Pakistan Economy - News & Updates - Archive

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Chinese company to invest $10 million in celestite mining: MoU signed with Sindh government

KARACHI (December 14 2006): A Chinese company has agreed to start $10 million worth project for mining and development of celestite in Sindh. In this regard, 'Sinochem Hebei Corporation', of China, a joint venture of Sinochem Hebei Corp and Yongli Chemical Company Limited, on Wednesday signed a memorandum of understanding (MoU) with Sindh Mines and Minerals Department.

The MoU singed by Du Hui Bin, Director General, Sinochem Hebei Corp, Zhang Xinqi, Manager, Yongli Chemical Company Limited and Muhammad Yaqoob, Vice President, Minred (JVC) on behalf of the Chinese company, while Suhail Akbar Shah represented the Sindh Mines and Minerals Department.

The two Chinese companies, in collaboration with Minerals and Natural Resources Development Pakistan (Minred) to start exploration of celestite on an area of 5,000 acres at Nooriabad, in Thatta district. The Sindh government had allotted two leases to Minred in the area and with the signing of the MoU the company would transfer the two leases to the Chinese company.

A spokesman of Minred told Business Recorder that the company would complete exploration work in one year and, by the end of year 2007, production would be started. The company has brought an initial investment of $2 million and, after setting up the plant in a year total investment would cross $10 million in the country.

He said that the company would be able to produce about 0.3 million tonnes celestite mineral annually and would meet the local demand of 82,000 tonnes, which the country has been importing for defence purposes. Celestite (SrSO4) is a mineral consisting of strontium sulphate. Primary strontium compounds are used in the faceplate glass of colour television picture tubes, ferrite ceramic magnets, pyrotechnics and signals, X-rays and other applications.

On the occasion of MoU signing, Irfanullah Marwat, Sindh Minister for Mines and Minerals, said that the government had concentrated on coal while the mineral sector was neglected.

The present provincial government had realised the importance of natural resources, particularly the mineral sector, in which about 25 different minerals had been identified in the province, he added. He said that there was no involvement of federal government in the project, and the project would materialise within the stipulated time period.

The Chinese company is among 500 world's best and has good reputation in the mining sector, he said, adding that considering the company's ranking, the Director General, Sindh Mines and Minerals Department had visited China and invited the company.

Three Italian companies, including Carrara group, had shown interest to invest in Sindh's mineral resources. He said that the Sindh government had signed seven MoUs in the past and four of them were operational.

About the Shenhua group, a Chinese company, which intends to set up power plant at Thar at a cost of $1 billion, he said that the federal government had approved the plan and it was delayed due to approval from the Chinese government. The minister said that the mining and development of celestite mineral project would provide jobs to about 1,500 locals and, in addition, it would also provide health and education facilities to the people of the area.

He said that the provincial government would provide infrastructure to the company, including roads and electricity. About revenue, he said that the Chinese company would pay royalty to Sindh government at the rate of five percent of the amount of per tonne excavated mineral.

 

[Neo]

Chinese company to invest $10 million in celestite mining: MoU signed with Sindh government

KARACHI (December 14 2006): A Chinese company has agreed to start $10 million worth project for mining and development of celestite in Sindh. In this regard, 'Sinochem Hebei Corporation', of China, a joint venture of Sinochem Hebei Corp and Yongli Chemical Company Limited, on Wednesday signed a memorandum of understanding (MoU) with Sindh Mines and Minerals Department.

The MoU singed by Du Hui Bin, Director General, Sinochem Hebei Corp, Zhang Xinqi, Manager, Yongli Chemical Company Limited and Muhammad Yaqoob, Vice President, Minred (JVC) on behalf of the Chinese company, while Suhail Akbar Shah represented the Sindh Mines and Minerals Department.

The two Chinese companies, in collaboration with Minerals and Natural Resources Development Pakistan (Minred) to start exploration of celestite on an area of 5,000 acres at Nooriabad, in Thatta district. The Sindh government had allotted two leases to Minred in the area and with the signing of the MoU the company would transfer the two leases to the Chinese company.

