Pakistan Economy - News & Updates - Archive

[Owais]

China Mobile acquires Paktel’s 89% shares


SHANGHAI: China Mobile Communications Corp. has agreed to buy 88.86 percent of shares in Paktel Ltd, a subsidiary of Germany based Millicom International Cellular, in Pakistan, the company's listed unit said Monday.

The deal values Paktel at US$460 million (euro355 million), China Mobile Ltd. said in an announcement.

It said the deal was subject to regulatory approval but was expected to be completed by late February.

China Mobile had tried to acquire the company in July last year but the bid was failed at that time.

China Mobile has a mobile network in 16 countries of America and Africa.

http://geo.tv/geonews/details.asp?id=1100&param=3

 

[Owais]

Cotton production target enhanced to 12.5 million bales


MULTAN: The Cotton Crop Assessment Committee, set up by the federal government, has enhanced the country’s cotton production target for the current year by 60,000 bales.

The Committee meeting presided over by the Federal Minister for Food and Agriculture, Sikandar Hayat Bosan held here, assessing countrywide production of cotton this year at 12.5 million bales on the basis of the data provided by the Pakistan Cotton Ginners Association (PCGA), has upped the country’s current year cotton production target from 12.44 million bales to 12.5 million bales, which included 10.1 million bales from Punjab, 2.3 million bales from Sindh, while 0.1 million bales of cotton production of Balochistan and NWFP.

The Committee, taking notice of the January 17 PCGA survey report stating that the Ginneries across the country have already received 11.55 million bales of cotton until January 15, assessed that the upward revised target of 12.5 million bales of cotton production would be achieved, despite pests and virus attack on the crops.


http://geo.tv/geonews/details.asp?id=1059&param=3

 

[Neo]

LOL, this is one benifit of having a huge population!!

Correct, India is getting six times as much!

 

[Contrarian]

Correct, India is getting six times as much!

I dunno what the pop gap between the number of expats of India and Pak.
But i mean generally, S.A countries all have a high pop. and send a good number of their children abroad

BWT I hope Neo, your sending money back as well

 

[Neo]

Monetary policy: rising inflation and difficult choices

By Yousuf Nazar

MAKING the half-yearly monetary policy statement, State Bank Governor Shamshad Akhtar told a press conference last Thursday that the central bank will maintain its (tight) monetary policy stance while “effective administrative measures” are needed to control food prices.

The SBP appears to be saying it has done as much as it can to control inflation and it is now up to the government to take corrective measures on the administrative or supply-side to bring down food price inflation that has led to Pakistan's overall inflation rate to accelerate to a twelve-month high of 8.9 per cent in December. The Governor left the benchmark policy rate (3-day Repo Rate) unchanged at 9.5 per cent.

The monetary policy statement of the State Bank of Pakistan (SBP) makes two other important points: (a) inflation remains stubbornly high and is likely to exceed the 6.5 per cent target for the current fiscal year, and (b) the monetary policy continues to be supportive of the economic growth as threshold level of inflation for a stable economic growth. in the range of 4-6 per cent..

The assertion that Pakistan, being a developing country, needs a high inflation rate (6 per cent or so) to support a 6-8 per cent GDP growth is seriously questionable and is not supported by hard evidence from the most recent comparable GDP growth and inflation data of some major emerging markets as shown in graph 1.

Pakistan stands out with the highest inflation rate and the only country in the group whose inflation rate (8.9 per cent) is more than its GDP growth rate (6.6 per cent). This suggests that either there is something so unique about the structure of Pakistan’s economy that the divergence of its GDP growth and inflation data from the norm of even other developing and oil importing countries (leave aside those of the developed markets) has a valid and legitimate reason or the data itself is questionable.

However, even if we take data at its face value, the graph shows that most of these developing countries are growing at around six per cent or more while their inflation rate is around four per cent or thereabouts. The only exception is India whose inflation rate is 6.7 per cent but then its current GDP growth rate of 9.2 per cent is also significantly higher than Pakistan’s 6.6 per cent. The monetary policy statement does acknowledge that the inflation is relatively higher compared to its competitors and trading partners and this higher domestic inflation has offset the gains emanating from nominal depreciation of the rupee against other currencies. Is it making a case for an accelerated depreciation of rupee in the coming months because the monetary policy has failed to achieve the inflation target?

When most of major developing countries are recording healthy GDP growth while keeping overall inflation (this includes food and energy inflation) under five per cent, should not the government set five per cent inflation rate as target for the next fiscal year? This assumes additional significance - aside from domestic economy and political considerations in an election year - since the relatively higher inflation is hurting competitiveness and exports growth instead of supporting the declared policy objective of encouraging economic growth.

