Pakistan Economy - News & Updates - Archive

[Neo]

Sunday, February 04, 2007

Gwadar revenue to be shared with Balochistan: Babar

* President Musharraf to inaugurate Gwadar port on March 22 or 24

KARACHI: Shipping and Ports Minister Babar Ghouri has said that Gwadar Port which has been leased to a Singapore firm would earn a handsome revenue of $40 billion, which would be shared with the Province of Balochistan.

While addressing a press conference at the Karachi press club on Saturday, he informed that the inaugural for the 40-year lease would be signed on March 22 by PM Shaukat Aziz, and Balochistan would be given due share, talks for which are underway between the federal and provincial government.

He said that government efforts are specifically aimed at reducing the poverty in the Province, and announced that all employments of grades 1 to 16 would belong to thje locals, who would also be given a sizeable quota from within Upper grade officers.

He said that Gwadar Project was not being opposed by general provincial masses, but rather by some miscreant elements, and also claimed that despite some corrigible reservations, "nationalist elements" were also quite in favor of the project.

Replying to a question he said that Gwadar Port would be used solely for commercial and trade activities, however in case of any untoward emergency it can be and would be used for security purposes as well.

He denied that the construction of the Port would harm other ports of the country, since the port stands to compete with Dubai port. While replying in reference to another question about the port regarding fraudulent registration of estates he said that, he has no knowledge whatsoever about the issue, since it is a provincial issue and could be answered by the provincial government.

Pakistan plans in March to inaugurate a new port, built with Chinese help and to be operated by Singapore's PSA International, at Gwadar.

Pakistan has grand plans to turn the port into a major energy and container transport hub to open up trade routes with Central Asia.

"President Pervez Musharraf will inaugurate Gwadar port on March 22 or 24," Babar Khan Ghauri, Minister for Ports and Shipping, told a news conference on Saturday.

He said a formal agreement with PSA International, owned by the Singapore government investment holding Temasek, for handling port operations will be signed on Tuesday.

In December, a consortium led by PSA won the contract to operate the deep-sea port on the Arabian Sea, about 450km (280 miles) west of the city of Karachi and about 70km (45 miles) east of the Iranian border.

Under the agreement, PSA will run the port for 40 years, during which time it will be exempted from corporate tax, Ghauri said.

"Also, no duty will be imposed on any equipment and machinery imported to develop the port during this period," he said.

PSA has envisaged investing $3 billion in the project, of which $550 million would be invested in the first five years. Pakistan's AKD Group is part of the Singaporean consortium.

http://www.dailytimes.com.pk/default...4-2-2007_pg5_1

 

[Neo]

Sunday, February 04, 2007

External debt fell to 111.7% from 300% this fiscal: PM

ISLAMABAD: Prime Minister Shaukat Aziz said Friday that the external debt and liabilities as percentage of foreign exchange earnings have registered a sharp and remarkable decline from around 300 percent in 1999-2000 to 111.7 percent by the end of the first quarter of the current fiscal year (2006-07).

The government believes in the freedom of expression and free press, with all respects for difference of opinion and constructive criticism. "We are trying to work for a better Pakistan, and the world recognises that Pakistan has moved a long distance in the last several years," he said while speaking at the launching ceremony of a book titled "Pakistan-Sovereignty Lost" here at the PM House.

The PM terming the book written by Shahid ur Rehman, a healthy activity, however maintained that it contains some inaccuracies and misinterpretations about the country's debt profile as well as its management.

He said, the country's economic numbers are available at the concerned offices, as there is nothing secret unlike the past when there has been a black box approach.

Giving the highlights of the country's debt profile, the PM said that Pakistan's total foreign debt has declined in absolute and relative terms, with coming down to $37.3 billion by September 2006 from $38.9 billion in 1999.

He further informed that Pakistan's external debt and liabilities as percentage of GDP have declined from 51.7 percent in 1999-2000 to 26.3 percent by end September 2006.

The external debt and liabilities as percentage of foreign exchange earnings have registered a sharp and remarkable decline from around 300 percent in 1999-2000 to 111.7 percent by the end of first quarter of current fiscal year (2006-07), the PM added.

Similarly, he said, the country's public debt which was over 100 percent of GDP in 1999 has declined to around 50 percent by September 2006.

The PM said, these facts are also recognised, endorsed and monitored by the international financial institutions and multilateral agencies.

He maintained that the publication of economic data by Pakistan was in line with the international practices, as "we deal in the international market and with multilateral agencies."

The PM also referred to the enactment of a historic Debt Limitation and Fiscal Responsibility Law by the present government as well as getting rid of the IMF as remarkable achievements and said these were meant to strengthen the country's sovereignty and integrity. "Debt must be within your capacity to pay", he said and added the new law would enable the country to remain within its fiscal limits and only the parliament has the authority to amend it.