A spokesman of Minred told Business Recorder that the company would complete exploration work in one year and, by the end of year 2007, production would be started. The company has brought an initial investment of $2 million and, after setting up the plant in a year total investment would cross $10 million in the country.

He said that the company would be able to produce about 0.3 million tonnes celestite mineral annually and would meet the local demand of 82,000 tonnes, which the country has been importing for defence purposes. Celestite (SrSO4) is a mineral consisting of strontium sulphate. Primary strontium compounds are used in the faceplate glass of colour television picture tubes, ferrite ceramic magnets, pyrotechnics and signals, X-rays and other applications.

On the occasion of MoU signing, Irfanullah Marwat, Sindh Minister for Mines and Minerals, said that the government had concentrated on coal while the mineral sector was neglected.

The present provincial government had realised the importance of natural resources, particularly the mineral sector, in which about 25 different minerals had been identified in the province, he added. He said that there was no involvement of federal government in the project, and the project would materialise within the stipulated time period.

The Chinese company is among 500 world's best and has good reputation in the mining sector, he said, adding that considering the company's ranking, the Director General, Sindh Mines and Minerals Department had visited China and invited the company.

Three Italian companies, including Carrara group, had shown interest to invest in Sindh's mineral resources. He said that the Sindh government had signed seven MoUs in the past and four of them were operational.

About the Shenhua group, a Chinese company, which intends to set up power plant at Thar at a cost of $1 billion, he said that the federal government had approved the plan and it was delayed due to approval from the Chinese government. The minister said that the mining and development of celestite mineral project would provide jobs to about 1,500 locals and, in addition, it would also provide health and education facilities to the people of the area.

He said that the provincial government would provide infrastructure to the company, including roads and electricity. About revenue, he said that the Chinese company would pay royalty to Sindh government at the rate of five percent of the amount of per tonne excavated mineral.

 

[Neo]

Pakistan approaches Russia to sign PTA

MOSCOW (December 14 2006): Pakistan has approached Russian Federation to sign Preferential Trade Agreement (PTA), which will finally lead to Free Trade Agreement (FTA) between the two countries. A working group of Pakistani and Russian officials is likely to hold its first meeting in end January 2007, according to commercial section of Pakistan Embassy here.

Pakistan's exports to Russia during March-July 2005 were $10.5 million, but due to extra efforts, it rose to $52 million and expected to increase manifold by end of fiscal year 2006-07 and enhance Russian investment in Pakistan.

Pakistan was biggest export of kinno (mandarin) to Russian Federation and in November 2006, four contracts were signed in Moscow between Pakistani Kinno (mandarin) exporters and Russian buyers.

Russia has huge market for textiles, rice, fresh fruits, vegetables, fabrics, home textiles, fish, seafood, dates, leather products, pharmaceuticals, cutlery, sports goods, and non-traditional items.

Following ban imposed on rice import by Russian agriculture ministry from all countries on December 4, 2006 due to contamination and other regulations, matter was taken up by Pakistan embassy's commercial section for its removal.

Pakistan, India, Thailand, China, Vietnam & United States trade representatives will soon meet Russian agriculture ministry officials to resolve issue. Russian authorities indicated ban on rice import is supposed to be lifted from December 25, 2006. Meanwhile, initial talks between Pakistan and Belarus officials on signing PTA, which will lead to FTA, between two countries will be held on Dec, 18-20, 2006 in Minsk, Belarus capital.

 

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Japan to provide $207 million loan for two projects

ISLAMABAD (December 14 2006): The governments of Pakistan and Japan signed here on Wednesday a note verbale whereby Japan would provide a soft loan of 207 million dollars (23.157 billion Yen) for two projects under its Official Development Assistance to Pakistan.

The two projects are Indus Highway Construction, Project (Phase-III) and Dadu-Khuzdar Transmission System Project.The note verbale was signed here by Economic Affairs Division Secretary Muhammad Akram Malik on behalf of Pakistan government and Ambassador of Japan to Pakistan Seiji Kojima represented his country.

Major assistance of this soft loan will be provided for the Indus Highway Construction Project (Phase-III) with an amount of 19.455 billion-Yen (174 million dollars) while 3.702 billion Yen (33 million dollars) will be allocated to Dadu-Khuzdar Transmission System Project.