Still, it is fair to say that the SBP, primarily through open market operations and changes in the reserve ratios, has managed to bring down the overall growth rate in the private sector borrowings. Based on the monthly average loans outstanding of the scheduled banks, the loan growth during the six months to December 2006 was 14.5 per cent compared to 25.3 per cent growth during the previous year.

However, the impact of the overall tightening in the credit supply has been somewhat diluted by a Rs34.7 billion increase in loans under Long-term Financing for Export Oriented Projects (LTF-EOP) and R26.8 billion increase in loans under Export Finance Scheme (EFS), both offered at concessional or reduced rates.

The combined increase in loans under these financing schemes accounted for 54 per cent of the Reserve Money (M0) growth during the first half of the current fiscal year. Although there may be legitimate reasons for offering export financing at concessional rates, the reports about the abuse of such facilities abound with money being diverted to real estate and stock market investments. Such schemes can offset the benefits of a monetary tightening and derail the progress made in since late 2004. Given their large proportion in overall money supply growth, it is fair to argue that their rapid build-up may have adverse effects on the core function of the monetary policy, that is, achieving low inflation in the next 12-18 months.

Notwithstanding this, the impact of the monetary tightening is visible in rising interest rates and a deceleration in the principal indicator of the money supply, that is M2, during the first six months of FY2006-07. The three-month Karachi interbank offered rate (KIBOR) averaged 10.39 per cent during December 2006 compared to 8.98 per cent during January 2006. While raising interest rates is a perfectly legitimate response to building inflationary expectations, there is an other side to it.

If real interest rates, that is, nominal interest rates minus inflation, are higher compared to a country’s competitors, they can hurt growth, particularly exports. Some policy makers argue that the local businesses and industrialists should not just look at the lower nominal interest rates in India because Pakistan’s inflation rate is higher. Simple enough, but a comparison of the real interest rates between Pakistan and India reveals a somewhat different and more complex picture.

Graph 2 shows real interest rates in Pakistan and India. The monthly averages of 3-month KIBOR and 3-month MIBOR (Mumbai interbank offered rate) and monthly inflation (CPI) rates were used to calculate the real rates. The graph shows the real interest rates in Pakistan have stayed generally higher during 2006 compared to India’s. Although it is difficult to quantify the impact, higher real interest rates do contribute to higher cost of production and hurt international competitiveness.

Moreover, the data has some difficult implications from a monetary policy standpoint. The real interest rates in Pakistan depict a declining trend since mid-2006 while those in India show an upward trend.

Declining real interest rates can portend a higher inflationary environment 18 months down the road, as monetary tightening takes at least that long to make a dent in inflation. Here, it is relevant to note that the SBP’s last Thursday statement starts with a rather bold assertion that “monetary policy measures adopted in July 2006 augmented earlier tightening and reduced core inflation (Non-Food Non-Energy – NFNE) to 5.5 per cent by December 2006 from 7.4 per cent a year earlier.”

Given the widely accepted view, acknowledged even by the SBP Governor, that monetary policy takes 18 months or so to impact inflation rate; it is not clear how the July tightening has caused headline inflation to drop in just 6 months? While this may be excused as a statement made more for public consumption rather than on a serious note, more important issue is the recent and growing trend of emphasising core inflation as opposed to overall inflation that includes food inflation. Maybe it is just a better number to talk about because it looks good.

On the other hand, one may argue that core inflation is also followed closely in the developed economies such as the United States. However, there is a major difference between Pakistan’s inflation (CPI) measure and those of the developed world. Food inflation is the single largest component of Pakistan’s CPI and constitutes 40 per cent of this index compared to only 17 per cent or so in the U.S. and some other developed markets.

Together with energy, food inflation accounts for almost 48 per cent of the CPI or overall inflation in Pakistan. Therefore, in Pakistan’s context, core inflation (that is, Non-Food Non Energy inflation) is not as meaningful a measure as in some other developed countries. While supply-side factors do play a role in inflation, this should not detract the central bankers from targeting the overall inflation rate as the primary focus of the monetary policy. Monetary tools, such as margin requirements, do play a role in commodity financing and should be used appropriately to respond to the financing needs of essential items.

Moreover, while financial deregulation and innovation have made the money supply harder to interpret in the developed markets, domestic money supply control can be a relatively more effective tool of monetary policy in economies like Pakistan where private sector access to foreign borrowing and markets is fairly limited. The fact that a large sector of the economy is undocumented has little to do with the effect of money supply growth on inflation as has been well established in high inflation developing countries like Brazil and Turkey.

The SBP maintains it is capable of skilful management of the often difficult and complex objectives of meeting national growth priorities, liquidity and demand management, and controlling inflation. As central bankers around the world know too well from history, it is difficult to manage just one goal – low inflation – let alone many.

