ever milk plant in Kabir Wala due to abundant supply of milk in the area.

President Musharraf said there is a need to bring in "white revolution" in the country as Pakistan has great potential in milk production. President also agreed to the proposal to improve the service structure of the scientists working at the PARC and added that there should be more financial return for them.

Federal Minister for Food, Agriculture and Livestock Sikandar Hayat Bosan speaking on the occasion highlighted various projects and incentives for the improvement of the per acre yield. Chairman PARC Dr Muhammad Tasneen in his welcome address highlighted the work done by the scientists of the PARC for the benefit of the farmers.

The President gave away Silver Jubilee awards to five scientists for their services rendered in the field of research in agriculture sector. Those who received awards included Dr Amir Muhammad, founder chairman PARC, Dr Kauser Abdullah Malik former chairman PARC, Dr Rafique Ahmad ex-director Honeybee Research Institute NARC, Dr Muhammad Afzal Director General NARC and Late Ikram ul Haque ex-Director Planning PARC. Earlier, the President visited an exhibition arranged on this occasion.

 

[Neo]

Local cars’ sale grows by 10.4pc in five months: 64,996 units sold

KARACHI, Dec 12: For the third time in a row this year the overall sale of locally assembled cars showed a growth of 10.4 per cent during July-November 2006, compared to the same period of last year.

The decline in growth rate in car sales started in July-September this year before that the companies’ sales were rising at an astonishing rate of 20-30 per cent.

Total car sales stood at 64,996 units in the last five months (July-Nov-06) as compared to 58,849 units in the corresponding period last year. Again with the exception of few cars like--Toyota Corolla petrol version, Suzuki’s Cultus, Alto and Mehran—-sales of Honda cars and Hyundai Santro remained depressed as compared to July-Nov 2005.

However, the sale of Suzuki Liana, which has replaced Baleno this year, has started losing ground to mainly imported cars.

Honda is said to be losing market share because of change of its model to 1,800cc engine coupled with its price hike, as the price of Honda City had also surged with the introduction of new model this year. Hyundai Santro makers are now offering Rs30,000 discount on the purchase of CNG-version to clear the backlog.

Starting with sales of 670 units in July 2006, Suzuki Liana sales had surged to 761 units in August 2006, and then started falling to 655 units in September, 372 in October and 354 units in November 2006. Pak Suzuki is offering free registration and a 29-inch Sony TV in a lucky draw for the buyers of Liana.

A total of 2,379 units of Honda Civic were sold in July-November 2006 as compared to 6,080 units in the same period last year, while Honda City sales plunged to 4,857 units from 6,237 units.

Toyota Corolla sales (mainly petrol version) rose to 14,625 units as compared to 10,426 units, while Daihatsu Cuore sales also increased to 5,372 units from 3,246 units.

Suzuki Cultus and Alto sales went up to 10,209 and 8,779 units, respectively, in July-November 2006 as compared to 7,475 and 5,781 units in the same period of last year. Suzuki Mehran sales jumped to 14,425 units from 13,969 units. Hyundai Santro sales declined to 1,538 units from 2,703.

Giving an overall picture of auto industry, Chief Executive Officer (CEO) Indus Motor Company (IMC), makers of Toyota, Pervez Ghias linked the decline in sales of cars to rise in leasing/financing rates to 14-16 per cent from 10-12 per cent last year.

This was followed by strict documentary requirements and measures taken by the State Bank to lessen default cases and the availability of the used CBU vehicles at reduced costs. Because of rising interest rates, there has been reduction in auto financing business.

He said sales of certain product categories had been affected by arrival of 45,000 used cars in 2005-06. However, import of used cars are now on decline, which means that demand and supply gap has been balanced in some cases and in fact in some cases supply is higher than demand.

Mr. Ghias said that the CBU import policy has been misused by the used car importers as it was designed to facilitate the overseas Pakistanis returning home. Now it is expected that the restriction on import of vehicles more than five years old will pave way for standard vehicles.