The agreements are expected to be signed between the Economic Affairs Division Secretary and Senior Executive Director of Japan Bank for International Cooperation Tetsuo Shiouchi on December 15.

The concessional loans carry an interest rate of 1.3 percent and a repayment period of 30 years, including 10 years grace period. These projects would greatly help the infrastructure building on which the government places high priority. These would benefit Balochistan in particular.

As regards, Indus Highway Construction Project (Phase-III), the objective of this project is to strengthen the capacity of the Indus Highway (N-55), which forms an integral part of the national trade corridor. By construction of an additional two-lane carriageway with allied facilities along the 200-kilometre road section between Sehwan and Ratodero, it will contribute to socio-economic development of Pakistan.

The objective of Dadu-Khuzdar Transmission System Project is to supply sufficient and stable electricity to Balochistan by extending transmission line from Dadu to Khuzdar and construct 220KV/132KV grid station, thereby contributing to the economic development of the province and to the improvement of their livelihood.

 

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Industrial production up by 9.7 per cent

ISLAMABAD, Dec 13: Pakistan's industrial production grew by 9.70 per cent in the first quarter (July-September) of the fiscal year 2006-07 from a year earlier, showing a dismal performance of the production sectors, particularly in electronics, vegetable ghee and petroleum products.

Official data compiled by Federal Bureau of Statistics (FBS) and released here indicated that the leading factories, mines and oil products showed low production during the period under review over the same period of last year.

The average output of 11 leading oil products dropped by 9.49 per cent during the July-Nov of 2006 over the last year. On month-to-month basis, the production of oil companies dipped 5.39 per cent in September over the same month last year.

However, the average growth in production of 31 industries recorded 11 per cent during the first quarter of the current fiscal over the last year. The output of 37 industries in the four provinces was up by 11.31 per cent during the period under review.

Director Pakistan Institute of Development Economics (PIDE) Dr Nadeem ul Haq told Dawn that slow down in the industrial output was the outcome of the government policy to curtail the demand. He said that it was a conscious decision of the government to raise the interest rates in a bid to control the inflationary pressure in the economy.

Mr Haq said that even in America the interest rates were raised last year, which he said resulted into slow down in the economy. He said that Pakistan enjoyed high growth during the last two to three years, which he said, now necessary to slow down relatively in the current fiscal year.

Industry-wise production analysis showed that production of jet fuel declined 1.57 per cent during the period under review, kerosene oil 6.40 per cent, motor spirits 6.64 per cent, high speed diesel 15.60 per cent, diesel oil 2.44 per cent, furnace oil 12.73 per cent, lubricating oil 1.79 per cent and petroleum products 5.05 per cent.

Production of soda ash fell by 1.75 per cent, nitrogen fertilizer 3.50 per cent, phosphoric fertilizers 7.75 per cent, coke (Pakistan steel) 29.9 per cent during the first quarter of the current fiscal over last year.

However, the production of cigarettes was up 1.26 per cent, cotton yarn 13.32 per cent, cotton cloth 14.25 per cent, jute goods 11.05 per cent, paper and paper board 7.68 per cent, cement 16.38 per cent, steel products 14.47 per cent during the period under review. Production of vegetable ghee declined 0.37 per cent in July-Sept 2006, tea blended 8.65 per cent, wheat and grain milling 1.09 per cent, woollen and carpet yarn 7.13 per cent, plywood 0.79 per cent, liquids 2.60 per cent, hydrochloric acid 6.16 per cent, sulphuric acid 4.71 per cent, safety razor blades 1.83 per cent.Among the electronics goods, the production of deep freezers declined 9.78 per cent, electric bulbs 10.38 per cent, electronic fans 9.08 per cent, electric meters 19.89 per cent, television sets 31.32 per cent and bicycles 11.37 per cent during the July-Sept 2006.

The production of beverages was up 28.32 per cent during the first fiscal year over the last year, paints and varnishes 22.80 per cent, matches 38.97 per cent, motor tubes 23.94 per cent, diesel engines 31.72 per cent, sugarcane machines 91.43 per cent, power looms 38.10 per cent, air-conditioners 218.37 per cent and switch gears 132.01 per cent.

