Pakistan Economy - News & Updates - Archive

[Owais]

Pakistan to achieve seven percent GDP growth target: S&P

KARACHI (February 25 2007): Standard and Poor's has forecast that Pakistan's growth prospects would remain strong during the current fiscal year and it would achieve its Gross Domestic Production (GDP) growth target of 7 percent.

The report on Pakistan's economy, issued on Saturday, said that Pakistan would achieve real GDP growth of more than 7 percent, against 6.6 percent of last fiscal year. However, current fiscal year growth would depend on the continuation of structural reforms and higher private investment, it added. Standard & Poor's Ratings Services reaffirmed its 'B+' for foreign currency and 'BB' for local currency long-term ratings and its 'B' short-term sovereign rating for Pakistan.

In the medium term, the economy should be able to grow at about 7 percent, as structural reforms, privatisation, and the gradual deepening of external trade links are likely to produce incremental gains, the report added.

Growth prospects are also underpinned by the rising participation of foreign direct investors in the economy, which yields knowledge transfer and efficiency gains. The report emphasises, that to boost the growth rates beyond these levels, the government would have to address still significant infrastructure and power supply deficiencies, bureaucratic red tape, and security concerns to improve investor confidence.

It says that during the current fiscal year 2007 Pakistan's exports growth would be 8 percent as compared to 12.9 percent during last fiscal year, while the unemployment rate would be lower than 2006 to 7.1 percent from year's 7.7 percent.

In addition, the country's real investment and consumer price index growth would be 5.7 percent and 6.5 percent, respectively, as compared to 10.3 percent and 8.1 percent, respectively, in same period of last year.

The report said that during 2006-07, Pakistan's growth rate eased back to a still stronger 6.6 percent following the record 8.4 percent in 2005-06. "Pakistan economy's structural transformation thus appears well advanced, and the expectation is that the process will continue under the current administration. Results of these reforms are manifested in the robust growth rates of recent years as compared to the stagnancy of the 1990s, with GDP growth averaging 4.3 percent during past five years," the report said.

It said that despite the fast pace of per capita GDP growth over recent years, Pakistan remains a low-income country with per capita GDP of $806 at the end of fiscal year 2006.

It said that it also reflects the likelihood that Pakistan will continue to enjoy the economic benefits of its close political relationship with the US, including support from official creditors. Looking ahead, the report says that the rating of 'B+' can improve if the government can sustain structural reforms so as to create a virtuous cycle of economic growth, job creation, poverty reduction, and a falling debt burden.

http://brecorder.com/index.php?id=532426&currPageNo=2&query=&search=&term=&supDate=

 

[Neo]

Over 4 percent agriculture sector growth likely

ISLAMABAD (February 26 2007): Pakistan agriculture sector is set to recover slightly this year with prospects of a moderate growth of four to five percent due to reasonable cotton output and encouraging wheat production.

Besides improvement in major crops like cotton, wheat, sugarcane and rice, some minor crops including lentil, potato and mash are also on the recovery track and will contribute to boost agriculture sector growth.

Last fiscal was a bad year for Pakistan agriculture as the sector that contributes highest (21 percent) in the country's Gross Domestic Product (GDP) grew at 2.5 percent against a 6.7 percent in 2004-05.

In 2004-05, the main contributors in an impressive agri sector growth were major crops that grew at 17.6percent as the cotton recorded all time high figures of 14.6 million bales.

But a year later the trend reversed totally as major crops collapsed and their growth went into negative mark (-3.6), mainly due to a shortfall in cotton production that remained at 12 million bales. "We hope this year major crops will do the miracle," Agriculture Development Commissioner (ADC) Dr Abdul Qadir Bux Baloch remarked.

Cotton production had gone slightly up and hoped it would touch 13 million bales this year. Wheat was also set to break the record with over 22 million tonnes against the achievement of 21.708 million tonnes in 2005-06, the official added.

He also used an increase in sugarcane from 45.295 (in 2004-05) to 51.80 million tonnes this year as a strong argument to prove his point.