As a result of huge glut of used cars few assemblers are operating under capacity. If equivalent number of Pakistani cars would have been sold then it would have been part of documented economy, providing job avenues etc. he added.

To a query why IMC adopted lukewarm attitude in changing models, he said the company has to follow the Toyota global model change policy and the timeframe. Time is required for new product design, sourcing and supply of parts.

He was asked to elaborate on why the assemblers receive huge money from customers in terms of advance booking and keep the same for many months. Even the annual accounts of Toyota Motors 2005-06 showed an amount of Rs6.6 billion received from customers in advance booking.

Pervez Ghias explained that keeping the full amount of money deters potential investors as they can only book a few number of vehicles on the reduced cost. If the companies accept partial payments then they will book more cars and the end-users will have to wait for a longer period.

He added that the companies pay interest amount on waiting period of more than 60 days and the refund facility is available to customers booking cars through dealerships.

 

[Neo]

Auto industry key to economic development: Tareen

ISLAMABAD: Minister for Industries, Production and Special Initiatives, Jahangir Khan Tareen on Tuesday underlined the importance of auto industry and termed it key to economic development of the country.

He said, “Auto industry because of its forward and backward linkages and economic multiplier effects will contribute to register a robust growth for considerable period.”

He stated this while inaugurating a workshop on Auto Industry Development Programme (AIDP), organised by Engineering Development Board.

Tareen said the government wants to encourage growth, promote domestic competition, enhance competitiveness and stimulate innovation through the programme. He expressed the hope that the policy framework of the government will double the contribution of auto industry to the GDP from 5 to 6 per cent in 2011-12 from present 2.8 per cent, with turnover of Rs600 billion and export to $350 million and $300 million for CBUs.

Paying tributes to vending sector, he described it as vibrant major job provider and necessary for the engineering skills know-how and integration of technologies in other sectors.

He said the government will support the auto industry with skill development programmes, technology up-gradation, auto research and development.

Referring to up-gradation of Engineering Development Board to Authority, he said that the ministry was working on its details and exercise will be completed by the end of January. This will give more independence and powers to the organisations for serving the auto industry.

However, he expressed regrets on non-introduction of new products by the industry during the last few years. The advantages of the policies initiated by President Musharraf and Prime Minister Shaukat Aziz have benefited the auto industry, he added.

Earlier Chief Executive Officer, Engineering Development Board, Imtiaz Rastgar, in his welcome address said the programme has been developed as the higher protection to the localised parts under the Tariff Base System (TBS) would not be for an indefinite period due to government’s external obligations and risk of potential un-competitiveness.

The programme provides a complete road map to Auto Industry with clearly spelled targets, he said and added that a pre-announced five year tariff plan for both CBUs and components will help the industry to make long term investment and production decisions.

It will also make business environment transparent and predictable, he said and hoped that the incentives given in the programme will give a direction to the industry to become competitive, innovative and sustainable.

 

[Neo]

Singapore’s PSA makes highest bid for Gwadar Port

KARACHI: A consortium led by Singapore port operator PSA International [PSA.UL] has submitted the highest bid to manage Pakistan’s Gwadar Port but the tender has not yet been awarded, a Pakistani port official said on Tuesday.

“We cannot give the figure quoted by PSA International until the negotiations are final but they are the highest and the successful bidder,” the official of the Gwadar Port Implementation Authority said, declining to be named. The PSA bid was accepted at the weekend.

The Gwadar deep-sea port is on the Arabian Sea, about 450km (280 miles) west of the city of Karachi and about 70 km (45miles) east of the Iranian border. China provided $198 million for the $248 million port project. It is scheduled to begin operations next year.

Under the concession, the winning bidder will take over the operation and management of the port for 40 years.

The port official said the offer from the runner-up —Pakistan International Container Terminal — was “far behind” that of the Singaporean operator. “We are in the process of finalising technical and financial terms and conditions with them and will take a decision very soon,” the official said. Pakistan’s AKD Group is part of the Singaporean consortium.