Given the propensity of the borrowers in Pakistan to abuse concessional credits and the difficulties in managing multiple and some times conflicting near-term policy objectives, the SBP will be better off to make achieving an inflation rate of five per cent or less as its core target for next 12-18 months. That by itself will facilitate growth and price stability. Failure to achieve low inflation will hurt growth and exports down the road as monetary policy mistakes can take up to 18-24 months to show up in even higher inflation numbers. But by then, elections will be over.

The writer is a former head of Emerging Markets Equity Investments, Citigroup.

http://www.dawn.com/2007/01/22/ebr1.htm

 

[Neo]

National Savings rates to be raised by 1pc

By Ihtasham ul Haque

WITH the increase in profit on Pakistan Investment Bonds (PIB), the Central Directorate of National Savings (CDNS) has decided to offer additional average one per cent profit on all its products in order to provide some benefits to its depositors.

The CDNS has sent a formal proposal to the finance ministry for approval and the issue is expected to be settled soon. However, commercial banks are opposing the move and have approached the central bank to look into the issue.

While the State Bank has allowed commercial banks to earn unchecked profit, the latter are reluctant to permit the government securities to extend any increase in the rate of interest for their depositors. Commercial banks have informed the officials of central bank that the market trend would be disturbed if the CDNS is allowed to revise its interest rate upward.

"We have proposed certain increase in the interest rate of our products, and hopefully a decision in this regard will be taken by the government within one month,” disclosed Director General of CDNS Ahmad Owais Pirzada. He defended the CDNS’ decision to offer additional profit to its depositors and said that like banks, government securities should also have the right to revise their interest rates from time to time to ensure healthy competition in the market.

Some officials in the finance ministry have supported the CDNS, which will be shortly converted to Pakistan Savings, to revise its interest rates upward. However, they were not sure what would happen as the banks were applying all sorts of pressure to stop the directorate from getting its decision implemented.

They maintained that banks were making 100 per cent profit for the last many years and had earned a record profit of over Rs90 billion in 2006 which was 104 per cent. Under these circumstances, the government should allow the CDNS to revise its interest rates upward which currently averaged about 11 per cent.

"There is a need to review the overall strategy to check the exploitation of the commercial banks who were indulging in illegal activities like offering luxury cars and other benefits to their chief executives and senior officials,” said an official of the finance ministry. While, he favours approving the recommendations of the CDNS to allow additional profits to its depositors, he did not think the government would reject the views of the commercial banks and the central bank over the issue.

Pakistan is among the few countries in the world which has the most lucrative banking returns, he said. These banks did not want the oppressed and hard pressed segments of the society to get some benefit through various national saving schemes of the CDNS, he added.

He was of the view that the central bank should convene a meeting of the banks and other government securities including the CDNS to discuss their rate of profit for next two years, five years or even for 10 years.

Another official said that although the government was not supposed to indulge and try to control the market by implementing its decisions and directives, it needed to play some role to remove distortions in the market to avoid exploitation of the traders and banks in terms of checking inflation.

"Unless the government asks all the market players to enforce their new strategy, banks will continue minting more and more profits and small depositors of government securities would not be able to earn genuine profits,” the official said. He said there was a need to ensure conformity so that all the market players could have a level playing field.

Asked about the position of the CDNS, Mr Pirzada said this organisation had raised over Rs21 billion in the first half of the current financial year and that its products were more economical as compared to other fund-raising sources.

"When we compare the NSS source with foreign borrowing, the non-banking is a better option, therefore, the NSS source should not only be strengthened but its rates should not be less than any compatible products available in the market, he said.

“This will not only be in public interest but will also be beneficial for the six million plus people having their savings in NSS,” the CDNS Director General said.

The World Bank and the Asian Development Bank are believed to have offered loans to the CDNS for its restructuring and improvement in corporate functioning, but the CDNS has declined the offer saying it could run its financial affairs without foreign assistance.

The officials of the ADB met Secretary Finance Naveed Ahsan last week and discussed with him plans to restructure the CDNS. They also offered loan on low mark up but the CDNS officials declined the offer saying they were comfortable with their present financial position.

The ADB officials, it is believed, also inquired as to why the CDNS had not been converted into Pakistan Savings despite the approval of the idea by the prime minister about a year ago, they said the file was still lying in the finance ministry for perusal.

The prime minister had also approved conversion of the Monopoly Control Authority (MCA) into a competition commission which too was being opposed by the law minister.

Generally, it is said that the affairs of the ministry of finance were not getting adequate attention as the decision making did not rest with one official. There is a prime minister's advisor on finance and then a state minister for finance, a secretary general and a finance secretary.