Some grey areas are, however, still there to create enough doubts about the sustainability of agriculture sector growth. One such problem is the shortfall in the rice production target.

In 2006-07, the target for rice production was set at 56.93 million tonnes but the achievement was 54 million tones, a shortfall of around three million tonnes.

The real situation will, however, be clear at the Federal Committee on Agriculture (FCA) meeting by end March when the final figures of production will be announced.

http://www.brecorder.com/index.php?id=532692&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

February 26, 2007
Investing remittances more productively

By Mohiuddin Aazim

OVERSEAS Pakistanis continue to send larger amounts of foreign exchange back home.. And this, coupled with greater inflows of foreign direct investment, strengthens the balance of payments. That, in turn, keeps the rupee and foreign exchange reserves stable.

But when larger inflows of foreign exchange sent back home by expatriates are converted into rupees, it raises money supply. That often fuels inflation because so far Pakistan has not been able to fully absorb these inflows in productive sectors. And a number of recipients of the money at home, indulge in a spending spree.

When this money is used in buying of imported goods like mobile phones and plush cars—the end result is worse. It causes imported inflation and widens the trade deficit. So, there is a strong case for Pakistan not only to maximise the inflow of these remittances but also to use them efficiently for production, development, job creation and poverty reduction.

The government is expecting $5.5 billion remittances in the current fiscal year—an increase of about 20 per cent over the last fiscal. But many reckon that Pakistan can attract up to $10-12 billion through remittances every year.

There are some four million Pakistanis living abroad and if, on average, each one of them sends home $2500-$3000 dollars per year, the country should get $10-12 billion..

The government is holding a two-day Overseas Pakistanis Investment Conference at Islamabad next month where top overseas businessmen/ professionals will interact with officials of the federal and provincial governments to identify potential areas for forming trade and joint venture partnerships.

Major topics for the conference include investment policy for small and medium investors; financing for small and medium enterprises ( SMEs) , investment in export-oriented industries, in capital markets and mutual funds.

The government has already identified agri-business sector, IT and telecommunications, housing and commercial properties and health and education sector as potential areas for such investment. If the government and the private sector can engage overseas Pakistanis in big housing/town-building and commercial property development, it would attract additional foreign exchange and keep the balance of payments in shape. On the other, hand it would give a real boost to industrial production.

Construction provides business to 40 odd supporting industries like cement, iron/steel, paints, glass, sanitary and hardware etc. Besides, it creates a lot of jobs directly and indirectly for skilled, semi- skilled and non-skilled workers. Construction industry employs some six per cent of workforce comprising 44 million people.

Once the country absorbs the inflows of remittances in a productive manner, the rise in rupee liquidity due to additional inflows would be less inflationary.

Late last year, the Reserve Bank of India allowed non-resident Indians (NRIs) to repatriate up to $1 million a year from the sale of properties in India. Earlier, they were supposed to keep these proceeds within the country for 10 years.

This is one of the several things India is doing to seek enhanced investment from NRIs. Overseas Pakistanis are already allowed to repatriate the sale proceeds of the real estate in Pakistan to the host countries. “But there is a need to make repatriation of the profit a bit easier,” says Hafeezur Rehman Butt, chairman of the Association of Builders & Developers.

Overseas Pakistanis need prior permission from the State Bank to repatriate the profits earned on the sale of real estate, he said.

Mr Rehman is due to present a detailed paper on the scope of investment in real estate by overseas Pakistanis at the proposed investment conference. He told Dawn that he would raise this issue in the conference.

“In any housing project an average 30-35 per cent investment is made directly or indirectly by overseas Pakistanis,” says Mr. Rehman adding the percentage varies depending upon the nature and the locality of the project.

