Pakistan Economy - News & Updates - Archive

[Owais]

UAE trade with Pakistan to hit $5.1 billion


ISLAMABAD (updated on: January 19, 2007, 17:24 PST): Trade between Pakistan and the UAE is set to reach $5.1 billion (Dh18.71 billion) by the end of June, increased by 20 per cent over $4.1 billion in 2005-06.

The first six months of this financial year have yielded a strong results. Exports to the UAE have risen to $700 million compared to $1.3 billion for full-year 2005-06,private news channel reported.

During the last fiscal year the UAE's exports were $2.8 billion and imports from Pakistan were $1.3 billion, keeping the trade balance in favour of the UAE.

Pakistan's exports to UAE were petroleum products worth $400 million, rice $250 million, textiles $200 million, engineering $60 million, leather $120 million and others.

The growth trends in two-way trade are very encouraging and both governments will continue to work closely with the private sectors to enhance co-operation in trade, commerce, investments and other vital areas.

brecorder.com

 

[Owais]

Growth on track; inflation to be higher: SBP

KARACHI (January 19 2007): Monetary policy statement for January-June 2007: first quarterly report for fiscal year 2007: The State Bank of Pakistan says that the growth target (7 percent) for the current year is achievable. However, inflation would be higher (7.5 percent) because of the double-digit increase in food prices.

Issuing the Monetary Policy Statement on Thursday, for January-June 2007 and the first quarterly report for FY07, SBP feared that the increase in money supply will be higher than envisaged in the Credit Plan by the central bank for the year. Further, the volatility in government borrowing is putting pressure on monetary policy.

The report clearly illustrates that the proper application of monetary policy in a calibrated manner has successfully curbed the demand side inflationary pressures while supporting the growth momentum.

SBP said the high reserve money growth is of serious concern as it is indicative of future monetary expansion and inflation. "Liberal access provided to exporters under EFS and LTF-EOP" has added Rs 42 billion over and above the credit plan rise in M2.

In addition, the net foreign assets of the banking system have also expanded by Rs 11.5 billion in the first half of FY07 as against Rs 66.7 contraction a year ago.

SBP report says that although government borrowing for budgetary needs could well be within the Rs 120 billion target - the source of borrowing is a concern for the monetary policy.

The report warns that government borrowing from the banking system jumped from Rs 20 to Rs 60 billion in last 18 months - causing a sharp increase in reserve money. This has a potential of re-igniting the inflationary pressures in the economy. And, the path of low stable inflation could be extended and interest rates kept at a high level for a longer period.

The report says private sector credit growth has slowed down primarily due to dampening of consumption-oriented demand for credit. The demand for long term fixed investment, however, has remained intact.

There has been a decrease in demand for working capital. It has slowed down as most industries are working at near full capacity. Unless additional capacity becomes operational, SBP does should not expect a significant rise in the demand for working capital.

Since inflation in Pakistan is relatively higher compared to its competitors and trading partners, the Relative Price Index (RPI) increased by 4.5 percent. It offset the gains emanating from nominal depreciation of the rupee and the Relative Effective Exchange Rate (REER) index appreciated slightly by one percent during last six months, concludes the report.

http://brecorder.com/index.php?id=518577&currPageNo=1&query=&search=&term=&supDate=

 

[Owais]

Current account deficit reaches $3.8 billion

KARACHI (January 19 2007): Current account deficit reached to 3.8 billion dollar during July-November of current fiscal year of 2007 as compared to 3.1 billion dollar recorded in the corresponding period of fiscal year of 2006.

According to the State Bank of Pakistan (SBP) quarterly report, the current account balance worsened further in the first five months of fiscal year 2007 and increase in deficit was contributed by goods and income deficit along with services deficit.

However, current transfer inflows showed improvement of 465 million dollar over the corresponding period, mainly due to higher remittances inflows. It is worth mentioning that despite persistent current account deficit since fiscal year 2005, Pakistan's debt to GDP ratio is continuously improving.