"Among the four people, nobody knows who is calling shorts but in the process the work of the ministry is suffering", said an insider.

http://www.dawn.com/2007/01/22/ebr3.htm

 

[Neo]

Services sector to lead growth

By Sabihuddin Ghausi

THE Services’ sector is being summoned again for the third consecutive year in 2006-07, for, “turning in above the target growth’’ so that the overall national economy shows seven per cent growth by the end of June next.

The national economy, now in second half of the fiscal, carries a drag of below-target harvest of major kharif crops. The large scale manufacturing industry has shown an impressive growth of 9.7 per cent in the first quarter—July-September 06—but it is too narrow based and there are visible dark shadows of power shortages in the coming days, besides the capacity constraints and the State Bank of Pakistan considers achievement of 13 per cent target ``a difficult job’’.

Overall, industrial growth at 7.1 per cent during the first quarter of 06-07 is a little lower than 7.9 per cent rise witnessed in same period of 05-06. This is because of a slow growth in electricity generation and gas extraction attributed to disturbances in Balochistan.

Coming out with a second report within a span of 40 days,--the first quarterly report of 06-07 released on Thursday after launching of annual report of 05-06 on December 2, 2006—the State Bank of Pakistan seems too ambiguous in its reporting. This ambiguity raises the question of sustainability of national growth as the current SBP report does not elaborate how an over-stretched services sector, with already a big base, would be able to show growth that would compensate for the shortfalls in agriculture and industry in the current fiscal year.

`` The likelihood of achieving seven per cent growth rate remains strong, despite visible challenges in meeting growth target in industry and agriculture’’, says the SBP reports in its latest review of the national economy while pinning hopes on the services sector. But it does not mention which segments of service sector show prospects of growth.

Inflationary pressures are found to have been eased a bit in the current fiscal year, but this downward trend is unstable as Consumer Price Index (CPI) jumped up to 8.9 per cent in August 2006 before dipping to 8.1 per cent on year-to-year basis in October that remained at the same level in November.

``The State Bank of Pakistan has a mandate to maintain price stability with growth in the national economy’’ Dr Shamshad Akhtar told journalists while releasing the first quarterly report and mid- term review of 06-07 Monetary Policy. Her presentation gives an impression as if inflation was a number one issue and growth is relegated to second position in importance., she was told.

Tight monetary policy of the State Bank, she said is expected to contain core inflation in the remaining months of the 06-07 year. However she stressed that it was important to supplement this impact by the measures to address food inflation and high energy prices. ``Volatile, double digit food inflation is particularly undesirable in view of its greater impact on low income groups’’, the report observes.

One of the few factors causing inflationary pressures is the government borrowing from the banks which was found to be `higher and volatile’’. ``The high government borrowings and the resulting rise in reserve money, has the potential of re-igniting inflationary pressures’’, says the report while giving a loud signal to both--private sector and the government in case high interest rates are maintained.

In sharp contrast, private sector has responded to State Bank’s tight monetary stance and high interest rates. Private sector credit demand in first five months (July to November 06-07) rose by 5.9 per cent as against 10.9 per cent which is bound to have an impact on growth.

Agriculture performance calls for serious thinking. Water availability improved, farmers’ access to bank credit made easier and fertiliser’ prices brought down. But all major kharif crops failed to achieve target harvests. Cotton, rice and maize production remained lower. The State Bank report does not mention about sugar cane which showed better harvest but its prices have become a issue between the powerful farmers’ lobby and equally influential millers. Both-- farmers and sugar --are well entrenched in the federal/ provincial governments and in the legislatures but it is surprising that sugar crisis is lingering on for four years. It reflects government’s incapacity in bringing about a reconciliation between the conflicting interests which have started impacting both industry and agriculture.

Dismal performance of agriculture also demands a hard look at the land holding structure , particularly in Sindh and Seraiki belt of Punjab to assess how much of the cultivable land is being utilised and performance of small owners-farmers and their access to bank credits and other facilities.

Large scale manufacturing growth of 9.7 per cent during July - September owes much to phenomenal rise of about 42 per cent in electronics as against only nine per cent in same period last year. The report observes that the continued strong demand for consumer electronics reflects strong income growth , better access to credit and improvement in transmission and distribution of electricity by the utilities—Wapda and the KESC--.

How could one reconcile with the SBP’s observation on the looming electric power shortages in coming months that would have an adverse impact on industrial growth. Who would question government’s policy of initiating consumerism of electronics and auto cars when petrol prices are sky-high and electric generation has become a costly affair.

An interesting and somewhat startling disclosure on public finances during the first quarter in State Bank report regarding an ``unidentified expenditure’’ of Rs33 billion which is 751.5 per cent higher than earmarked Rs3.9 billion in 06. The public financing included ``un-identified expenditure’’ of Rs12.3 billion in 2003, Rs14.5 billion in 04 and Rs6.8 billion in 05.