“Perhaps we need to involve overseas comptriots in development of new exclusive housing schemes in areas like Defence,” says Zubair Shaheen, an official of Defence Clifton Real Estate Agents Association. “We also need to involve groups in construction of commercial plazas across Pakistan,”

Broadly speaking, there is need to devise a comprehensive strategy to maximise the inflow of remittances and to use it efficiently in as many sectors of the economy as possible. The government, the State Bank, the private sector and overseas Pakistanis—all must evaluate who can do what to attain this objective.

The State Bank should find a way to reward the banks that handle more of remittances and are known for taking lesser time than others in collecting the remittances from abroad and releasing them to the beneficiaries. This would encourage other banks to follow suit and ensure larger inflows of such remittances through the official channel.

“Besides, the Central Board of Revenue must allow similar tax exemption on workers’ remittances sent home through foreign exchange companies like it does on remittances routed through banks,” says an official of Exchange Companies Association of Pakistan. This would help these companies handle more of these remittances, thus curbing transfer of foreign exchange through hundi/hawala.

Association officials estimate that exchange companies handle 10 per cent of the total amount of remittances. They say the percentage would rise once the CBR provides incentives.

Meanwhile, the government may add a new product to National Saving Scheme exclusively designed for the beneficiaries of remittances and offer a better rate of return on it. This would discourage consumer spending. And any sizable investment in this instrument would also reduce the government’s borrowing from the central bank or from the banking system—both of which are regarded as more inflationary than its borrowing from the non-bank sources.

One major issue in ensuring a sustained high growth in remittances is simultaneous export of manpower. In 2006 more than 183,000 people proceeded for overseas jobs. The number shows a handsome increase of 41,000 or 29 per cent over 2005 when 142,000 Pakistanis had left home to get a job abroad. The number must grow on sustainable basis if a better share in the global job market is to be secured.

The country, however, must ensure to export the right mix of manpower. The government may draw up an incentive plan to retain highly skilled people having expertise in the areas where finding their substitutes is difficult. A large number of semi-skilled and non-skilled people need to be trained in the disciplines where there is a demand in global job market. Then, the export of such manpower must be given top priority.

http://www.dawn.com/2007/02/26/ebr3.htm

 

[Neo]

February 26, 2007
Upgrading national trade corridor

By Jamil A. Siddiqui

IN just six years, foreign trade has increased from less than $20billion per annum to more than $45 billion in 2005-2006 in an economy with $140 billion plus GDP. If this trend is to be sustained, a functionally efficient and commercially viable logistics system has to be developed. It should cover the entire range of services for the mobility of goods, from the producer to the importer/consignee’s warehouse.

Success in global trade substantially depends on competitive prices that is made up of production and transport logistic costs from origin to destination. The economy must have equally competitive and efficient productive and logistics sectors.

The inland transport network in the form of national trade corridor must match the international transportation system in quality and efficiency. Out-dated, dysfunctional and inadequate inland transport system may hamper the trade. Adequacy, reliability, efficiency, commercial viability and speed of inland transport network act as a catalyst in the promotion and expansion of a country’s foreign trade. No wonder, countries displaying impressive foreign trade performance, possess equally impressive national transport corridors. Transport system provides basic infrastructure for the logistics system of an economy.

Pakistan being at the cross-roads of South Asia, Central Asia and Middle-east offers promising trade and investment opportunities, including transit trade, that need to be exploited fully.

As identified by the Planning Commission, inadequacy and inefficiency of transport system annually costs the economy more than Rs220 billion. It also constrains economic growth, reduces export competitiveness and hinders social development.

Documentation, clearance, movement, and electronic data interchange require modernisation of the transportation. The vision for the sector is establishment of a well-integrated transport system.

The strategic thrust is on optimal utilisation of the existing capacity, improved management for maintenance and operation and coordinated use of various modes of transport.

As an important sector of the economy, the sector contributes 10 per cent of the GDP and 17 per cent of the gross capital formation (GCF) , and covers road transport, railways, ports, shipping and aviation. Facing challenges of today’s global trade presupposes availability of a modern and comprehensive infrastructure.