According to the SBP report the services account deficit also recorded an increase of 5.2 percent during July-November to reach 1.9 billion dollar as compared to 46.5 percent rise in the corresponding period last year.

An unusual lower growth in services account deficit was largely due to the absence of one-off outflow for construction services. The payments for construction services declined by 77 million dollar during July-November FY07 as compared to the same period in FY06. The higher payments for construction services during July-November FY06 were related to the deferred construction payments for the Ghazi Brotha Dam.

Similarly, the net outflow under other business services also recorded fall of 40 percent during July-November FY07. Thus the saving on construction services and other business services partially offset the routine outflows on account of transportation and travels account.

http://brecorder.com/index.php?id=518581&currPageNo=1&query=&search=&term=&supDate=

 

[Owais]

ADB to extend $36 million for coastal areas

LAHORE (January 19 2007): Asian Development Bank (ADB) is lending $36 million to reduce poverty and improve environmental management in six coastal sub-districts of Sindh. According to a press release, the loan is the first to be approved by the ADB Board of Directors in 2007.

The project focus includes job creation, community-driven development and methods for households to cope with environmental degradation in parts of Thatta and Badin districts, where a million people live in poverty.

Environmental degradation is a significant concern in the area around the Indus delta, where losses of agricultural land and declining inshore fishing stocks have occurred.

Over a six-year period, Sindh Coastal Community Development Project would provide opportunities for environmentally sustainable growth at the household, community, and institutional levels. At the household level, improved development of mangrove planting, crab and prawn ponds, bivalve and seaweed rafts, and training for a variety of skills would create income-generating options, it said. Households will also benefit from access to micro loans and savings services.

At community level, the organisation of village groups, leadership training and community-managed development funds would increase self-reliance and improve access to water, roads, and other basic services. At the regional level the project would support development of a coastal zone management and monitoring plan, the statement added.

Surveys of water quality and fisheries in near-coastal areas as well as work to enhance public sector responsiveness to local needs are planned. "The most urgent issue to be faced on the Sindh coast is poverty and environmental decline that households are likely to face," says Betty Wilkinson, an ADB Rural Development specialist.-PR

http://brecorder.com/index.php?id=518621&currPageNo=1&query=&search=&term=&supDate=

 

[Owais]

Import of mild steel, iron sheets from India allowed upto March 31


ISLAMABAD: The government on Thursday allowed the import of Mild steel (MS) reinforcement bars grade 40/60, mild steel angle iron sections graded 40/60 and corrugated galvanized iron sheets SWG falling under their respective headings shall be importable from India upto March 31, next, via land route as well, for exclusive use in the reconstruction of earthquake affected areas.

This decision has been taken by the Ministry of Commerce on the recommendations of the Earthquake Reconstruction and Rehabilitation Authority (ERRA), says an order by the Ministry here today.

Following is the text of the order: "The Federal Government is pleased to direct that the following further amendments shall be made in the Import Policy Order, 2006, namely:- In the aforesaid Order, in paragraph 16, under heading B in clause(viii), for the second proviso, the following shall be substituted, namely: - Provided further that mild steel (MS) reinforcement bars grade 40/60,mild steel angle iron sections graded 40/60 and corrugated galvanized iron sheets SWG falling under their respective headings shall be importable from India up to the 31st March, 2007, via land route as well, for exclusive use in the reconstruction of earthquake affected areas on the recommendations of the Earthquake Reconstruction and Rehabilitation Authority (ERRA)".

http://geo.tv/geonews/details.asp?id=940&param=3

 

[Janbaz]

Privatisation yields $6bn in 7 year

SLAMABAD, Jan 18: Federal Minister for Privatisation and Investment Zahid Hamid has stated that the government is fully committed and very serious to bring Pakistan State Oil (PSO) to the bidding point within the set target as "we have received encouraging response."

The minister stated this during his meeting with a delegation of Kuwaiti investors, led by Mr Hussain Al Shammaa, Managing Director, Bakri Energy Marketing Systems, on Thursday.