The PM, however, added when the economies grow their borrowing capacity also increases. He also clarified that any direct borrowing by provinces is done only after approval of the federal government. He said that owing to the government's reforms measures the country has achieved macro-economic stability during the last seven years, with all economic indicators moving towards positive direction. The PM said that Pakistan has become an investment-friendly destination, with Foreign Direct Investment (FDI) pouring in from across the world including from US, EU, Middle East and Far East countries.

The PM maintained that the country's sovereignty was very robust, with the government trying to build a better Pakistan, which is strong and stable with peace, progress and prosperity.

Earlier, the writer of book, Shahid ur Rehman presented a copy of the book to the PM and in his remarks on the occasion thanked him for his gesture of presiding over the launching ceremony.

Minister for Information & Broadcasting, Muhammad Ali Durrani and Special Assistant to the Prime Minister, Commander (Retd) Khalil-ur-Rehman were also present on the occasion.

http://www.dailytimes.com.pk/default.asp?page=2007\02\04\story_4-2-2007_pg5_2

 

[Neo]

Sunday, February 04, 2007

Overcoming power shortage: Pakistan needs to import 3-4 million tonnes of coal

By Fida Hussain

ISLAMABAD: Pakistan will require to import three to four million tonnes coal for generating over 1000 MW thermal power to bridge the gap between electricity demand and supply, a senior government official told Daily Times.

This will increase Pakistan’s dependence on imported energy as the government has failed to develop its coal reserves for electricity generation, the official said. “If the government had developed its coal reserves, the country would need not to import coal for power generation,” the official said. Pakistani coal of around five to six million tons would be enough to generate the required power, he added.

According to initial estimates, for thermal power generation, which has already been planned by Private Power Infrastructure Board (PPIB) in collaboration with private sector, the country would need around three to four million tons of coal, the official said.

He said that government has already faced a huge surge of 1,536,000 metric tons (MT) in furnace oil import in the first six months of the current fiscal year due to deteriorating situation of water availability in reservoirs.

The furnace oil import has increased by 436 percent in quantity and 428 percent in value in the first six months of the current fiscal. Besides this, the overall import of petroleum products has increased by 16 percent in value and 10 percent in quantity in the first six months of 2006-07. The import bill valued at 3,447 million US dollars in the review period of the current fiscal against $2,968 million in the same period of the last fiscal.

Water releases have actually increased during the current fiscal, but WAPDA could not take any benefit due to lack of coordination between the Indus River System Authority (IRSA) and provinces. The official said that WAPDA should have been informed so that it could have generated electricity from enhanced water releases from reservoirs by timely operating power plants.

The Planning and Develop-ment (P&D) Division, which initially opposed the coal import, agreed to one of major demands of Water and Power Ministry and Water and Power Development Authority (WAPDA) of importing coal for exclusive use of electricity generation.

It is regrettable that Pakistan is using only two percent of the existing coal reserves. The country would have been better positioned after development of Thar coal to generate around 20,000 megawatts for almost 40 years. However, the coal mining in Thar could not achieve required a phased investment of $4 billion, the official added.

http://www.dailytimes.com.pk/default.asp?page=2007\02\04\story_4-2-2007_pg5_4

 

[Neo]

February 04, 2007
Pakistan asks US to share ROZs draft law

ISLAMABAD, Feb 3: Pakistan has expressed the hope that Washington will share draft legislation with Islamabad before placing it in the US Congress for approval to establish Reconstruction Opportunity Zones (ROZs) in the economically deprived areas on both sides of Pakistan-Afghan border.

A senior official told Dawn on Saturday that the USTR officials in the last meeting with Pakistani counterparts had agreed that the draft law will be placed before US Congress in February 2007 for legislation.

The law will indicate exact locations of the ROZs mostly to be located in the tribal areas and products to be manufactured there for duty free export to US market, the official added.

“We hope that Washington will share with us the draft legislation formally before it was placed in the US Congress,” a senior official in the commerce ministry n condition of anonymity told Dawn.

He said that all details about the ROZs had already been finalised by officials of the USTR in consultation with a private firm hired for the purpose.

To a question the official said that the current proposed amendment in the US Congress will have no impact on trade relations or the establishment of ROZs.

US President George W. Bush had accepted the Pakistani proposal of ROZs in his last visit to Pakistan. Mr Bush had announced that the trade zones established in the remote areas (tribal and border) would get duty free access on goods exported to the US market.

http://www.dawn.com/2007/02/04/ebr2.htm

 

[Owais]

No blanket sales tax relief for Pak-China investment company

ISLAMABAD (February 05 2007): The Central Board of Revenue (CBR) has expressed inability to grant blanket exemption of sales tax on imports being made by Pak-China Joint Investment Company for promotion of joint ventures between the two countries. Sources told Business Recorder on Sunday that CBR had examined the draft, of Joint Venture Pak-China Agreement, for exemption of duties and taxes.