To meet the futuristic requirement, a plan has been devised under the name of National Trade Corridor (NTC). Estimated to cost $6 billion, NTC is envisaged to ensure transportation time for containers and trucks of not more than 36 hours from Karachi to Peshawar, for meeting the domestic requirements and for providing transit facilities to Central Asia, Western China, Afghanistan and Iran.

The World Bank has offered $1.8 billion and the Asian Development Bank (ADB) has agreed to provide $1 billion for the NTC plan which is . expected to be implemented in about five years. According to official statement it is estimated to save $5--7.5 billion annually.

NTC is essential for supporting 7-8 per cent of the sustained economic growth annually. The plan envisages improving Pakistan’s share of world trade from 0.2 to 1 per cent by 2030 and increasing its exports from $17 billion in current FY to $250 billion by 2030.

It will enhance regional connectivity through trade links and energy and transport corridors with China, the Central Asian Republics (CAR), Afghanistan and Iran. Mention may be made of the Himalaya Pipeline, proposed by Pakistan to China, linking Gwadar Port , carrying Middle-east crude to the western border of China and avoiding the narrow piracy-prone Malaca Straits, with 80 per cent Chinese oil imports passing from there.

Chinese have shown interest in this proposal. Both the governments have agreed to upgrade Karakoram Highway and the pipeline would go in tandem with that. Both sides have also agreed to extend Pakistan’s railways up to the Chinese border. All these developments are up-hill tasks, but with the support of China it appears to be achievable.

Seaports as interface between national and international segments of logistics will play a key role in achieving the goals of NTC. KPT as the prime seaport that handled a total cargo volume of 32 million tons, including 1.144 mio.TEU’s during 2005-06, plans upgrading of the port infrastructure, as well as the development of a new state-of-the-art facilities.

Under the up-gradation, KPT is poised to undertake a massive reconstruction. In all, 13 berths will be reconstructed and deepened up to 16 metres, at an estimated cost of Rs4.5 billion. Further, a 10-berth container terminal has been planned, with 18 metre draft alongside, costing $1.2 billion, envisaging completion by 2010-12, with annual total capacity of 1.5 millionTEUs, capable to berth container vessels with carrying capacity up to 14000 TEUs, to be constructed at east of Keamari Groyne.

The first phase is to be operational by June 2009, with four berths of total 1500 metre quay length, 700 metre wide turning basin, navigational aids and protection works, estimated to cost around $530-550 million. The terminal will be connected with KPT cargo village to be set up on an area of 1303 acres through reclamation of land in the Western Backwaters providing modern facilities to the trade.

The PQA--the country’s first industrial port-- is planning to raise its annual cargo handling capacity from current 30 to 50 million tons. In August 2006, PQA signed contract with Dubai Port World (DPW), whereby DPW will invest $211 million on the development of second container terminal – extension of the present QICT at PQA, marking a 1.15 million TEU’s growth, enhancing total TEU’s capacity of the port to 1.75 million TEU’s annually.

The DPW has bought P&O, the majority share holder as well as operator of QICT at PQA. Gwadar Port, at the mouth of Persian Gulf, expected to start operation in a matter of weeks, has been assigned to Singapore Port Authority (SPA) for operation on long-term basis. SPA holds enviable position of being the top or the runner-up container port of the world in competition with Hong Kong.

Pakistan Railways--as its contribution to the goals of NTC--, in its modernisation programme is augmenting its fleet of freight wagons (FW) for which the government has approved Rs5.33 billion with Rs2.967 billion as foreign exchange component. IDB has approved $39 million loan to modernise its fleet of high capacity FW, plus use of $16 million left-over from an on-going loan.

Under this project, the PR will procure 300 high capacity FW in CBU and 700 FW in semi/complete knock-down(SKD/CKD) to be manufactured in Mugalpura Workshop (Lahore). About 64 per cent of the FW fleet has become obsolete.