He informed the Kuwaiti group that the data room for the due diligence of PSO was ready and would be made available to the parties soon after the completion of pre-qualification process on the basis of the information received from the parties through their statements of qualification (SoQs).

The minister said that Pakistan had liberal economic and pro-investor policies and provided level playing field to all in a most fair, open and transparent manner.

The government’s strong political will and commitment from the top has yielded record results on the privatisation and investment fronts during the last seven years of President General Pervez Musharraf’s government.

Since 1991 to-date Pakistan has realised privatisation proceeds worth $7 billion out of which major portion of $6 billion was received during the last seven years, he said.While briefing the delegation about the investment policy and achievements, Mr Zahid stated that Pakistan provided conducive and very attractive investment environment.

The leader of the delegation of Kuwaiti Investor group expressed his keen interest in the privatisation of PSO and wished the minister for successful completion of the transaction.

http://www.dawn.com/2007/01/19/ebr8.htm.
The Dawn.

 

[Neo]

Low imports of dutiable items hitting revenue

ISLAMABAD, Jan 18: The gradual slowdown trend in imports, particularly in dutiable imports has posed a serious threat to the government to achieve the annual tax target of Rs835 billion set for the fiscal year 2006-07.

This warrants a special attention towards other appropriate remedial measures like plugging the loopholes in customs collection. The decline in dutiable imports seriously hits the customs duties collection followed by revenue from sales tax and withholding tax.

The CBR’s first quarterly report 2006-07 released here on Thursday indicated that although CBR had accomplished the assigned target for July-Sept of 2006, the trend of decreasing dutiable imports, if continued, might create difficulty in achieving the revenue target for the remaining year.

On the other hand, the higher growth in the direct taxes has been possible due to vibrant economic activities in the banking, oil and gas and telecommunications sectors. The boom in the construction sector has also contributed positively towards this end. The improved voluntary compliance has been the result of various policy changes in the income tax regime.

There might be a need to search for new avenues for replenishing the erosion of revenues from the existing base. Improved enforcement, systematic audit and efficiency gains from the on-going reforms are some of the options that would have to be exploited, the report suggested.

Along with efforts to broaden the tax-base, it is equally important to reduce leakages as the gap between the taxes realized and their potential from the existing taxpayers, particularly the corporate sector, appears to be quite significant.

This difficult task can be accomplished through effective audit, for which the national audit plan needs to be completed on priority basis, the report recommended.Since different rates of duty are applied on imports any sudden decline in major commodities with higher ad valorem duty and specific rates of duty on items like vehicles, edible oils etc can seriously affect the collection of customs duty. On the other hand, valuation of imported goods is also essential for safeguarding government revenues, the report added.

The fluctuation in imports can cast straight impact on the collection of sales tax due to a flat rate of 15 per cent on all the imports. However, any decline in the import of raw materials results in the lesser claims of input in sales tax.

The report says that around 90 per cent of the value of imports has been contributed by only 26 commodity groups during the first quarter of the current fiscal year. Within this group, nearly 58 per cent of the import value is generated by POL products (27.1 per cent), machinery (20.3 per cent), vehicles and organic chemicals (5 per cent each).

A detailed review of these commodities confirms that electrical machinery (Ch: 85) has reflected a growth of 14 per cent. The transmission apparatus including mobile phones constituted 57.4 per cent of electrical machinery.

The growth in the imports of mobile phones during the first quarter has been 26.7 per cent while transmission apparatus excluding mobile phone grew by 16 per cent.

On the other hand the import of general machinery has reduced by 3.1 per cent.

http://www.dawn.com/2007/01/19/ebr2.htm

 

[Neo]

SBP unclear about achieving targets

KARACHI, Jan 18: The State Bank of Pakistan has advised the government in blunt terms to reduce its dependence on borrowing from the central bank as it is “most inflationary and it contributes to reserve money growth”.