 

[Neo]

Wednesday, December 13, 2006

WB proposes up to 40% cut in KPT staff

* Also seeks 15% reduction in port service charges, closing down of Karachi Dock Labour Board
* Suggests privatisation of PNSC

By Sajid Chaudhry

ISLAMABAD: The World Bank has proposed reducing up to 25%-40% Karachi Port staff, 15% cut in port service charges, closing down the Karachi Dock Labour Board and looking into the possibility of privatization of the Pakistan National Shipping Corporation (PNSC) to be included in Pakistan’s ports and shipping reforms.

Reveals a World Bank report entitled “Transport Competitive-ness in Pakistan”, analytical underpinning for national trade corridor improvement programme, prepared by energy, and infrastructure operation unit of the South Asia Region of the World Bank.

According to the report’s assessment and recommendations, the basic policy decision to make port authorities landlord rather than service operators has already been taken and extensively introduced. But port authorities (particularly the Karachi Port Trust) are still over-staffed and unnecessary labour regulations (at Karachi Dock Labour Board) still persist, rising the cost of services to the users. While cargo-handling charges are comparable with international ports, shipping charges are high and port authorities are very profitable. The government needs to access whether such financial transfers from users to the port authorities are really in the best interest of development, or whether lower charges and lower port profits would have more positive impact on trade and economic development. Ports and shipping reforms should include such actions.

Improving port management by reducing port charges by 15%, appointing management specialists, reducing port staff by 25%-40%, phasing out “Double Charging” to streamline container handling charges, outsourcing of port services to the private sector and making navigation available on a 24-hour and seven-day a week basis.

Updating the national port management plan to revaluate the appropriate roles of the Karachi Port Trust (KPT), the Port Qasim Authority (PQA) and the Port of Gwadar.

Closing down the Karachi Dock Labour Board (KDLB) by using a mutually-agreed separation scheme.

Improving port infrastructure to modernize and meet international standards by investing in both cargo-handling capacity and draft depth to cater for larger vessels.

Completing the transformation of KPT to landlord status. In the longer term, the government of Pakistan may also wish to consider whether a restructuring of the KPT to provide greater focus to both port and property activities would increase the effectiveness of both.

Raise the level of port and commercial, marketing professionalism at both ports and establishing performance-monitoring indicators and benchmarks.

Sea freight rates are determined in a competitive market and Pakistan can do little to affect them, other than ensuring that the ports charge appropriate rates, provide the draft necessary to maintain encourage direct calls and ensure rapid turn around. At present international shipping provides Pakistan with comparable service times and rates to its main competitors. The role of Pakistan-owned vessels is strictly limited to the PNSC, which enjoys a privileged and profitable position through its monopoly over the import of bulk petroleum oil. Increased participation of Pakistan-owned vessels might be encouraged by the privatization of PNSC, removal of cargo reservation and the maintenance of existing tax incentives. However, commercial benefits of the external sector would be limited as Pakistan-owned shipping would follow world market rates. The economic benefits would also be rather limited as the foreign exchange component for shipping services (capital, cost, fuel, spares) is high.

 

[Neo]

Wednesday, December 13, 2006

Pakistan 3rd in world in banking profitability: IMF

By Arshad Hussain

KARACHI: Pakistan’s banking sector is on the third position because of its higher profitability in the international banking markets, a report of the International Monetary Fund (IMF) said, which has attracted foreign investors, including multinational financial institutions.

On the IMF chart, Pakistan’s banking profitability is on third position after Colombia and Venezuela. On the IMF chart India is on 36th position and China is on 40th position.

Foreign banks’ interest in Pakistani banks is also on the rise, partly in response to the government’s plans to divest most of its shares in several domestic banks.

Mergers and acquisitions are on the rise, partly as a result of mandated increases in minimum required capital from Rs 1.5 billion at end-2004 to Rs three billion at end-2006, and further to Rs six billion in 2009.

Standard Chartered Bank has already completed a $487 million deal to buy a domestic bank, and ABN Amro and other foreign banks are also, reportedly, working to acquire local banks.