Gwadar is planned to be linked with Quetta at a cost of Rs40 billion. As to the road infrastructure, the federal minister of communication, has stated that 46 highways are under construction at a cost of Rs400 billion, with broadening of main highways, including Karakoram Highway and extension of Gwadar Highway to Hub Road. Super Highway connecting Karachi with Hyderabad is being upgraded to 6-lane motorway status at a cost of Rs7 billion. In Karachi, Northern Bypass and Lyari Expressway, along with a number of flyovers, underpasses, and development of elevated highway from Jinnah Bridge to Quidabad for providing signal-free movement between KPT and PQA, would enormously add to the speed and efficiency of NTC.

http://www.dawn.com/2007/02/26/ebr14.htm

 

[Owais]

ECC approves package for Chinese economic zones: no system devised against cement price hike

ISLAMABAD (February 27 2007): The Economic Coordination Committee (ECC) of the Cabinet on Monday failed to formulate any mechanism to punish the 'unjustified' profit making cement sector, and, rather used lip service by saying that "we will never tolerate any artificial increase in cement prices".

Presided over by Prime Minister Shaukat Aziz, the ECC meeting approved a policy package for 300 acres land for economic zone, to be designed near Kala Shah Kaku Interchange (M 2 Motorway), exclusively for Chinese investors and Pak-China joint ventures.

After the ECC meeting, Dr Ashfaque Hasan Khan, Economic Advisor to Finance Ministry, told journalists that the ECC meeting had discussed cement prices issue in detail and observed that prices were manoeuvred for one week (February 1 to 8) which hiked the average prices from Rs 229 to Rs 271 per bag.

He was of the view that there was a lot of variation in prices in one week as on February 1, the price of a bag was Rs 210 at Lahore which rose to Rs 300, while in Rawalpindi/Islamabad it touched Rs 292 on February 8. "Sudden increase was absolutely unjustified because this was not based on the principle of demand and supply," he argued.

He claimed that the Prime Minister had taken strong exception to this situation and made it clear that "we will never tolerate any artificial increase in cement prices". Dr Ashfaque said that the Ministry of Industries had been directed to monitor movement of cement prices continuously and place the information before the ECC.

Cement prices were between Rs 235 and Rs 245 per bag on Sunday. The Monopoly Control Authority (MCA) has also been asked to investigate the matter and submit its report to the Prime Minister. Asked what mechanism the government has formulated to take action against the responsible cement makers or dealers, Ashfaque said that he did not know about the action, as he was there to tell about the decisions.

The ECC meeting also took serious note of sudden increase in flour prices in the country and especially when wheat stocks stood at 2.4 million tons as of February 24 and wheat production target of 22.5 million tons was expected to be achieved.

"There are indications that we will be achieving production target; there is no justification of any increase in flour prices and the government will not allow flour mills to fleece the public," the ECC said, according to Dr Ashfaque.

He said that the Principal Secretary to Prime Minister has been directed to write letters to the Chief Ministers to hold meetings with representatives of flour mills associations and resolve the issue immediately. Minister for Food, Agriculture and Livestock would co-ordinate between the provinces and flour mills associations, he added.

The ECC also noted that the prices of tomato had declined substantially and, on Sunday, the price was one rupee per kg in Thatta. He said the ECC has directed Minfal and Ministry of Industries and Production to invite prospective investors for setting up tomato paste industry so that prices should not widely fluctuate.

All financial incentives designed for economic zones would also be available to the joint venture of Ruba Group Pakistan and Haier Group of China, he said.

The policy package, finalised after threadbare discussions at different forums, included import of plant, machinery, equipment and accessories for zone development, and the projects in the zone to be fully exempted from duties and taxes.

The CPEZ will also enjoy tax holiday for a period of five years for projects in the zone from the date of starting commercial operations. This shall also be available to the developers in the zone. Moreover, existing initial depreciation allowance of 50 percent shall be considered enhanced to 100 percent.

He said that normal incentives for exports, as available to projects established anywhere in the country, would be applicable to exports from the projects in the zone. Dr Ashfaque said that the federal government/agencies would provide gas, electricity and other utilities at the zero-point of the zones while captive power generation will also be allowed to developers of the zones.