It advises the government of publishing quarterly borrowing targets at the beginning of every period to reduce uncertainty associated with its borrowings.

“The high government borrowings and the resulting rise in reserve money, has the potential of re-igniting inflationary pressures,” warns the first quarterly SBP report for 2006-07 released on Thursday.

But the report begins with an optimistic note of achieving 7 per cent economic growth rate despite a few negative factors which are failure of key kharif crops and a fear of large-scale industry coming under adverse effects of electric power shortages in coming months.

While making it clear that the State Bank will “need to continue tight monetary policy for a longer period,” the report says the inflation is set to exceed the 6.5 per cent initial target and is indicated to range between 6.7 to 7.5 per cent and monetary expansion will be between 13.5 to 14.5 per cent instead of original target of 13.5 per cent in the current fiscal year.

The tone of the report is optimistic but it is tentative in substance when it is indicating expected growth in industrial production, exports and revenue while expressing concern on government’s dependence on borrowing from the banking sector and decline in indirect taxes. The report is a central bank review of economic performance of the first quarter — July-September 2006 — but it has given numbers from July to October 2006 and July to November 2006 in certain areas.

Inflation seems to be the dominating theme of the State Bank report for the first quarter as State Bank of Pakistan Governor Dr Shamshad Akhtar in her remarks on Thursday made it clear that price stability remains the prime objective of the central bank but then it does not mean economic growth has been relegated to secondary position in importance.

“While an anticipated recovery in large-scale manufacturing is likely to be realised, it seems that achieving a 13 per cent growth target may prove difficult,” is how the SBP report is optimistic and tentative on industrial growth.

Similarly, the weak performance by three major kharif crops - cotton, rice and maize — had reduced the probability of a sharp rebound by agriculture, though even here, the value addition is likely to be an improvement over the preceding year if contribution from the livestock and the wheat crops remains strong. While dropping hints on less than expected growth in large-scale industry and agriculture, the SBP report pins all hopes on the services sector “to turn in an above the target growth”.

It reports acceleration in growth of large-scale manufacturing in first quarter of FY07 to 9.7 per cent from 8.8 per cent in the same quarter of FY06. This growth was led by textiles, electronics, chemicals and metals.

The report claims of “somewhat” easing of inflationary pressures in the current fiscal year which it attributes to its tight monetary policy but stresses for a further reduction in domestic inflation to ensure improvement in export competitiveness and a better return to bank savers. “Core inflation has already dropped significantly,” the report claims while attributing it to its monetary policy to point out the instability in inflation is driven by food prices.

Food inflationary pressures, the report says, could be better controlled by improvement in supply of key staples and to take suitable administrative measures as were taken in Ramazan.

According to report the collection of indirect taxes declined in the first quarter that is attributed to deceleration in imports coupled with higher growth in development expenditure. But direct tax collections improved and State Bank hopes that this should considerably offset the loss of indirect tax reduction.

“However, if any revenue shortfall do emerge, the impact on fiscal account should be sterilised through curtailing expenditure and makes a specific reference to non-discretionary and non-development expenditure,” the report suggesting the possibilities of adjustments and appropriation in the budget in coming weeks and months.

The report calls persistent large-scale current account deficits “undesirable in the medium term” but declares in clear terms that Pakistan’s present current account deficit is not yet a serious problem. It is because the current account deficit is forecast at 4.5 per cent which it says is manageable, the country is in a position to comfortably finance the deficit through strong non-debt flows also by taking at relatively favourable terms and that Pakistan’s GDP ratio is on decline.

As leading international rating companies continue upgrading Pakistan’s credit rating position, it manifests Pakistan’s comfortable debt-to-GDP ratio.

But then the State Bank advises the government to demonstrate its commitment of fiscal discipline because it is crucial in reassuring international investors, thereby supporting a further improvement in the country’s credit rating.