``The classification of 0.4 per cent of total first quarter un-identified expenditure hampers a more meaningful analysis’’ says the SBP report while pointing out that 11.1 per cent growth in expenditure seems quite reasonable. But when it is added with unidentified expenditure the ratio jumps to a ``disturbing 23.9 per cent’’. One wonders whether the graduate legislators will take up this issue of unsolved puzzles in government’s book keeping and accounting.

The State Bank has taken notice of outflows of the profits and dividends from foreign investment in Pakistan which has started pinching the finances. No details have been given about the outflow from the privatised entities, banks owned by foreign sponsors and other external enterprises but the warning bells have started ringing. `The year 2006-07 will be through somehow, but the future poses a big question mark as many present liabilities have been deferred.’, observes an economist.

http://www.dawn.com/2007/01/22/ebr15.htm

 

[Neo]

Rs 4.5 billion projects in industrial areas to be completed this year: Kamal

KARACHI (January 22 2007): City Nazim Karachi Syed Mustafa Kamal said on Sunday the city government had started development projects in all four industrial zones with the estimated cost of Rs 4.5 billion which would be completed by the end of this year.

Addressing a press conference at the Civic Centre here, the City Nazim said after the completion of these projects, these industrial areas would be known as developed industrial zones in the world as they would bring economic revolution in Pakistan.

Syed Mustafa Kamal said huge development projects in the city would bring a positive impact on entire country as every countryman would be benefited through these projects at any level. He said no government in the past paid any heed to resolve basic problems in these industrial zones but this government was fully committed to redress these issues.

He said his government had started special uplift projects worth billions of rupees for the industrial zones including Korangi, Landhi, Federal 'B' Area and North Karachi, which would be completed by the end of this year. The city government was installing high quality imported sewerage GRP (Glassfibre Reinforced Plastic) pipes as they were durable and strong enough to meet the sewerage needs of industrial area for a period ranging between 50 to 100 years, he said.

He also said the city government had spend Rs 50 million to install new sewerage system in Jaffer Tayyar Society within 28 days to address 37-year old problem. He also informed that a huge new state-of-the-art laboratory was in its final stages at Abbasi Shaheed Hospital which would be functional after two months as equipment worth million of rupees had been procured.

Kamal said the city government had also kick off the study for storm water drainage system in the city. Answering a question, Syed Mustafa Kamal said the city government on the directives of court had vacated the school building in Firdaus Colony and the children would be shifted in the nearby schools. Regarding the U-turn on University Road near Ashfaq Memorial Hospital and Mumtaz Manzil, he ensured to conduct a study through city government's engineers.

http://www.brecorder.com/index.php?id=520033&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

FDI up 67 percent in H1 of 06/07: SBP

KARACHI: January 22, 2007: The country's Foreign direct investment (FDI) rose 67 percent to $1.87 billion in the first half of the 2006/07 fiscal year, led by inflows into the communications, energy, and banking and financial services sectors, official figures show.

Data released by State Bank of Pakistan on Monday showed that the FDI for the July-December period rose from $1.12 billion in the corresponding period last year.

Inflows from foreign portfolio investment during the six months were $627 million, up from $359 million in the corresponding period last year.

The United States led the list of foreign investors with direct investment of $468 million during the period, followed by the United Kingdom with $460 million and the United Arab Emirates with $251 million.

Inflows generated by privatisation amounted to $133 million in the six month period, compared with $254 million in the year-ago period.

The banking and financial services sectors attracted the most foreign investment during the period, $517 million, followed by $495 million invested in the communications sector, and $315 million in oil and gas exploration.

Asia-focused Standard Chartered's $487 million take-over of Union Bank Ltd. accounted for most of the funds attracted by the financial sector, though not all the money paid has come to Pakistan.

http://www.brecorder.com/

 

[Owais]

24-hour cargo clearance from February 1

ISLAMABAD (January 23 2007): The Central Board of Revenue (CBR) will launch a new cargo clearance system from February 1, 2007 which will remain operative 24 hours, seven days a week, at all airports and sea ports.

Revenue Division Secretary-General and CBR Chairman M. Abdullah Yusuf announced the launching of the new system at the quarterly conference of collectors of customs and collectors (Appeals) on Monday.

Official sources told Business Recorder that CBR has finalised arrangements for launching of the new cargo clearance system. In this regard, the CBR has approached National Bank of Pakistan (NBP) for working on 24 hours basis. A detailed meeting of CBR and NBP officials was recently convened at Karachi.

Responding to CBR's request, the NBP agreed to open all its branches for seven days on 24 hours basis for customs purposes. The branches would facilitate the clearance process on regular basis, sources said.

Meanwhile, CBR Chairman informed the collectors' conference that the new cargo clearance system would facilitate trade, both imports and exports. It would not only save time to a large extent but would also considerably reduce the cost of doing business. The CBR Chairman said that the "new initiative is in the best interests of trade. All clearance points will work 24 hours in all seven days of a week."