He said that provincial governments would be directed to construct approach roads up to zero-point of the zone while concerned agencies will establish their offices within the zones to provide one-window facility. The management of the zone shall provide office accommodation along with the utilities.

They said that service delivery to complete required processing/procedures within the zones will be provided at the doorsteps of the investors, besides free facilitation service and guidance to investors by the Board of Investment.

The projects or joint ventures can be set up in the zones by Chinese, Pakistanis and investors from other countries in accordance with Pakistan's investment policy.

Dry port facility would be provided in the zone to facilitate imports and exports while Punjab government would facilitate Haier-Ruba Group to acquire land for SEZs, he added. The federal government may make up the amount for land acquired for the SEZs from the Federal PSDP, he said.

Dr Ashfaque said that the President during his visit to China in November 2003 had desired the establishment of China-specific industrial and high-tech zones in Pakistan. He said that total investment during the first seven months of current fiscal year was $3.674 billion against $1.64 billion of same period of last year, which showed 123.3 percent increase.

Regarding new Gwadar international airport, he said that Planning Commission Deputy Chairman has been asked to discuss the issue with Balochistan Governor and resolve the issue of land and price.

Answering a question, he said that the ECC did not agree with Defence Ministry's proposed airport, saying that such a big airport was not required for the time being. The ECC rejected a payment rescheduling request by BNP (Pvt) Limited, as proposed by Capital Development Authority (CDA), directing that the issue should be dealt at Board level.
http://brecorder.com/index.php?id=532934&currPageNo=1&query=&search=&term=&supDate=

 

[Owais]

US warned against aid suspension

ISLAMABAD (February 27 2007): President General Pervez Musharraf has warned Washington against possible legislation to cut off funding to Pakistan by the Democrat-Congress under the influence of western media spreading misperceptions about Islamabad's commitment to fight terrorism.

In his meeting with visiting US Vice President Dick Cheney here on Monday, President Musharraf expressed concern over the "proposed discriminatory legislation regarding US aid to Pakistan and misperceptions being created by the western media about the country's vital efforts in fight against terrorism," said a press statement.

Musharraf's remarks seemed to have been provoked by a New York Times report conveying that US President Bush had decided to tell his Pakistani counterpart that the Congress might cut off funding to Pakistan if military regime did not accelerate its drive in hunting down al Qaeda and Taliban operatives.

US Vice President Dick Cheney, who flew in here unannounced en route to Kabul, called on President General Pervez Musharraf and stayed with for about two hours. The two leaders discussed a number of regional and international issues including Tehran's nuclear stand-off and Taliban's would-be spring offensive.

The US vice president's visit coincided with the trip to Islamabad by British foreign secretary Margaret Beckett who also called on President Musharraf and apprised him of her government's position on Afghan imbroglio where the Taliban insurgency is said to be acquiring the status of a national liberation war.

The President told Cheney that the international community was collectively responsible for defeating the scourge of terrorism and curbing militant activities inside Afghanistan. "Pakistan has done maximum in the fight against terrorism and stressed joint efforts to achieve the desired objectives," the statement added.

During the meeting Musharraf emphasised that "most of the Taliban activities originated from Afghanistan and the solution of the issue also lies within that country".

He said that Pakistan was a victim of the spill over of Taliban influence in the Fata and in Afghan refugee camps in Balochistan. The President underlined that Pakistan, Afghanistan, US forces, Nato and ISAF will have to take the joint responsibility to stop illegal crossings along the over 2400-km long border in an inhospitable terrain.

He said Pakistan had deployed over 80,000 troops and set up 1000 check posts along the porous border in contrast to only 100 posts on the Afghan side. According to the statement, the US Vice President appreciated Pakistan's pivotal role in the fight against terrorism, underscored that sustainable mutually beneficial multifaceted ties should be further augmented.

But he also expressed "US apprehensions of regrouping of al Qaeda in the tribal areas and called for concerted efforts in countering the threat". He expressed serious US concerns on the intelligence being picked up of an impending Taliban and al Qaeda 'spring offensive' against allied forces in Afghanistan, the statement added.