 

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Humayun claims exports rising, imports falling

ISLAMABAD: Commerce Minister Humayun Akhtar Khan on Wednesday said all out efforts are underway to help the exporters to keep up pace of exports which registered increase of 23.9 per cent in the month of November 2006 as compared to the corresponding period of the last year.

Speaking at a press conference, he said exports have registered an increase of 5.8 per cent in the month of July 2006, 7.6 per cent in August and 23.9 per cent in the month of November 2006.

While the growth in import slowed down to 10.4 per cent during July- November 2006 as compared to 54.3 per cent during the corresponding period of the last year, he added.

This, he said, has slowed down widening of trade deficit, which is evident from the fact the growth in trade deficit during November 2006 was 17.9 per cent.

He said, “this is an extremely positive trend and its sustenance shall enable us to achieve the export target of $ 18.6 billion”.

The most heartening aspect is that export of textile and clothing to EU and the US, which account for more than 50 per cent of export of textile and clothing, have increased, he added.

He said it has been decided that trade figure released by Federal Bureau of Statistics (FBS) in future will also include data on services export and imports. FBS is compiling the figures of export and import of services, he said adding, the export of services during July-October amounting to $1.048 billion against import of $2.608 billion for the same period.

Humayun said this year better cotton crop is expected which will boost value added products of textile and clothing.

He said, “we are attaching high importance to the trade diplomacy which is now bearing fruit as Pakistan has gained market access to China through recently concluded FTA which will spur exports particularly of home textile to the market.

The commerce minister said the local exporters are facing problems of competitiveness due to higher input cost as compared to the other countries including China, India and Sri-Lanka. However, he said, the government is trying to provide level playing field to the exporters enabling them to compete in the world market and enhance exports of the country.

He said government has also announced incentives of R&D support on ready made garments and this facility has been extended to dyed/print fabrics and home textiles.

The refinance rates have been brought down to 7.5 per cent from 9 per cent and Long Terms Financing for Export Oriented project (LTF-EOP) has been amended and interest rate brought down to a maximum of 7 per cent from 9 per cent to provide concessionary financing to export oriented products, he added.

Humayun said freight subsidy is also available and scope has been widened and government is facilitating participation in exhibitions opening of warehouses. Moreover, he said, the Prime Minister has also set up a High Power committee to resolve the problems impacting textile industry.

 

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Pakistan's GDP to pick up to seven percent this year: World Bank

LAHORE (December 15 2006): South Asia has witnessed a strong economic growth and Pakistan's GDP is expected to pick up to a robust 7 percent in the year, according to a new World Bank report. The World Bank in its report 'Global Economic Prospects 2007:

Managing the Next Wave of Globalisation,' which was made available on Thursday, said globalisation could spur faster growth in average incomes in the next 25 years than during 1980-2005, with developing countries playing a central role; however, unless managed carefully, it could be accompanied by growing income inequality and potentially severe environmental pressures.

The report says growth in developing countries would reach a near record 7 percent this year. In 2007 and 2008, growth would probably slow, but still likely exceed 6 percent, more than twice the rate in high-income countries, which is expected to be 2.6 percent. Broad-based growth in developing countries sustained over the period would significantly affect global poverty.

Gross Domestic Product (GDP) in South Asia is estimated to have expanded at a very rapid pace of 8.2 percent in 2006.

India led the way with GDP growing by an estimated 8.7 percent, backed by non-agricultural growth in excess of 10 percent. Output in Pakistan is estimated to have slowed from 7.8 to 6.6 percent, following a return to more normal agricultural production in the wake of a bumper harvest in 2005.

In Bangladesh, growth rebounded to 6.7 percent owing to stronger remittance inflows, vibrant services and manufacturing sector output and the waning impact on agricultural output of last year's floods.

Economic activity in Nepal slowed to 1.9 percent because of the intensified conflict, a weather - related decline in agricultural production, and a decline in clothing exports. In Sri Lanka growth picked up to an estimated 7 percent, thanks to a good harvest, and post-tsunami recovery and reconstruction activity.