A slowdown in Pakistan’s exports has surprised the State Bank of Pakistan which has contributed to the widening trade deficit. The report announces support in all measures that aim to reduce cost of doing business.

http://www.dawn.com/2007/01/19/ebr1.htm

 

[Neo]

January 19, 2007

Pakistan ahead of regional economies: Economic freedom index

WASHINGTON, Jan 18: Pakistan is ranked ahead of many regional economics in terms of economic freedom, according to the latest worldwide index of economic freedom. The 2007 Index of Economic Freedom, jointly conducted by The Heritage Foundation and Wall Street Journal, has put Pakistan at the 89th place.

Pakistan has also earned a better ranking compared with most of developing countries on the index, which rates economic freedom of countries taking into account some key factors including ease of doing business, regulations, investment freedom, financial freedom, fiscal freedom, property rights, trade freedom etc.

India is 104 on the index which measured economic freedom of 161 countries.

The assessment notes that Pakistan scores well in fiscal freedom, business freedom, freedom from government, and labour freedom. It also acknowledges that the government’s efforts to liberalise the business climate are producing results.

In the background, experts observe that Pakistan is a vital crossroads between Central and South Asia and also add that wide-ranging macroeconomic reforms have spurred economic growth.

China, a major regional economy, has been ranked 119th on the index.

The executive summary of the 2007 Index notes that modern scholars of political economy are rediscovering the centrality of “free institutions” as fundamental ingredients for rapid long-term growth.

Economic freedom is strongly related to good economic performance, the summary stresses.

The Index reflects that the top 20 countries have held relatively steady. Even though the methodology used for rating economic freedom has been revised with this edition of the Index, the composition and order of the top 20 economies have hardly changed at all.

Japan and Belgium moved into the top group (compared to the old methodology, not compared to 2006 scores using the new methodology), whereas Austria and Sweden fell to lower positions.

Hong Kong has the highest level of economic freedom for the 13th straight year. Singapore remains close, ranked second in the world, and Australia is ranked third freest economy in the world, which means that the Asia-Pacific region is home to the top three economies.

Twelve of the top 20 freest economies are European. A majority of the freest economies are in Europe, led by the United Kingdom, Ireland, Luxembourg, and Switzerland. Only five are in the Asia-Pacific region. The remaining three are from the Americas: the United States, Canada, and Chile.

A new labour freedom factor has been added, and entrepreneurship is being emphasised in the business freedom factor.

Both of these new categories are based on data that became available from the World Bank only recently.

http://www.dawn.com/2007/01/19/ebr12.htm

 

[Neo]

LSM grows by 9.7 percent

KARACHI (January 19 2007): Large Scale Manufacturing (LSM) has grown up by 9.7 percent during the first quarter (July-October) of the current fiscal year, as compared to 8.8 percent during the same period last year. According to the State Bank of Pakistan (SBP) first quarter report, issued on Thursday.

The LSM growth acceleration is not broad-based and growth in the LSM during the first quarter is primarily due to acceleration in the production in textile, electronics, chemicals and metal industries.

The electronics sub-sector recorded an extraordinary 41.6 percent growth during the first quarter. This sector grew by 9.2 percent during the same period last year. The report said and added that strong income growth, better access to credit, and the efforts of power utilities to modernise and extension in their distribution networks are the main factors behind the extraordinary performance of the electronics sub-sector.

The report said that the growth in the textiles sub-group also rose to 12.4 percent during July-October 2006 as against a decline of 0.9 percent in the same period last year. This growth in textile sub-group is the second highest for any first quarter during the last six years.

The growth recorded in textile production appears to be supported by the acceleration in the growth of the chemical sub-sector to 10.1 percent during first quarter of 2007 as compared with 8.2 percent growth during same period of last fiscal year. Production in the metals sub-sector also grew by 14.5 percent during July-October against the 4.1 percent decline during the same period last year.

The improvement can be attributed to the streamlining of production by Pakistan Steel after completion of repairs of its coke oven batteries in the last quarter of FY06.

During the July-October the automobiles sector registered lowest growth during the last six years, which is only 11.1 percent compared to a strong growth of 33.1 percent in the same period of the preceding year, report added.