Under the proposed agreement, the only issue relating to sales tax exemption has been specified on import of equipment, materials and means of transport, imported to meet the requirement of the JV company. The import of plant, machinery and equipment has been zero-rated for sales tax purposes.

However, the scope of exemption, laid down in the agreement, is vague and no authority has been specified to determine the requirement of JV company. Therefore, the CBR would not support giving total exemption of sales tax on imports made by the JV company to meet its requirements, sources said.

Pakistan and China are set to enter into implementation phase of the first Five-Year Trade and Economic Cooperation Action Plan. The implementation phase includes cooperation in areas of Pak economy, establishment of Pak-China Joint Investment Company, upgradation of Pak-China Avoidance of Double Taxation Agreement, incentive package for Chinese companies to invest in petroleum exploration and production sector and re-positioning of the over-capacity of Chinese petroleum services industry in Gwadar Port Energy Zone.

The five-year trade and economic cooperation plan is in furtherance of the Framework Agreement on Expanding and Deepening Bilateral Economic and Trade Cooperation between China and Pakistan which was signed on February 20, 2006 during President Musharraf's visit to China. The framework agreement aims to create a favourable environment for Chinese enterprises in major areas of Pakistan's economy.

These are agriculture, plant protection, breeding, fisheries and processing. On the manufacturing side are light industry textile, electromechanical projects, infrastructure and public engineering construction, exploring mineral resources, cooperation in the energy sector, information technology and telecommunication sector, development of tourism, banking, insurance and transportation and low-cost housing and other areas of interest. For financing Chinese projects, Pak-China Joint Investment Company, a federation or a consortium, would be established, sources added.


http://brecorder.com/index.php?id=525376&currPageNo=1&query=&search=&term=&supDate=

 

[Owais]

China and US eye Pakistan's textile industry

KARACHI (February 05 2007): The Pakistan Cotton Ginners' Association (PCGA) released its fortnightly cotton arrival and disposal figures up to 31st January, 07 on last Saturday. According to this report, total arrivals are reported at 11,928,506 local weight bales, total sales (mills and exporters) is 10,104,968 bales and total unsold stock is 1,739,607 bales.

Now, it appears quite certain that total crop would cross the level of 12.5 million bales and finally may finish closer to the level of 13.0 million bales.

Some of the factories in lower Sindh are still operating and receiving truckloads of seed-cotton at rates around Rs 900 per 40 Kg ex-gin. Thus, these ginning factories are making fabulous profits, one insider said. The ginners of Southern Punjab and Upper Sindh are holding larger stocks of unsold cotton but do not seem worried. The Spinner- buyers are forced to pay the ginner's asking price around Rs 2,600 - 2.625 for better quality cotton.

Some sales of lower grade have been reported at rates lower than Rs 2,300. Lower grade cotton may be under selling pressure and its prices may go below the present level. Some ginners are upholding the sales of better quality cotton and want to dispose of lower grade cotton first. The cost of carrying charges is very high up to Rs 50 per maund per month so it does not appear viable to carry lint cotton bales for months as the expected increase in lint price may hardly meet the extra carrying charges.

If the prices of lower grade cotton come down to the level of Rs 2,200 per maund, it may attract foreign buying. To meet the increasing local mill demand of lint cotton, some 2.5 million bales are likely to be imported during this season as so far about 1.6 - 1.8 million bales have already been booked from different sources especially from India, CIS and African countries. Some of the local mills have made direct connection with Indian exporters and have deputed their selectors for selection of lint cotton.

It appears that in the near future Indian cotton would largely be imported into Pakistan in view of advantage of suitability of cotton, low shipping cost, shorter shipment period and competitive price. Prominent cotton exporting houses of USA and India have established their office and warehouse to sell their cotton in China.

Some of the prominent retail chain stores in US are planning to source their requirement of textile and apparel goods from Pakistan. As such, some of the groups are in the process of negotiations with the local textile groups for entering into a joint-venture business or to establish their own industry for manufacturing textile and apparel goods required by their chain stores.

Apparently, it is good for the economy of Pakistan that foreign investment would come into Pakistan but if the investment is made on larger scale then our textile industry would be high-jacked by multinational companies and keep our textile entrepreneurs on wages instead of profit as is in Bangladesh.

The Western and American countries fear that in the long run, their retail market would mainly dependent on textile and apparel supplies from countries like China, India, Pakistan, Bangladesh, Vietnam, and Sri Lanka all falling in Asian continent. Taking advantage of the free-trade and to counter the fears they are planning to tap our resources to the benefit of their people. The multinational retail stores and companies may manage to avail better facilities of infrastructure. These MNSs would bring their own funds at very low interest rates and may install their own power plants to make the business more competitive and profitable than that of the local manufacturers.