About the peace agreement with tribal elders in North Waziristan, the President said it was the way forward. Musharraf said that political, administrative steps taken in the tribal areas would help curb al Qaeda and Taliban activities and avert any Talibanization in the area.

He stressed the need for weaning away the majority of moderates from the militants and that could only be achieved through intensified economic activities coupled with strong administrative and political measures.

The President also called for swift setting up of Reconstruction Opportunity Zones (ROZs) in FATA to generate more economic activity for job creation and poverty reduction which, he added, would strike at the core of extremism and terrorism.
http://brecorder.com/index.php?id=532931&currPageNo=1&query=&search=&term=&supDate=

 

[Owais]

India snaps trade ties with Pakistan under Safta
ISLAMABAD: India has snapped trade ties with Pakistan under the South Asia Free Trade Agreement (Safta), as it has unilaterally withdrawn tariff concessions that it extended to Pakistan under the regional agreement, which is effective since July 1, 2006.

However, Pakistan expressed regret over the development and termed it sheer violation of Safta. Since July 1, 2006, New Delhi has been complaining against Islamabad that Pakistan is not extending equal treatment to India as it is extending to other Saarc countries under Safta. In return Pakistan is seeking a level-playing field from India and removal of para-tariffs and non-tariff barriers (NTBs).

However, Kamal Nath, the Indian commerce minister, lost patience and announced the decision of unilateral withdrawal of tariff concessions to Pakistan from Tuesday during the second meeting of the Safta Ministerial Council (SMC) in Kathmandu on Monday.

Commerec Minister Humayun Akhtar Khan represented Pakistan at the conference. Pakistan’s Commerce Secretary Asif Shah informed the press about the Indian decision at a briefing, saying it is a violation of Article 7 of the Safta agreement. Pakistan reserves the right to act under the provisions laid down in Article 20 of Safta.

He said under the article, all options would be exhausted to settle the issue, and a strategy would be evolved when the commerce minister lands here from Kathmandu today (Tuesday), in consultation with the top leadership of the country and foreign office. When asked if Pakistan will take punitive action to reduce or erase the positive list regime under which trade is under way with India, he said: “We would prefer to act under the provisions laid down in Article 20 of Safta.”

Responding to a question, he said Pakistan would not review its tariff concessions extended to all member countries, including India under Safta. He said Pakistan remains committed to the trade liberalisation programme as stipulated in the Safta agreement.

He said during the ministerial conference Pakistan distributed the non-paper among the Saarc ministers about the reasons for not extending equal treatment to India. In the non-paper, Pakistan has highlighted the massive restrictive tariff regime of India, which is why Pakistan’s exports are not making any room in the Indian markets.

Pakistan in its non-paper mentioned that India has imposed on the goods of Pakistan and other countries para-tariffs, countervailing duty (CVD), Special CVD, national calamity duty, additional duty of excise, education cess.

India has also imposed massive non-tariff barriers, owing to which Pakistan has no level-playing field with it to increase its exports to India. Asif said India has termed the positive list regime as non-tariff barrier of Pakistan.

Online adds from Kathmandu: India and Pakistan have agreed to hold a bilateral meeting within next six months to resolve their differences over Safta. Commerce Minister Humayun Akhtar Khan and his Indian counterpart, Kamal Nath, stated this at separate press meetings they held in Kathmandu on Monday.

Though agreeing to discuss the disputed issues, the two countries, however, remained deadlocked, apparently due to their disagreement over the Kashmir dispute though neither side referred to the issue directly. “Pakistan and India have different positions on certain implementation and market access issues, like the non-tariff barrier,” Humayun said. “Both countries disagree on these issues. If there are more discussions (between the two countries), it will help the Safta process.”

Admitting that Safta success depends on the success of Indo-Pak ties and trade, Khan said Islamabad was optimistic of better business with India in future. “That is why the leaderships of the two countries are engaged in a composite dialogue. It includes both political and trade issues and the two areas are moving in tandem.”