GDP in South Asia is projected to slow gradually to a still robust 7.5 percent in 2007 and 7 percent in 2008. Weaker external demand, reflecting slower growth in the United States in 2007, tighter domestic monetary and fiscal policies, and tighter international monetary conditions are all factors contributing to the expected slowdown.

The report also predicts that globalisation would expand the global economy from 35 trillion dollar in 2005 to 72 trillion dollar in 2030. Moreover, global trade in goods and services could rise more than threefold to 27 trillion dollar in 2030, and trade as a share of the global economy would rise from one-quarter today to more than one-third.

Roughly half of the increase is likely to come from developing countries, which that only two decades ago provided 14 percent of manufactured imports of rich countries, today supply 40 percent, and by 2030 are likely to supply over 65 percent. At the same time, import demand from developing countries is emerging as a locomotive of the global economy.

"Globalisation is likely to bring benefits to many. By 2030, 1.2 billion people in developing countries, 15 percent of the world population, would belong to the 'global middle class,' up from 400 million today.

This group would have a purchasing power of between 4,000 dollar and 17,000 dollar per capita. It would enjoy access to international travel, purchase automobiles and other advanced consumer durable, attain international levels of education, and play a major role in shaping policies and institutions in their own countries and the world economy," it added.

However, the report warns that the next wave of globalisation would likely intensify stresses on the 'global commons,' which could jeopardise long-term progress. Nations would have to work together to play a larger role in issues involving global public goods, from mitigating global warming, to containing infectious diseases like avian flu, to preventing the decimation of the world's fisheries.

According to the report, global warming is a serious risk. Rising output means annual emissions of greenhouse gas, would increase roughly 50 percent by 2030 and probably double by 2050 in the absence of widespread policy changes.

To avoid this, policies would have to promote 'clean' growth so as to limit emissions to levels that would eventually stabilise atmospheric concentrations.

Moreover, poor countries would need development assistance to adapt to coming environmental changes, including support for their participation in the carbon finance market.

It pointed out that the challenges of rapid globalisation put new burdens on both national policymakers and international officials. Nationally, governments need to ensure that the poor are incorporated into the growth process through pro-poor investments in education, infrastructure, and support mechanisms for dislocated workers. They need to support and invest in workers-all the while promoting rather than resisting change.

Internationally, the report calls for stronger institutions for tackling threats to the global commons. It also calls for more and better development assistance. Reducing barriers to trade is vital as well, since it can create new opportunities for poor countries and poor people.

http://www.brecorder.com/index.php?id=508016&currPageNo=1&query=&search=&term=&supDate=

 

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CPI goes up to 8.07 percent

ISLAMABAD (December 15 2006): The Consumer Price Index (CPI) in November went up to 8.07 percent from what it was 7.89 percent during the corresponding month of last year, while the inflation of five-month (July-November 2006) decreased to 8.29 percent over the corresponding period of last year (8.41 percent).

More interestingly, the Federal Bureau of Statistics (FBS) reported that the Wholesale Price Index (WPI) during November 2006 was up by 0.89 percent over corresponding month of last year. During the month under review, it climbed to 7.46 percent over October 2006 (6.70 percent) which signifies future prices rise in the coming months.

The most important feature of the data released by the FBS was that the rising prices of food, fuel and lighting, education, medicare and house rent are still snatching the purchasing power of the low income group, which is a challenge for the economic managers.

The monthly CPI bulletin further reveals that beside other commodities, the prices of food and beverages and fuel and lighting year-on-year during November inched up to double digits as compared to the corresponding month of last year.

According to the data, in November 2006, prices of food and beverages rose by 10.62 percent and fuel and lighting charges increased by 10.51 percent over November 2005. It further says that medicare charges increased by 9.75 percent, education was expensive by 7.25 percent, household, furniture and equipment by 6.88 percent and house rent increased by 6.63 percent as compared to corresponding month of last fiscal.

Detailed analysis of CPI data showed that under food and beverages, the items, which became dearer in November 2006, were onion 67.16 percent, eggs 20.69 percent, potatoes 18.94 percent, gram whole 4.50 percent and dry fruit prices increased by 2.84 percent in one month over October 2006.