Emphasising execution of the system in an efficient manner, he advised the collectors that there must not be any let-up from any side. The decision of the government must be implemented in its true spirit, as it would facilitate the traders tremendously, he added.


http://brecorder.com/index.php?id=520223&currPageNo=1&query=&search=&term=&supDate=

 

[Owais]

Privatisation sends 0.6 million workers home


KARACHI (updated on: January 23, 2007, 11:56 PST): About 0.6 million Pakistani workers have been rendered jobless because of government's privatisation policy started in 1990, said a research study on privatisation in Pakistan.

The research study titled "The Politics of Privatisation" was carried out by Actionaid International Pakistan.

Terming the retrenchment of 0.6 million workers in 16 years alarming, it said that civil society should display strong reaction over it. It said all over the world, protests are being lodged, rallies taken out and the process of privatisation being resisted by workers, NGOs and members of civil society.

"The people are constantly criticising institutions like the World Bank and IMF. The policies of the World Bank and IMF in the name of privatisation, downsizing and rightsizing have been completely rejected by the common man, as they have brought nothing but deprivation for poor men and women."

It said that many studies conducted by independent scholars show that privatisation has left devastating effects on the vulnerable segments of society.

Referring to the study of noble laureate Joseph Stigliz titled "Globalisation and its discontents" it said that it was proved that so-called 'stabilisation prescription' offered by IMF were counterproductive and had completely failed to yield expected results.

"The dreams of open market economy have proved unrealistic and there is a widespread anxiety in global economy due to privatisation."

It said one wonders why the government of Pakistan is preaching the gospel of privatisation when it has already failed to yield the expected results. "The answer may be the nefarious designs of the ruling clique that wants to plunder national assets through different means of corruption and kickbacks in the name of privatisation.

In this regard the report of Auditor General of Pakistan 2002 speaks volumes about the so-called transparency of the privatisation process. The report pointed out that a whopping Rs 70 billion that the government earned from privatisation had gone missing and no one had a clue where the money had gone."

It added the international experience of privatisation had also been dismal. Globally privatisation is increasing poverty, inequality, decreasing quality, intensifying corruption, shrinking opportunities for employment and concentrating wealth.

"Chile is considered a successful case of privatisation but there have been serious charges that cronyism and favouritism won the day in privatisation process. Similar charges of crony capitalism were levelled in Argentina where privatisation proved an exercise in futility."

It said in Russia rapid pace of privatisation at behest if IMF has led to sharp economic decline. Chile and Argentina may be quoted as examples because privatisation in both the countries has been associated with giving away expensive public assets at cheat rates to political cronies.

The experience of privatisation in Latin American countries has met utmost failure and the concept of 'welfare state' is re-emerging. Workers in these countries are demanding re-nationalisation of private sector.

The report said no doubt under the advise of IMF, World Bank, multinational capital and the Western governments, the state in Pakistan is rapidly shedding its primary responsibilities towards citizens vis-à-vis their basic needs and welfare, as subsidies are slashed, state enterprises privatised, taxes cut and investment 'incentives' enhanced. Resultantly, people find themselves worse off than before.

It said that repressive arm of state was providing protection to the machinations of foreign capital in the country. "Creating a 'favourable investment climate' means crushing dissent and systematically corruption or destroying movements that seek to protect the rights of working class."

The report said privatisation cast horrible impacts on poor and working class people. It diminishes quality of life, besides lowering employee morale and hence productivity. After privatisation workers are being exploited through lower wages. It also increases discrimination against women and children.

According to the report privatisation in long run means loss of government control and sovereignty, loss of control and accountability, increased corruption, bribery and kickbacks and increased conflicts, strikes, grievances and arbitration.

The report suggested that the privatisation needs to be resisted out-rightly without indulging in discussion of 'profit-making or loss-making' paradigm. The practical alternative to privatisation can be fund in fundamental reforms of public sector. This is a challenge to management and public employees' unions.

Reviving and strengthening trade union culture, ensuring openness and transparency, making public sector especially services sector responsive to public needs and by giving the citizens participation priority in decision-making at all levels can help to improve the public sector and eliminate need of privatisation.


brecorder.com

 

[Owais]

UAE to expand investment in Pakistan

ISLAMABAD (January 23 2007): United Arab Emirate's investment in Pakistan will witness a major boost in 2007 in various sectors such as energy, investment, trade, and manpower. UAE is the largest foreign investor in Pakistan's public and private sectors, with $1.456 billion investments, a private news channel reported.