Of course, foreign companies are making huge investments through buying important industries, financial institutions and other business concerns in Pakistan but all profit would be transferred to their respective countries while local entrepreneurs re-invest the profit in Pakistan. Beside, the MNCs / MNSs would be at liberty to take their investment back to their countries if they do not find business conditions conducive. Thus all that glitters is not gold. The concerned authorities should keep close watch on the situation and take only such decisions, which serve the interests of Pakistan and not those of others.

Pakistan is a single industry country ie, the main industry is textile which earns up to 66 percent of the total annual foreign exchange earnings. Pakistan is more independent economically than politically and we keep it intact. When Pakistan's Prime Minister visited China a couple of months back, he had signed with the Chinese Prime Minister a five-year bilateral economic cooperation agreement identifying textile as area of collaboration between the two countries.

China is interested in joint venture business investment and technology collaboration in areas of cotton growing and processing, development of chemical fibre industry, upgrading textile equipments and technology, boosting market competitiveness internationally in textile products. China is the biggest player in cotton textile industries and is the largest importer of raw cotton and we cannot export any cotton to China as we are already short by some 2.5 million bales annually.

What we need is the assistance and cooperation of China and USA in improving our efficiency and competitiveness in textile sector for staying competitive in the world market and not over-taking our textile industry for own benefits. The next few years are very crucial for Pakistan's politics and economy as well.


http://brecorder.com/index.php?id=525402&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

7,000 small industrial units planned

KASUR (February 05 2007): The Punjab government will establish 7,000 small industrial units in the province, which would help overcome unemployment and poverty problem. Provincial Minister for Public Health Engineering, Sardar Hassan Akhtar Moakal said this while addressing a function here on Sunday.

He said the government had approved a national internship programme under which the unemployed youth below 25 years of age would get stipend of Rs 10,000 per month.

The provision of employment to youth is a part of the agenda of President General Pervez Musharraf and Prime Minister Shaukat Aziz, he added.

He said the provision of clean potable water was priority of the government and work on water supply schemes worth Rs 539 million was in progress in 10 cities of the province.

http://brecorder.com/index.php?id=525419&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

SSGC crew installs 62-metre steel bridge for gas line

HYDERABAD (February 05 2007): The installation of 62-metre long steel structure bridge for placing 42-inch gas pipeline at the site of Pakistan Steel sea water intake in the Bin Qasim industrial Area, currently in its final stage of completion, is an incredible feat of engineering, unprecedented in the history of Pakistan's energy sector.

The pipeline, largest diameter gas pipeline ever commissioned in Pakistan, would eventually serve the Bin Qasim thermal power station and the Pakistan 'Mashal' LNG project in the proposed Bin Qasim Area, and qualifies to be one of the greatest achievements of Sui Southern Gas Company (SSGC).

SSGC Managing Director Munawar Baseer Ahmad, along with his senior management members visited the site to inspect the completion work of the steel bridge. Terming the project as "another feather in the cap of SSGC", he appreciated the efforts of the on-site engineers and construction crews for completing the work on fast track basis.

This single-span steel bridge, that weighs 113.1 tons, has a width of 2.75 metres and height of 4.87 metres. This very massive structure is supported on concrete piles of 30 inches diameter each, constructed for the 42-inch overhead pipeline crossing. The methodology involves placing fabricated supports, with the rollers fixed on floating platforms and piles, by using 'rolling & pulling' skills. All the rollers, floating platform with a carrying capacity of about 70 tons as well as other auxiliaries were designed and fabricated at SSGC workshops.

The highly experienced and devoted construction team of SSGC's P & C Department has achieved the milestone as per target, without procuring any outside assistance.

The construction of this bridge was started some four months back. It is similar to another one of SSGC's massive projects, the 30-inch dia overhead crossing at Indus River, near Jamshoro, on a vertical loop, with a clearance of 70 feet. The task was laborious, requiring tremendous amount of fabrication and welding in different stages and has only been possible due to the tenacity and professionalism of SSGC engineers and construction crews.

http://brecorder.com/index.php?id=525442&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

February 05, 2007
Funds for Neelum-Jhelum project

By Khaleeq Kiani

ISLAMABAD, Feb 4: Pakistan is expected to finalise by early next month a $1.4 billion financing arrangement with China and Qatar to start construction of a much-delayed 969MW Neelum-Jhelum Hydropower Project in Azad Kashmir.

A project of Water and Power Development Authority (Wapda), the project has been in doldrums for six years and is considered crucial to secure Pakistan's priority rights over Neelum waters - a tributary of the river Jhelum - threatened by the Indian move to use its waters for power generation and diversion.