The production of fertiliser also fell in July-October, dropping by 1.7 percent as against a rise of 3.7 percent growth during the same period of the preceding year. This decline was mainly due to capacity constraint as well as lower demand on the back of untimely rain and an anticipated subsidy announcement by the government, report concluded.

http://www.brecorder.com/index.php?id=518603&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

Crude oil refining capacity rises to 12.62 million tonnes

ISLAMABAD: The capacity of refineries in the midstream and downstream oil sector has reached about 12.62 million tonnes per annum. According to official data presented by the Oil and Gas Regulatory Authority (Ogra) in its annual report.

The Attock Refinery Limited, which began its operations in 1922 with a small capacity of 119,000 tonnes per annum, has now increased its capacity to 1.82 million tonnes per annum.

The National Refinery Limited, which has now been privatised, is refining 2.7 million tonnes crude oil per annum. In addition, it has two lube refineries, which have a combined capacity of 176,000 tonnes of lube base oils and the BTX unit has a 25,000 tonnes per annum capacity.

The third refinery, Pakistan Refinery Limited, has the present design capacity of 2.1 million tonnes per annum. Pak-Arab Refinery Limited (Parco), largest in the country, was commissioned at Mehmood Kot with the capacity of 4.5 million tonnes per annum. It has an asset base approaching Rs 100 billion.

Bosicor Pakistan Limited (BPL) was incorporated in Pakistan as a public limited company in 1995. It has a designed capacity of 1.5 million tonnes per annum. These refineries are producing complete range of both energy and non-energy products.

Non-energy products include lubes and greases, asphalt, solvent oil, mineral turpentine, benzene toluene xylene, jute batching oil, processing oil, carbon oil, and wax.

http://www.brecorder.com/index.php?id=518274&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

Potential of service sector to bridge the trade gap

EDITORIAL (January 18 2007): Professor Ahmed Mahmood's discourse with the Business Recorder on 14th January, 2007 was quite instructive and covered a number of subjects relevant to the conditions obtaining in Pakistan. Being an expert on South East Asian Economies and a highly respected academician, his analysis carries a stamp of authority and feasibility.

In a highly convincing tone, he advised the policy makers of the country to rely more on the service sector to bridge the trade gap and develop social capital which is being increasingly regarded as a crucial factor in accelerating the development process. Pakistan had the human capital and infrastructure to become a hub of education and services, in the fields of agriculture, livestock, fisheries, fruits and vegetables, medicine, dentistry, engineering, information technology, media, telecommunication, management, accounting, nursing, tourism, especially health tourism, marketing of health services, etc.

In these fields, the country had a vast competitive edge over other nations, like China, Thailand, Vietnam and Middle Eastern countries, provided it builds credible institutions in these sectors. Also, instead of focusing on increasing textile and clothing exports, which account for only five to six percent of the total world trade, Pakistan should diversify its exports from low to high value addition and improve the quality and branding of its traditional and non-traditional exports.

The government, in particular, should encourage and facilitate the talented women entrepreneurs involved in fashion designs, fine arts, etc to enter the regional and global markets.

Professor Mahmood asserted in no uncertain terms that social capital, like physical and human capital, was a valuable and productive resource and economic researchers have recently shifted their focus from physical and human capital to this new variable in order to identify the reasons for widening cross-country income differences. This was because 40 to 60 percent of economic growth was left unexplained by changes in the traditional factors of growth. Though Pakistan had social capital in certain pockets, the country needs to create positive and institutional social capital on a much higher scale which must ensure that institutions are working and interactions between the individuals and the institutions create conditions that enhance the wellbeing of the entire society and not of a few individuals.