These investments will expand to areas such as agri-business, tourism, hospitality services and food packaging. Pakistan has developed a strong base of trained, educated, skilled and professional manpower, which could meet the growing workforce needs of the UAE. Pakistan expects $5 billion FDI inflows in the current fiscal year 2007, up from $3.8 billion in 2006.


http://brecorder.com/index.php?id=520264&currPageNo=1&query=&search=&term=&supDate=

 

[Owais]

Islamabad and Tokyo agree on free trade accord

KARACHI (January 23 2007): Business leaders of Pakistan and Japan have agreed to make efforts to move toward free trade agreement, promote joint ventures, initiate partnership, provide technical expertise and introduce licensing possibilities to enhance trade volume in coming years.

Pakistan Japan Business Forum (PJBF) and the Japan Pakistan Business Co-operation Committee (JPBCC) issued a joint declaration at the conclusion of the fourth Pakistan Japan joint business dialogue on Monday and stressed the need for taking forward the existing trade relations between the two countries.

Abdul Kader Jaffer, President, Pakistan Japan Business Forum and Tohru Tsuiji, chairman, Japan Pakistan Business Co-operation Committee signed the Joint declaration at a simple ceremony at the residence of Japanese Consul General Shoichi Nakano. The Ambassador of Pakistan to Japan Kamran Niaz and the Ambassador of Japan to Pakistan signed the declaration as witnesses. Members of PJBF and JPBCC were also present.

A strong team of businessmen had come from Japan to Pakistan to have business to business dialogue under the leadership of Tohru Tsuiji, chairman, Japan Pakistan Business Co-operation Committee. It has been agreed between the two organisations that both organisations should maximise trade and commerce information sharing that could lead to further increase in bilateral trade and investment between Pakistan and Japan.

Both the organisations have agreed that in view of the time-tested, pragmatic and advantageous relationship of both the countries, they desire to further cement this by reviewing friendly and cordial relations between the two organisations through an increased co-operation mode among the industrialists, businessmen and entrepreneurs of the two countries.

The two organisations have also agreed to set up a Pakistan Japan study group on trade and investment. The study group would keep the JICA report on "Direction of Industrialisation in Pakistan - Towards Vision 2030" as its main lead.

The study group will consider further steps toward reaching a free trade agreement, as early as possible, by both governments. The study group will constitute representatives from business, industries and academia and work in close collaboration with both governments as observers.

The two organisations agreed unequivocally to call upon the governments of both the countries that sincere efforts should be made to achieve the goals as included in the JICA report as well as the recommendations. The fifth Japan Pakistan joint business dialogue would be held in Japan in 2008.


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[Owais]

'Canada ready to equip Pakistan with technologies'

LAHORE (January 23 2007): Canada is ready to equip Pakistan with latest technology in oil/gas and power sectors to overcome the shortage of energy being faced by the country. President Pakistan-Canada Business Council Anwar Merchant stated this while speaking at Lahore Chamber of Commerce and Industry (LCCI) on Monday.

LCCI Acting President Mubasher Sheikh, former LCCI president Mian Misbahur Rehman, former SVPs Sohail Lashari, Abdul Basit, former VP Mohammad Ali Mian and convenor SME standing committee Rehmatullah Javed were also present on the occasion.

Anwar Merchant, who spoke at length on various issues, said that there are a number of other sectors wherein joint ventures could be initiated between the two countries in the larger interests of the people living in this part of the world. He said that the rapid economic growth of Pakistan has started making ripples in the outer world and a large number of Canadians are planning to make investment in Pakistan so this is high time that the Pakistani businessmen should avail the opportunity.

While paying tributes to present government, particularly Punjab Chief Minister Chaudhry Pervaiz Elahi for bringing consistency in policies, he said that in the coming years Pakistan would be a hub of business activities and standing tall among the comity of nations.

Speaking on the occasion, LCCI Acting President Mubasher Sheikh said that there is a great scope of cooperation in various industrial sectors between the two countries. "The possibility of undertaking joint ventures in areas like pharmaceuticals, electrical appliances, food stuff, leather, textiles, engineering goods, agro-based industries, chemicals, fertilisers, mineral and mineral based industries, oil and gas exploration, telecommunication, seaport development, dams, power generation, areas related to education, health and environment are very bright," he added.

He said that Pakistan is planning to establish 13 nuclear power plants and is ready to give them under the supervision of International Atomic Energy Agency. Canada may seriously consider setting up such plants in Pakistan. He said that the trade between the two countries has averaged around 436 million dollars over the last three years. "During this period Pakistan's total exports amounted to 584.7 million dollars against its import of 723.3 million dollars. While Pakistan's import from Canada had grown by 56 percent during this period, its exports to Canada had increased by only 15 percent. The trade deficit of Pakistan with Canada needs to be narrowed down," he added

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[niaz]

Privatisation sends 0.6 million workers home


KARACHI (updated on: January 23, 2007, 11:56 PST): About 0.6 million Pakistani workers have been rendered jobless because of government's privatisation policy started in 1990, said a research study on privatisation in Pakistan.