Prime Minister Shaukat Aziz told Dawn that his government had decided to construct the project in the public sector and he had issued instructions last week to make financing arrangements. "I have set a deadline of six weeks to finalise everything", he said.

His advisor on Finance Dr Salman Shah said that the government of Qatar had committed to invest $2-2.5 billion in Pakistan and there was an option to include Neelum-Jhelum project in their investment programme. "They can finance construction of the project". Secondly, the company selected by Wapda has also provided the option of financing the project through the Bank of China on buyer's credit.

Responding to a question if a financing offer for the project from the US-based YRM could also become part of the overall foreign funding, Mr Shah said the government of Pakistan could not confirm credibility and funding viability of the US firm. Also, credible sources like the Bank of China and Qatar government were better options. "We will finalise funding arrangement within four-weeks", he told Dawn on Sunday.

Responding to another question if the government would also issue bonds to raise funds for the project, he said if the financing programme (from the

China and Qatar) comes with the contract then there will be no need for bonds. However, there may be a need for bonds at a later stage if the project specific company was to be set up to run it.

An official at the private power and infrastructure board (PPIB) said the PM’s advisor on Finance would be holding a meeting of all the stakeholders in a couple of days to examine all options in detail. He said a $300 million credit line from the Bank of China has been lying unutilised for quite sometime and could also be considered for the same project.

The bidding for the construction of the project had been held seven months ago. Since then, the government has been contemplating arranging one billion dollars foreign exchange following Wapda's inability to secure the lowest bid with financing facility.

Wapda has been seeking about $600-800 million buyer's credit as part of the engineering, procurement and construction (EPC) contract for the construction of $1.4 billion project. The project has already been delayed by more than six years due to lack of public-sector allocations for the project. Several rounds of bidding have been held and cancelled for one reason or the other.

The project should have been started in 1999 as originally planned. It is estimated to take at least seven years for completion. Currently, officials of the Finance and Economic Affairs Division are evaluating terms and conditions of the Chinese and Qatari financing.

The mode of foreign financing was earlier changed by the government from supplier's credit to buyer's credit which would mean that Pakistan's sovereign guarantees would be provided for the loan. The supplier's credit project-financing is usually based on the credit guaranteed by the export credit guarantee agency of the offering country while buyer's credit project-financing by a sovereign guarantee issued by the recipient country.

A few months ago, Wapda received three bids for the construction of the project. The lowest $1.3 billion bid from a consortium of China Gezhouba Group of China and the CMEC China was recommended by Wapda to the federal government for approval.

The bid from a consortium of Vinci of France and the Frontier Works Organisation (FWO) that had offered to provide $800 million credit on soft terms was rejected on technical grounds because the FWO did not have relevant experience as lead contractor.The China International Water & Electric Corporation emerged as runner-up with a contract price of $1.8 billion to complete the project and also offered financing facility of $800 million but the bid money was too high.

Pakistan had stopped India about a year ago from completing a 22km tunnel that sought to construct a storage-cum-power project and divert Kishanganga (Neelum) waters to Wullar Lake in violation of the Indus Waters Treaty 1960. Later, India offered to alter its project design but Pakistan rejected that plan as well. Like the Chenab, Jhelum River of which Neelum is an integral part belongs to Pakistan under the 1960 treaty. Under the treaty, India cannot divert waters from Jhelum and Chenab rivers.

Under the treaty India could not change the flow of Jhelum River even for power generation that may affect any Pakistani power project. But if Islamabad fails to construct the project and there is no power project in Pakistan that could be affected on that particular river, India could divert the river for run-of-the river project but without any storage.

Under the treaty, Pakistan has exclusive rights to use water of western rivers - Indus, Jhelum and Chenab - while eastern rivers - Ravi, Sutlej and Beas - have been assigned to India.

http://www.dawn.com/2007/02/05/top6.htm

 

[Neo]

February 05, 2007

Flashlight on Pakistan

By Afshan Subohi

THE people of Pakistan should brace themselves for a major spur in the economic activity in the years ahead. Private business should also shipshape to survive in a more challenging domestic environment as the international capital flexes muscles to enter and/or increase their stakes in Pakistan in a variety of sectors.

Even the record quantum of $3.5 billion foreign direct investment in the country over the first half of the current fiscal year look measly when judged against the interest shown by the overseas investors in the country during the past week in Davos.

Here 75 of 100 top companies participated at a gargantuan event of the annual meeting of the World Economic Forum that attracted more than 2,000 leaders drawn from across the world from business, politics, academia, the media and civil society.

During the course of the five days January 24-28, aside from formal and informal interaction at planned events a number of corporate heads of giant companies called on the leader and members of Pakistani delegation and divulged their plans to enter the country in a big way or increase their investments manifolds.