According to WPI, the raw materials prices increased by 13.22 percent, food by 9.11 percent, fuel lighting and lubricants by 7.88 percent and manufacturers price increased by 3.13 percent in November over corresponding month last fiscal.

However, comparison of the WPI of November 2006 with the last month (September) of this fiscal, shows that during this one month prices of raw materials (including sugarcane 14.21 percent, and hides 8.17 percent) increased by 5.34 percent, food by 1.12 percent and building materials by 1.08 percent.

 

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Exports to Russia increase to $52 million

KARACHI (December 15 2006): The exports from Pakistan to Russia during March to July 2005 remained at 10.5 million dollars and rose to 52 million dollars due to initiatives taken by the Pakistan Embassy's commercial section, which was reopened there.

The Commercial Section was first established in the Embassy premises temporarily in February, 2005 in a room of the Information section but later set-up in a newly hired office near metro Oktyabarskaya. According to an official report, keeping in view the potential of the Region, the exports to Russia are expected to increase manifold by the end of fiscal 2006-7.

Pakistani exporters participated in five international exhibitions of textile products, besides visit by four delegations of cutlery and general goods while various individual exporters also visited the Russian Federation to assess the market and find potential buyers of their products. They were assisted, guided, and helped in achieving the objective.

During 2007, the Commercial Section intends to provide a boost to exports to Russia by participating in more exhibitions of various products and invite more delegations. A big delegation of Russian Importers, for the first time, was brought to Pakistan to participate in Expo-2006.

The report said that individual and collective exporters were being motivated, persuaded, guided and helped in arranging quick visas and match meetings with the Pakistani buyers in Pakistan. The exports of kino (mandarin) were largely introduced, as Russian market is the biggest importer of kino (Mandarin).

Besides textile items, there is a huge market of rice, fresh fruits and vegetables, fabrics, home textiles, fish and seafood, dates, leather products, pharmaceuticals, cutlery products, sports goods and other non-traditional items.

The commercial Section has planned to double its efforts to increase manifold the exports from Pakistan and realise the actual potential and which is expected to grow manifold in future.

In this regard a memorandum of understanding (MoU) valuing $4.4 million was signed in March 2006 at the time of Expo-2006. The representative of M/s RUSPAK was motivated to visit Pakistan and hospitality was extended by the then Export Promotion Bureau and Pakistani Company, Ghausia Trade, Lahore and M/S RUSPAK, St: Petersburg. Pakistani kino exporters visited Moscow during November 2006.

They had meetings with the big Russian importers like M/s Globus Russia, M/S Soyuzpomcontrakt and M/s Moscow International Business Association. Big chains of retail outlets, M/s Paparus, M/S Nature Food, etc were organised by the Commercial Section, Moscow. The importers were accompanied personally by the Minister (Trade) to motivate and persuade the Russian buyers to conduct business with Pakistan.

 

[Neo]

15078 KPP schemes completed so far

FAISALABAD (December 15 2006): Under Khushaal Pakistan Programme-1, Rs 10651.094 million have been disbursed to executing agencies in the federal/ provincial/district governments for executing 21,515 schemes in approved sectors. So far 15078 schemes have been completed.

This programme will cover essential infrastructure at the village, union council, tehsil and district level; basic education and health; support for creating entrepreneurial and employment capacity; and support for creating direct employment. The federal government has allocated Rs 4.42 billion for the financial year 2006-2007.

 

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'Furniture exports to cross $500 million by 2015'

KARACHI (December 15 2006): Furniture exports from Pakistan are expected to cross $500 million by 2015, Chairman All Pakistan Furniture Exporters Association, Turhan Baig Mohammad said.

Speaking at the association's annual general body meeting held recently at a local hotel in Karachi, he highlighted the achievement of the association in 2005-06. The meeting also discussed the problems being faced by the industry, with particular reference to raw material availability, skilled workforce shortage and inadequate production capacities.

The Chairman informed the members that the association had prepared an export plan for the industry. Later, he made a presentation of APFEA's Furniture Vision 2015,in which association is seeking the government's support to develop country's furniture industry located in Karachi, Lahore, Gujrat, Chiniot and Peshawar by providing all the necessary modern facilities so that the furniture exports are increased to around $500 million in less than 10 years.