“Most financial soundness indicators (FSI) of the banking system have improved during December 2004 to June 2006” the IMF report said. “Pakistan’s banking system continued to strengthen since 2004.”

Pakistan’s banks maintained their ranking among the top half in a group of 44 emerging market countries in terms of indicators of capital adequacy and asset quality, but moved to near top of the ranking in terms of profitability from a position near the bottom in 2001.

The rise in earning and profitability indicators was particularly noteworthy, partly reflecting the high spread between deposit and lending rates (700 basis points).

Banks’ financial soundness indicators have improved, though this could be partly due to continued rapid credit growth. The expansion in bank credit to the private sector slowed down to 23 percent in 2005/06 from an average of 31 percent in the previous two years, but remained on the high side. The slowdown in credit during 2005-06 was broad based, affecting all types of borrowers, including households. The growing deposit base remained the primary source for credit expansion; banks’ foreign borrowing, other than for trade credit, remained negligible. Concentration of the banking system remains high.

As of March 2006, Pakistan’s five largest banks held 53 percent of the system’s assets and 51 percent of its loans, somewhat less than at end-2004.

Public banks still account for about 20 percent of total assets of the banking system (excluding the SBP). Monetary policy was tightened in July 2006; reserve requirements on bank deposits were raised for the first time since end-2000 and, two weeks later, the discount rate was increased to 9.5 percent.

Foreign investors’ interest in Pakistan increased significantly in 2005-06. The sale of the Karachi Electric Supply Company and the partial sale and transfer of management control of Pakistan Telecommunication Company (PTCL) generated large foreign exchange inflows and revitalized the privatization process. Foreign direct investment inflows, excluding privatization, rose by 70 percent. The successful March 2006 cash reserve requirements on demand deposits (CRR) were raised from five to seven percent, and the Statutory Liquidity Requirement on demand and time deposits (excluding CRR) was raised from 15 to 18 percent.

Placement of $800 million of 10-year and 30-year government bonds at very favourable terms was also indicative of strong foreign demand for Pakistani paper.

Progress on structural reforms was mixed. Reforms to broaden the income tax base and reduce rates continued, and the legal framework for investor protection was strengthened. However, reform of the power sector has stalled, and the schedule of higher regional electricity tariffs has not yet been implemented. Progress on trade liberalization has slowed down.

 

[Neo]

Wednesday, December 13, 2006

LSM sector grew 9.7% in Q1 of current fiscal

By Tanveer Ahmed

KARACHI: The Large Scale Manufacturing (LSM) index registered a 9.70 percent increase in the first quarter (July-Sep) of the current financial year compared to the corresponding period of the last fiscal year.

However, the LSM index depicted a growth of 6.78 percent in September of 2006-07 compared to same month of previous year. The index was up by 12.98 and 7.49 percent in the months of July and August of the current fiscal year respectively compared to the corresponding months of previous year, the data released by Federal Bureau of Statistics (FBS) showed on Tuesday.

The LSM index is based on the latest production data of 100 items provided by the Oil Companies Advisory Committee (OCAC), Ministry of Industries & Production and the provincial bureaus of statistics.

The breakup of data shows that OCAC index continued to register a negative growth and declined by 9.49 percent in the July-September period of this financial year whereas in September alone, the index was down by 5.39 percent.

The Ministry of Industries & Production index was up by 11.00 percent in the first quarter of current financial year whereas in month of September, it depicted a growth of 10.86 percent.

The data complied by the provincial bureaus of statistics suggests that this category index was up by 11.31 percent in first three months of financial year 2006-07 over the previous year and in September alone, it went up by 2.46 percent compared to August of the previous financial year.

In the petroleum production sector, the statistics show that jet fuel oil production dipped by 1.57 percent in July-September 2006-07, however it was up by 15.23 percent in September. Kerosene oil production was down by 6.40 percent and 23.38 percent in July-September and September periods of the current financial year respectively.