On their part the high powered Pakistani officials and delegation leader Prime Minister Shaukat Aziz projected the country as an attractive destination for the world investors looking eastward.

Unlike India, Latin America or currently Thailand which seemed to be selective in extending their support to the flow of international capital, the government of Pakistan scarcely hid its commitment to the liberal economic philosophy that advocates free cross border movement of capital.

In its effort to prove more liberal than the liberal philosophy, they bent backwards in order to accommodate demands of international investors. There are many examples where this attitude was demonstrated. Etisalat deal (PTCL privatization) merit a special mention here.

From the government side, it is argued that flexibility is required to attract funds roaming the world in search of the right investment options. Examples of India and China with more cautious and calculated approach is presented by the critics who feel that the government should negotiate from a position of strength with intending overseas investors confident of rich dividends that the country has the potential to offer.

There is no denying the fact that international companies bring with them modern corporate culture necessary to operate in increasingly globalised world. In countries where foreign investors are encouraged to transfer technology in weaker areas of the native economy, it most certainly has played a very vital role in transforming the work environment and development of both tangible and intangible assets. China is a case in point.

The confidence over the role of foreign investment especially in capital market as a dependable source for development, however, was shaken in mid 90s when footloose foreign capital suddenly moved out of Far East and Asian tigers were left gasping to fend for themselves. It took affected countries about a decade to re-emerge. So a word of caution is not so much out of place in an environment where the government is keen to woo the international capital.

The question is: How much the people, local industry and services sector stand to gain from increased foreign investment? It is too early to comment on that. Much will depend on the quality and quantity of investment, its correlations with existing players and its forward and backward linkages in the economy.

But one thing is for sure that in the absence of correction required to check lopsidedness in the economy growing size will not rectify the inherent structural flaws. The economy is so structured that it rewards the privileged and discriminates against the vulnerable. Besides, negligence of certain high potential sectors such as agro-based industry, shipping, mining, etc. for a variety of reasons has led to waste of country’s precious resources.

With increased foreign investment, the pie will grow larger but will it also lead to increased share to people’s frustration of not being able to share under the current arrangement is hard to tell. A more in-depth study of sectors where investment is coming in and terms and conditions offered to investors is required to make a credible comment on the issue.

In the words of Prime Minister Shaukat Aziz,the world saw Pakistani leadership in action at WEF. All crisp and smart Prime Minister’s performance on stage was strikingly good. The Prime Minister was seen rushing and rubbing shoulders with rich and mighty in the lobbies and lounges of the congress centre. The themes of panel discussions where he was one of the speakers were, however, focused directly on politics. One was on terrorism and the other on the issue of nuclear proliferation.

Notable of those whom he met during his stay in Davos included big wigs such as heads of Bata Shoe Foundation, Gulf International Bank, Artoc Group for Investment and Development, Metro Cash and Carry International, Emirates Telecommunication Corporation, Citibank, Taib Bank, Gulf Investment Corporation, National Bank of Kuwait, Peremba Group of Companies, Hamza Alkholi Group, Xenel Saudi Company, Goldman Sachs International, Dallah Al Baraka Holding Coca-Cola Company and Bahrain Petroleum Company.

He met David Ruenstein, CEO Carlyle Group, a private equity fund, who indicated that the company has planned to set up an office in Pakistan as a part of their larger investment plan worth several billion dollars for the region.

Chairman Nestle also called on prime minister and told him that his company would invest more in Pakistan taking advantage of its investment friendly and liberal economic policies.

Prime minister also held one to one meeting with Robert E Diamond Jr., President, Barclays, UK and Grant Kvalheim, C-President, Barclays Capital, USA. He also met Hans-Joachim Korber, Chairman and CEO, Metro and Thomas M Hubner, CEO, Metro Cash and Cary International. Carlos Ghosn, Chairman Renault, Patric Ceseau, Group CEO, Unilever Food Global also called on the PM and discussed issues related to their business prospects in Pakistan. Charles O Prince and Clark B. Winter threw a reception and hosted dinner for the PM and his team.

There is little doubt that Western governments find Pakistan a risky place. Pakistani businesses spare no chance to list problems they are faced with in conducting their affairs in the country. But the corporate giants looking eastward are charmed by the country’s untapped potential and Pakistan’s accommodating gestures.