We feel that we were lucky to have such a useful conversation with Professor Mahmood. The topic was particularly pertinent because of the growing trade deficit of the country and the apparent inability of the authorities to halt this deteriorating trend. Professor Ahmed Mahmood, leaning on his experience and learning, has obviously shown a new way to the economic managers of the country by advising forcefully to avoid the beaten track and adopt innovative ways to increase exports and earn foreign exchange. Pakistan must carve out a niche in the services sector and entrepreneurs and exporters must be encouraged to adopt new strategies to maximise foreign exchange earnings.

The countries which realised the importance of this strategic shift early have been amply rewarded because the provision of services is generally much more costly in the developed world due to higher labour costs. Pakistan, on the other hand, remained engaged in producing and exporting low quality products or encouraged the export of cheap labour, which of course increased home remittances but led to a sub-optimal use of a precious resource. More foreign exchange could be earned by training the manpower and providing services like back-office functions of the financial and aviation sectors from Pakistani soil. The country has a lot of potential and talent in this field because of qualified, trained and cheap manpower.

It needs to be noted, however, that in order to translate the Professor's vision into reality, proper investment is needed to develop the necessary skills in the services sector. The investment of resources and effort of the right kind is sure to yield very high dividends for the country and generate handsome opportunities for employment. Also, the law and order situation and overall perception of the country needs to be greatly improved. In addition, social capital has to be developed. Unfortunately, the structure created by institutions and political developments so far has created such a rigidity in thinking that it has prohibited flexibility and creativity in the society which are the essential ingredients to move faster than others.

http://www.brecorder.com/index.php?id=518354&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

Ups and downs of textile sector

KARACHI: After posting an annual average growth of 11 per cent in the last seven years, Pakistan’s textile exports came under pressure during the first four months of the current fiscal year. However, in November 2006 it started moving up and total textile exports touched $864.935 million as compared to $681.570 million in the same month of last fiscal and $783.883 million in October 2006.

During July-October 2006, textile exports recorded a decline of 9 per cent to $3.2 billion against $3.5 billion in the same period last year. This resulted in the declining share of textile items in total exports of the country.

During July-Oct 2006, textile exports accounted for 58 per cent of the total exports as compared to a share of 65 per cent a year earlier. Alone in Oct 2006, textile exports were down by 5 per cent to $783 million from preceding month’s (September 2006) exports of $824 milllion and 5.2 per cent on year-on-year basis.

During first four months, out of 13 items, that constitute textile group, only five could post growth in exports. Cotton Cloth, Bed Wear and Readymade Garments that collectively carry around 50 per cent weight in the total textile exports, recorded a decline of 18.5 per cent, 19.3 per cent and 7.2 per cent, respectively. Thus, export of value-added products posted a declining trend.

However, in the month of November it came in the reverse gear and started moving up and total textile exports touched $864.935 million as compared to $ 681.570 million in the same month of last fiscal and $783.883 million in October 2007.

Though Federal Bureau of Statistic did not issue final figures of December 2006 so far, it is anticipated that textile exports are likely to increase considerably during month of December.

Many reasons are being linked with current rise in textile exports during last two months. However, some textile exporters said that the improvement in textile exports was recorded high in November because last year exports declined massively due to October 8 earthquake that hit northern part of the country badly, on the other hand government characterised it as its policies that helped in expansion of exports particularly 6 per cent Research and Development (R&D) Support for textile sector.

Textile sector is the backbone of Pakistanís economy. In FY06 textile exports accounted for the 60 per cent share in total exports of the country. This share came down to 58 per cent in (Jul-Oct 2006) but in November this share rose to 80 per cent of total exports of the country which slightly narrowed down burgeoning trade balance of Pakistan at this stage.

During the period under review European Union (EU) reduced anti-dumping duty on Pakistani bed-linen products from about 13 per cent to 7.5 per cent in May 2006, this could not help Pakistani products to maintain or improve its exports. Main cause behind this decline was intensifying competition from peer exporting countries where manufacturing cost is relatively cheaper as compared to Pakistan.

Moreover, lesser focus on value-added products also makes Pakistani manufactures uncompetitive in the international markets.