In the first quarter, motor spirits production dipped by 6.64 percent, high speed oil production by 15.60 percent, furnace oil by 12.73 percent, lubricating oil by 1.79 percent and LPG production by 2.77 percent. In the Ministry of Production & Industries index, the production of cigarettes was up by 1.26 percent in first three months. Cotton yarn by 13.32 percent, cotton cloth by 14.25 percent, paper and board by 7.68 percent, caustic soda by 12.35 percent, steel products by 14.47 percent, pig iron by 122.11 percent, glass plates and sheets by 0.94 percent and cement production by 16.38 percent.

The auto sector performed well in the first quarter of current financial year and contributed substantially in the overall index growth, tractors production was up by 7.41 percent with 12192 units in first three months, trucks production rose by 9.56 percent with 1135 units, buses by 17.08 percent at 281 units, jeeps and cars production by 12.73 percent at 41457, motorcycles production by 4.79 percent at 186670 units and production of the LCVs was up by 6.26 with 6945 units in the first quarter.

On the other hand in the MI index, the production of soda ash dipped by 1.75 percent, phosphate fertilisers by 7.75 percent and coke production (Pak Steel) by 29.90 percent in first quarter.

In the index of the provincial bureaus of statistics, in the July-September period, the cooking oil production was up by 3.30 percent, starch and its products by 12.33 percent, beverages by 28.32 percent, cycle tyres by 3.99 percent, cycle tubes by 5.53 percent, motor tyres by 5.64 percent, air conditioners by 218.37 percent, switchgears by 132.01 percent, diesel engines by 31.72 percent.

Whereas the production of TV sets declined by 31.32 percent, bicycles by 11.37 percent, electric bulb by 10.38 percent, tea blended by 8.65 percent, vegetable ghee production by 0.37 percent and electric meters by 19.89 percent.

 

[Neo]

Wednesday, December 13, 2006

Mobilink selects Motorola to expand HLS

KARACHI: Motorola announ-ced Tuesday an expansion to the successful deployment of its home location server (HLS) to enable Pakistan Mobile Communications Limited “Mobilink” to serve an additional 10 million subscribers for an average of 30 million subscribers overall.

According to a press release the existing HLS order, announced in February, supported Mobilink in meeting its fast growth plans and reaching its goal of 20 million subscribers, up from 13 million subscribers. “The major benefit of Motorola’s HLS is that it enables telecoms providers to add capacity quickly and seamlessly and at reduced capital and operating expenses,” said Jose Figueroa, corporate vice president and general manager, Motorola Networks and Enterprise EMEA.

 

[Neo]

Oil and gas found

KOHAT (December 14 2006): Huge quantity of oil and natural gas has been discovered in Adam Banda, Hangu district, sources confided to NNI correspondent here on Wednesday. Adam Banda, a remote area of southern district Hangu, NWFP, is located some 94 km towards south west of Kohat near Gurguri Oil field.

It is worth mentioning here that "MOL, Pakistan Oil and Gas Company" as investor and operator has been busy in exploration of oil and gas in the 'Thall Block' comprising three districts Kohat, Karak and Hangu for many years.

The MOL has been successfully completed its deep drilling at Manzali Well 1 at Gurguri, some 86 km away from here towards south-west where huge quantity of 1 trillion cubic feet natural gas was discovered besides sufficient quantity of oil in December 2002.

MOL has then successfully drilled two more wells at Makori and Manzali 2 at Sam Banda in Banda Daud Shah Tehsil of district Karak respectively where huge quantity of natural gas and crude oil has been discovered some time ago.

Some four wells have also been completed at Shakardarra, a remote area of Kohat district where sufficient quantity of oil and gas has discovered by OGDC. Production from 2 of its wells has also been started.

The sources further said that work on further exploration of oil and gas is in progress as two more wells are being drilled at Bakha Banda in Banda Daud Shah Tehsil (Karak) and Hoti Banda (Kohat).

According to sources, huge quantity of natural gas and oil has been discovered recently in Hangu district at Adam Banda (known as Manzali Well-3). Although the exact quantity of oil and gas has not yet measured, said the sources, adding that it is under testing. They added it is another success, by the MOL, oil and gas exploring company in the southern districts of the province.