 

[Neo]

ADB to provide $330 million to promote renewable energy

FAISALABAD (December 15 2006): The Asian Development Bank will provide $180 million and $150 million (total $330 million), respectively to the NWFP and Punjab provinces for Renewable Energy Development Sector Investment Programme under Multitranche Financing Facility (MFF).

According to ADB sources, the maximum utilisation period under the MFF will be for a 10-year period ending December 31, 2017. Each specific loan will have its own closing date to match with its implementation period.

ADB sources explained that the closing date for submitting periodic financing requests (PFRs) under the MFF would be December 31, 2015, provided that such utilisation period would lapse 12 months from the date of the MFF's approval by the Board, unless by such time the first loan agreement under the MFF is signed and made effective.

NWFP and Punjab governments had requested the ADB to provide several loans or tranches to their parts of the Renewable Energy Development Sector Investment Programme. The indicative loan amounts for the two provinces will be $180 million and $150 million, respectively. Each loan under the MFF would not be smaller than $50 million. The first set of loans amounts to the equivalent of $115 million.

Furthermore, the government has delegated authority to the provinces to develop power- generating capacity of up to 50 MW. Renewable Energy (RE) programmes are a mean to deliver this mandate. In May 2005, the government announced a target calling for RE to reach 3.5 percent and 6.0 percent of the total energy supply mix by 2015 and 2030, respectively.

RE development is compatible with the government's twin goals of energy security and promoting indigenous resource utilisation. RE development is also one of the key features of the government's poverty reduction and environmental agendas.

RE supports electrification in remote and rural areas, including those not covered by the main grid. Employment generation and improvements in social wellbeing are two by-products of RE development. The MFF transaction is accompanied by a first PFR to finance a set of subprojects prepared by the provinces and ready for implementation. The investments comprise mainly small to medium-sized hydropower plants in NWFP and Punjab.

 

[Neo]

Imports contribute 37pc to exports

KARACHI, Dec 14: While the threat of huge trade imbalance is looming large, the exports dependency on imported inputs has touched a new peak.

A study conducted by the State Bank’s research department reveals that the contribution of imported inputs in total export level is 37 per cent.

“The contribution of imported inputs in total export level is 37 per cent, however, this impact would translate with one period lag,” said the working paper. The paper also provides the disaggregated long-run estimates of imports, which are 24 per cent for raw material and 16 per cent for capital goods.

The objective of the paper was to examine and estimate the long-run dynamics of the real exports and imports for the country.

The trade deficit during the first five months of the FY07 increased by over 17 per cent to $5.450 billion and the government is facing pressure to curtail imports.

“The curtailment of imports would surely reduce the trade gap but it will also hit the export negatively,” said analysts Abid Aleem.

Despite all efforts and increased supply of subsidised loans, the exports posted negative growth during July-October 2006-07.

Exporters argue that the high cost of production made their cost uncompetitive on the world markets.

“The high inflation is the real problem which keeps the prices of inputs higher as compared to regional countries which are our competitors,” said Abid.

The current monetary policy has curtailed the supply of credit to private sector but the policy also increased the cost of borrowing which adds additional cost to the manufacturing sector.

“The recent debate about the overvaluation of the rupee is also very much concerning for the industrial sector as the devaluation will increase the cost of imports and ultimately the export would be hit,” said researcher Imran Ahmed.

He said any devaluation of the rupee would increase the cost of imports, both the raw material and capital goods.

He said this was the reason that our exports never went up with the devaluation of the rupee.

“Those who argue that the rupee devaluation is must to reduce the trade deficit by increasing exports and curtailing imports, should not ignore the fact that imports have vital contribution for exports,” he said.

Analysts and economists suggested that there was a need to restructure the pattern of manufacturing sector and the products the country exports.

They said the import substitutes should not be exceeding 15 per cent while 20 per cent would allow the country to make fair deals with the countries exporting into Pakistan.

“The imported inputs for export means that import will always be high with the rise in exports and this cycle will continue till restructuring of the production pattern,” he said.