The two committees, headed by Zubair Motiwala and Tariq Saigal, had submitted their recommendations on reducing cost of doing business in textile and clothing sector which was total cost Rs50 billion but government did not pay any heed to these proposals except announcing 6 per cent R&D Support.

These committees had recommended that textile industry should be declared a priority sector for application of separate lower gas tariff in line with the rates prevailing in Bangladesh. In addition, they demanded that power tariffs prevailing in the country were on the higher side and need to be rationlised and they also recommended that government should devise strategy to bring the cost of furnace oil-based power generation at par with gas-based power generation.

The committees also demanded financial support, tax and duty exemption besides market access but they are still waiting for governmentís response to much of their recommendations.

Decline in exports created a negative impact on smaller textile manufacturing units to some extent but larger textile units and garment factories remained unaffected which have had strong presence in foreign markets and did good business.

http://www.thenews.com.pk/daily_detail.asp?id=39376

 

[Neo]

Musharraf Wants More UAE Investment
Azhar Masood, Arab News

ISLAMABAD, 19 January 2007 — Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces of the United Arab Emirates Sheikh Mohammad Bin Zayed Al-Nahayan held talks with President Gen. Pervez Musharraf and Prime Minister Shaukat Aziz yesterday.

The crown prince, who arrived here on a two-day visit yesterday, discussed with President Musharraf regional and bilateral issues. President Musharraf apprised Sheikh Mohammad of the investment opportunities existing in the country. He said Pakistan’s policies were investment friendly and urged UAE entrepreneurs to invest in the country in real estate, hotel industry, joint defense projects and ports and shipping. UAE is one of the biggest investors in Pakistan.

UAE’s Etisalat has major stakes in Pakistan’s Telecom company.

Prime Minister Shaukat Aziz hosted a dinner in honor of the visiting crown prince. Another important dignitary from the UAE, Sheikh Hamdan Bin Rashid Al-Maktoum, also arrived in the central city of Bahawalpur.

He will open an international airport in Bahawalpur which has been funded by him.

Meanwhile, Air Arabia yesterday announced the start of operations between Sharjah and Pakistan, which becomes 21st country the low-cost carrier is flying to. Flight schedules will include Karachi and Peshawar.

http://www.arabnews.com/?page=4&section=0&article=91130&d=19&m=1&y=2007&pix=world.jpg&category=World

 

[Owais]

Team leaving for Turkey to resolve Bayinder contract issue

ISLAMABAD (January 20 2007): A Pakistani team of experts led by Secretary Communication Tariq Mahmood is leaving for Istanbul on Sunday to discuss the $700 million dispute between the National Highway Authority (NHA) and the Turkish construction company Bayinder,

National Highway Authority terminated Bayinder's contract for the construction of the multi billion Islamabad-Peshawar Motorway (M-1) project in 2000 on its failure to complete two sections of Peshawar Motorway according to the agreement.

The contractor registered a case with the Paris-based UN subsidiary the International Commission for Settlement of Investment Disputes (ICSID) seeking damages of about $400 million from Pakistan for its alleged violation of a bilateral investment treaty.

The company also filed suits with Turkish courts for inflated claims of billions of rupees.

On its part, the NHA said that under the original agreement, Bayinder was required to hand over completed M-1 project to NHA by December 2002 and Pakistan suffered huge economic losses because of serious breach of contractual commitments on the part of Bayinder.

NHA further said that termination of agreement delayed the project by at least another four years and got NHA's Rs 6 billion stuck up with the Turkish Banks.

Official sources told Business Recorder here on Friday that NHA and Bayinder are contesting their claims in courts of arbitration and settlements in the US, France and Turkey as a massive sum of $700 million was involved.

They said that this dispute was also discussed at the highest level between the two governments without any positive results. The Pakistani team includes NHA representatives and legal experts of dispute resolutions will stay in Istanbul and Ankara for a week and also Turkish government officials.


http://brecorder.com/index.php?id=519017&currPageNo=3&query=&search=&term=&supDate=