Ignoring travel advisories and shyness of local players they find profit margins, liberal policies, untapped resources and growing market reasons good enough to take serious interest in the country. Journalists attending the high-profile economic gathering at Davos could easily conclude that for the private capital seeking destinations, Pakistan is more than just another country in the conflict stricken region of South Asia.

http://www.dawn.com/2007/02/05/ebr2.htm

 

[Neo]

February 05, 2007
Expanding frontiers of economic freedom

By Dr Mahnaz Fatima

According to the 2007 Index of Economic Freedom (EFI) prepared jointly by The Heritage Foundation and the Wall Street Journal, Pakistan ranks 89th ahead of many regional economies. That is, Pakistan offers a lot more “economic freedom” than many other countries in the region. India is ranked 104 out of 161 countries. Let us see how this so-called economic freedom is gauged by these prestigious institutions.

According to this index, freedom is gauged as fiscal freedom, business freedom, freedom from government, and labour freedom and Pakistan “scores well” on all of these scales. Basically, it gauges economic freedom in terms of “ease of doing business, regulations, investment freedom, financial freedom, fiscal freedom, property rights, trade freedom etc.” The long and the short of it is that this EFI is based on freedom to make profits by the trading and business classes. In the process, a whole lot of other freedoms may be denied or trampled upon that this EFI ignores or sweeps under the rug.

What is fiscal freedom in a country where tax evasion goes unchecked mostly? According to a renowned development economist, tax evasion in Pakistan is of the order of five per cent which if controlled will wipe off the fiscal deficit. So, fiscal freedom is a lot about denying freedom to evade taxes with an iron hand that this EFI does not reflect.

What is business freedom in a country where there is freedom to hoard and jack up prices as in sugar and cement occasionally or to hike milk and vegetable prices without effective restraint? Or, to keep increasing the support prices of wheat that is basic diet of all and that then spirals into increasing inflation that none tries to bring down. This business freedom to increase food and consumable prices by fair means or foul denies the freedom of food. Freedom to eat and live and to live well, ala Amartya Sen, is a very basic human freedom.

Our so-called business freedom usurps this fundamental freedom to eat by eating into the food share of the deprived or even the middle classes in the country. If business freedom denies the right to eat and live, there is something seriously amiss in the economic policy outlook that this so-called Economic Freedom Index promotes in the interest of the dominant global elite network.

The token petroleum product price decrease in election year is a pittance if compared with a fall in the international oil price level from over $70 a barrel to around $50. This small mercy will feature in policy makers’ rhetoric for a long time to come.

Under the weight of this favour, will we be expected to crumble when we are already crumbling under the weight of unbridled price increase in nearly all items of daily use including food, pharmaceuticals, travel, healthcare, education, utilities, and housing to name a few ? Does any one listen at all to a groaning public in this “democratic” dispensation?

With rising healthcare costs, it is freedom from disease, ala Amartya Sen, or freedom to live a healthy life that is denied? With rising educational expenditures, it is freedom to see light that is denied to vast majority of the population that dies in ignorance. Freedom to have basic amenities of life is denied with costly utilities and roof required essentially over the head. So, whose freedom does the Economic Freedom Index portray? Of those who already have most freedoms on earth by virtue of the wealth they are born in and who keep claiming successfully a bigger and a bigger share of the same by virtue of their headstart!

To give high marks on labour freedom is certainly a mockery of the state of “labour freedom” in Pakistan. With retrenchments, layoffs, and downsizing on the rise; labour are losing the freedom even to work according to their choice in an environment that does not have many choices to offer. Freedom to work according to capability is not available to the educated and professionally qualified either who have to put up with discrimination and exploitation at work places because the external environment does not offer many alternatives.

Employers may carry on with their discriminatory practices knowing all too well the constraints within which the employees work. So, where is the economic freedom for labour of various shades if they do not have freedom to choose or have a very limited freedom to choose a desirable workplace?

The more courageous may choose to migrate. This, however, entails huge human costs and suffering in terms of separated families. People then do not even have the freedom to live happily together as a family in close proximity just because of non-availability of appropriate economic opportunity and freedom to work as per one’s liking in the homeland.

And, when the most deprived cannot provide the bare minimum of food, shelter, and clothing to their off-springs; some start trading them at a very young age for small sums of money. Consequently, we are known for providing camel riders for the sheikhs in Dubai which is a horrendous practice in usurping basic freedom of the child to be raised well and respectably that the policy makers give no thought to at all nor did the prestigious institutions that rank us decently on the “economic freedom” index.

Then, there is the huge supply of internal child labour to households, motor mechanic workshops and other vocations, retail trade, carpet manufacturing units, and brick kilns to name a few. A sizeable percentage of the population does not have the economic freedom to bloom. Many a potential stars fade away before growing into robust, happy, and willing input providers to our economy that fails to realise its full potential year after year after year as we begin wasting our precious human resource from their very young age.