The research study titled "The Politics of Privatisation" was carried out by Actionaid International Pakistan.

Terming the retrenchment of 0.6 million workers in 16 years alarming, it said that civil society should display strong reaction over it. It said all over the world, protests are being lodged, rallies taken out and the process of privatisation being resisted by workers, NGOs and members of civil society.

"The people are constantly criticising institutions like the World Bank and IMF. The policies of the World Bank and IMF in the name of privatisation, downsizing and rightsizing have been completely rejected by the common man, as they have brought nothing but deprivation for poor men and women."

It said that many studies conducted by independent scholars show that privatisation has left devastating effects on the vulnerable segments of society.

Referring to the study of noble laureate Joseph Stigliz titled "Globalisation and its discontents" it said that it was proved that so-called 'stabilisation prescription' offered by IMF were counterproductive and had completely failed to yield expected results.

"The dreams of open market economy have proved unrealistic and there is a widespread anxiety in global economy due to privatisation."

It said one wonders why the government of Pakistan is preaching the gospel of privatisation when it has already failed to yield the expected results. "The answer may be the nefarious designs of the ruling clique that wants to plunder national assets through different means of corruption and kickbacks in the name of privatisation.

In this regard the report of Auditor General of Pakistan 2002 speaks volumes about the so-called transparency of the privatisation process. The report pointed out that a whopping Rs 70 billion that the government earned from privatisation had gone missing and no one had a clue where the money had gone."

It added the international experience of privatisation had also been dismal. Globally privatisation is increasing poverty, inequality, decreasing quality, intensifying corruption, shrinking opportunities for employment and concentrating wealth.

"Chile is considered a successful case of privatisation but there have been serious charges that cronyism and favouritism won the day in privatisation process. Similar charges of crony capitalism were levelled in Argentina where privatisation proved an exercise in futility."

It said in Russia rapid pace of privatisation at behest if IMF has led to sharp economic decline. Chile and Argentina may be quoted as examples because privatisation in both the countries has been associated with giving away expensive public assets at cheat rates to political cronies.

The experience of privatisation in Latin American countries has met utmost failure and the concept of 'welfare state' is re-emerging. Workers in these countries are demanding re-nationalisation of private sector.

The report said no doubt under the advise of IMF, World Bank, multinational capital and the Western governments, the state in Pakistan is rapidly shedding its primary responsibilities towards citizens vis-à-vis their basic needs and welfare, as subsidies are slashed, state enterprises privatised, taxes cut and investment 'incentives' enhanced. Resultantly, people find themselves worse off than before.

It said that repressive arm of state was providing protection to the machinations of foreign capital in the country. "Creating a 'favourable investment climate' means crushing dissent and systematically corruption or destroying movements that seek to protect the rights of working class."

The report said privatisation cast horrible impacts on poor and working class people. It diminishes quality of life, besides lowering employee morale and hence productivity. After privatisation workers are being exploited through lower wages. It also increases discrimination against women and children.

According to the report privatisation in long run means loss of government control and sovereignty, loss of control and accountability, increased corruption, bribery and kickbacks and increased conflicts, strikes, grievances and arbitration.

The report suggested that the privatisation needs to be resisted out-rightly without indulging in discussion of 'profit-making or loss-making' paradigm. The practical alternative to privatisation can be fund in fundamental reforms of public sector. This is a challenge to management and public employees' unions.

Reviving and strengthening trade union culture, ensuring openness and transparency, making public sector especially services sector responsive to public needs and by giving the citizens participation priority in decision-making at all levels can help to improve the public sector and eliminate need of privatisation.


brecorder.com

This is an age old debate. I have witnessed first hand nationalization of Industries by the Bhutto regime. Unions literally sold machines worth crores for peanuts. Machinery worth millions rotted. Privatization causes job losses, because too many people are hired in the first place, a lot of them thru 'Nepotism' and produce nothing. Look at all the Govt owned industries in Pakistan, starting from PIA. Railways, WAPDA, Steel Mill etc.

All of these are white elephants and a drain on the public exchequer. No country, even in the West has successfully run government enterprises in the black or break -even.

What ever temporary hardships, in the long term, any commercial enterprise has to be in the black. If Pakistan has to progress, there is only one way. Production of goods and services by its work force and no " Charity or Hand Outs".

Regretably, too many people are used to just going thru the motions and getting paid at the end of the month. Some don't even bother go to work ( All the stories about ghost schools). This was true even in the police, authorities were forced to make a rule that one had to come and sign for one's salary and they found 'ghost' policeman in Karachi.

Articles such as above are inspired by vested interest and those who want to exploit temporary harship for political gains.