 

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Friday, December 15, 2006

Food inflation rose to 10.64% in November

By Arshad Hussain

KARACHI: Food inflation that was on the downward trend in the past two months again increased in November to 10.64 percent compared with the 10.54 percent in October, according to data released by the State Bank of Pakistan here on Thursday.

“The consumer price index (CPI) was up 8.07% in November, compared with the 8.11 percent rise in October. Average inflation in July-November 2006 rose to 8.29 percent compared with 8.41 percent in July-Nov 2005,” the data said. The country’s headline inflation further dipped in November to 7.07 percent year-on-year basis, according to the data.

Market experts said the inflation rates are stable as the central bank is continuously raising short-term interest rates for the banking sector. The SBP governor has claimed in the annual report 2005-06 that the inflation rates may be beyond the target of 6.5 percent set by the SBP. Owing to the rising inflation, the governor had said, production cost in the textile sector and other exporting goods had gone up. “If inflation is not controlled in coming months, the country’s exports would be hurt further,” she had said.

The heavily weighted food and beverages component of the CPI rose 10.62 percent on year, compared with a 10.54 percent increase in October. The component has a weightage of more than 40 percent in the index.

Another important component of the CPI, house rent, declined slightly to 6.63 percent from 6.88 percent in October.

Non-food inflation rose to 6.27 percent year-on-year basis in November this year compared with 6.41 percent in October. Non-food inflation in July-Nov stood at 6.96 percent compared with 9.11 percent in the same period of last year.

“The central bank is trying to reduce the inflation rate slowly,” an analyst said. Inflation would be around 6.5-7 percent in the current fiscal year, he added. The government is making serious efforts to increase food supply, the analyst said, adding that the government is importing onion, potato and others food items to reduce prices.

The central bank has further tightened its monetary policy in the first half of the current fiscal, and the policy would be reviewed again in January 2007.

 

[Neo]

Strike causes Rs 2.5 billion industry losses

KARACHI (December 16 2006): Majority of industrial units in all five industrial estates of the city remained closed on Friday as workers failed to report for duty owing to transport strike.

The transport strike call was given by Pakhtoon Action Committee, which was backed by Karachi Transport Ittehad to press the government to clear outstanding of Rs 2.4 million against use of transporters vehicles during local body elections around one and half year ago, compensation of around 200 vehicles (buses, mini buses, coaches and trucks) torched in the city during various violent incidents and other demands. Industrialists said that the one-day closure of industrial units in Karachi causes around Rs 2.5 billion losses.

Korangi Association of Trade and Industry (KATI) Chairman Masood Naqi said that in Korangi industrial estate almost all units remained closed as workers failed to reach their workplace. Those who reached also left for home after some time. He said total closure of industrial units in Korangi industrial estate caused Rs 250 million revenue losses per day.

He said that there were a few units remaining operative with thin work force. Only those workers who are living nearby managed to report for duty. Industrialists from Site said that a very large number of units remained closed. Some industrials on Thursday did not allow their night shift to go home to keep their units operating on Friday.

Industrial units, which remained operative also worked with depleting staff. Industrialists claimed that there are around 3000 industrial units in Site and one-day closure causes around Rs 1 billion production losses; beside, government sustains Rs 200 million revenue losses.

They said that majority of multinational companies already have their own transport to bring staff. Those multinational companies who faced problems in the past have made arrangements and hired transport to bring staff on time. North Karachi Association of Trade and Industry (NKATI) Chairman Dawood Usman Jakhura said the entire industrial units in this industrial estate remained closed.

He said beside non-availability of buses, minibuses and coaches, disturbances at Sohrab Goth, New Karachi, North Nazimabad and other areas also played a major role in creating hurdles in the way of those workers trying to reach by car and their own transport.

He said only a few workers managed to reach the workplace, but after some time they were allowed to go home. He said that industrialists have started thinking to keep their units working on coming Sunday to meet production target as well as export orders.

Some shops in major markets including Saddar, Electronic Market, Jodia Bazaar, Jama Cloth Market, mobile phone markets remained open but there were no customers. Only those shopkeepers managed to reach their shops who have their own transport. Markets in Nazimabad, Federal B Area, Gulshan-e-Iqbal, Gulistan-e-Johar , North Nazimabad remained partly open.