Even though there is great emphasis on exploitation of “natural resources” such as water, wind, mineral, and even solar energy; not a thought goes towards developing the human resource that gets wasted primarily because of the lack of economic freedoms that they must have from day one. From day one, they must have freedom to drink milk. Milk prices skyrocket as traders/businesses have a lot of freedom according to none other than the worldwide Economic Freedom Index. But, countries underprivileged, underfed, and undernourished mothers suffer as do their babies born to experience one denial of economic freedom after another throughout their existence on our part of earth.

And, the cheek of it all is the “freedom from government” that this economic freedom index also boasts of. Which country on earth is free from government or should be free from government? The very presence of governments means that the societies are not self-governing. That is, governments are required. If governments are required, they must govern well. Good government does not mean interference in all business and socio-economic activity.

However, it does mean effective intervention wherever and whenever societal segments fail to make good of their freedom from government. And, this failure is writ large as depicted herein already. It is, therefore, incumbent upon the government to discharge its responsibility. It is further incumbent upon the government to provide us with roads, electricity, gas, healthcare, education, and all the infrastructure that the society needs without

burdening the salaried taxpayers unduly. Taxes must be shared equitably horizontally and vertically.

None must have freedom from tax payment no matter how wealthy or privileged socially. “Freedom from government,” in our environment, is actually freedom for the government to be in government without doing what a government is supposed to do. This freedom cannot be allowed to governments that have yet to discharge for the benefit of all alike without discrimination.

Unless the above economic freedoms come to prevail through governments that are not left free to offload to those who already hog the financial resources, economic performance will only be gauged by growth rates for the benefit of economic policy makers and the beneficiaries of such policies. The vast majority will continue to standby idly due to a gross lack of economic freedoms. A “booming” economy must provide economic freedoms to all even-handedly otherwise it is non-performing. The much avowed correlation between “economic freedom” and “economic performance” must then be qualified to be considered true for a select minority segment only that may not stand the test of justice and equity now or in the future in Pakistan if we “stay the course.”

http://www.dawn.com/2007/02/05/ebr3.htm

 

[Neo]

Pakistan-Iran trade reaches $1 billion

Monday, February 05, 2007

Tehran, -- SPA -- Trade exchange between Iran and Pakistan will reach one billion U.S. dollars during this year, the Islamic Republic of Iran News Agency (IRNA) reported today.

The existing trade exchange volume between the two countries has reached currently $650 million.

Iran mainly exports to Pakistan steel, crude oil, gas, cotton, fruit and vegetables, sailboats, spare parts, chemicals and construction materials, saffron.
http://www.dailystar.com.lb

On its part, Pakistan exports to Iran rice, machines, food-seeds, sport tools, medical instruments and carpets.

http://www.dailystar.com.lb/article.asp?edition_id=10&categ_id=3&article_id=79243

 

[Neo]

Monday February 5, 2007

Doosan Heavy wins $150 mln plant order in Pakistan

SEOUL, Feb 5 (Reuters) - South Korea's Doosan Heavy Industries & Construction said on Monday it has won a $150 million order to build a power plant for Pakistan's Fauji Foundation.

Doosan said in a filing with the Korea Exchange it would build the 175-megawatt power plant in Daharki, located in the southern Pakistani province of Sindh, by April 2009.

http://asia.news.yahoo.com/070205/3/2wx3f.html

 

[Neo]

Chinese firms join solid waste management project in Pakistan
2007-02-05

Two Shanghai-based companies have signed an agreement with Pakistan's biggest city to build a 100-million-U.S.-dollar solid waste treatment project.

The scheme included the construction of facilities for garbage collection and transportation, recycling and sanitary backfilling of garbage, said Qian Yulin, general manager of Shanghai Shengong Environmental Protection Co. Ltd.

Shanghai Shengong, which designed the project, China Shanghai (Group) Corporation for Foreign Economic and Technological Cooperation and the Karachi city government would jointly invest in the two-year project.

The two Shanghai companies would run the plant after its completion. The Karachi city government would earmark waste treatment fees and special subsidies for the plant.

The garbage treatment process would produce fertilizer and methane, said Qian. The methane would be used to produce electricity.

Karachi, a sister city of Shanghai, has a population of about 20 million and produces 8,000 tons of urban garbage a day.

http://en.ce.cn/National/environment/200702/05/t20070205_10321920.shtml

 

[Janbaz]

EU direct investment in Pakistan soars

ISLAMABAD (APP): European Union (EU)’s direct foreign investments here witnessed an unusual surge during the first six months of the current fiscal year.
Private TV channel quoting SBP data reported that the EU direct foreign investments in Pakistan during the first six months of the current fiscal year soared by two and a half times as compared to the previous year’s same period.
The EU member countries during July-December, 2006 made direct foreign investments here amounting to $547 million, while it was limited to $194.1 million only during the same period previous year showing a substantial rise by $346.6 million during the period under review.

The Nation.
http://www.nation.com.pk/daily/feb-2007/6/bnews8.php