The minister said a joint study group, comprising joint secretaries of both countries, will be formed to discuss how to extend bilateral ties. “We recognise the potential to increase trade in the region and that India and Pakistan have a key role to play,” Khan said.

According to him, Pakistan was concerned over the non-tariff barriers imposed by India though New Delhi had given the most favoured nation status to Islamabad. “In the last few years, trade has been increasing in India’s favour,” he said.

India, on the other hand, accuses Pakistan of not complying with the Safta agreement. “There can’t be qualified or limited ratification (by Pakistan) where India is concerned,” Nath said and added, “Pakistan has to comply with the Safta agreement.”

The Indian minister said India was committed to reducing non-tariff and “perceived” barriers and was participating in Safta to provide greater market access. However, Pakistan had not complied with the treaty and where India was concerned, it had only issued a small, positive list of goods that could be treated, Kamal Nath said. “Pakistan’s non-compliance is an issue that fractures the solidarity of Saarc,” he said adding, “We do hope Pakistan recognises the benefits to its domestic market.”

As a sign of India’s desire to see Safta succeed, Nath said India was not withdrawing the concessions given to Pakistan. “Since Pakistan has not complied (with Safta provisions), we are entitled even today to deny Pakistan such benefits,” he said. “But we are not doing it.”
http://geo.tv/geonews/details.asp?id=2697&param=1

 

[Owais]

Growth rate target of 7 percent would be achieved: Omar Auyb
DUBAI: Federal State Minister for finance, Omar Ayub Khan has said that the rate of inflation would be squeezed down to 7 percent by the end of the current fiscal year, while the economic growth rate target of 7 percent for this fiscal year would be achieved.

In an interview to a foreign news agency, Omar Ayub said that the economic development in the country triggered prosperity and, thereby, an enhanced purchasing power of the people unleashed increasing demand for food and beverage items, which was one the reasons of high inflation rate emanating from high demand as compared to the supply.

However, the prices of food and beverage items were expected to mellow down by the increasing competition in the retail sector and the investment in food storage sector, which would finally pave the way for bringing the inflation rate down to the level of 7 percent by the end of current fiscal year, he elaborated.

Omar Ayub said that the foreign investment in Pakistan during the current fiscal year was likely to double to reach $6 billion, which again would help achieve fulfilling the set target for economic growth.
http://geo.tv/geonews/details.asp?id=2711&param=3

 

[Janbaz]

Inflation to drop below 7pc

DUBAI: Pakistan’s inflation rate should fall below seven per cent by the end of current fiscal year, helped by competition in the retail sector which will check increases in food prices, Minister of State for Finance Omar Ayub Khan said on Monday.

The country is on track to meet its target of seven per cent growth in gross domestic product for the fiscal year which ends in June, he said. Pakistan set an inflation target of 6.5 per cent for the year.

“We are trying our best to achieve this,” Khan told Reuters in an interview in Dubai. The consumer price index rose 6.64 per cent in January from a year earlier, recording the slowest inflation rate for nine months, in part due to falling food prices. Food and beverages account for 40.34 per cent of the index.

Despite this easing of price pressure, the central bank has forecast that inflation will overshoot the 6.5 per cent target. Khan said the main driver of inflation was demand for food, which was outpacing supply as economic growth increases wealth.

The proportion of Pakistanis living below the poverty line fell to 23.9 per cent in 2004-05 from 34.5 per cent in 2000-01. Competition in the retail sector and investment in food storage facilities in provinces would help ease shortages and bring prices down, he said.

Germany’s biggest retailer, Metro, opened a store in Pakistan last year. “International players are coming to Pakistan and their prices are 30 per cent below (the) market,” he said. “The provinces are also investing in their retail and vegetable markets.”

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=44600

 

[Janbaz]

Petronas and MCB to buy PSO

ZAMIR SHEIKH
KARACHI - MCB Bank has entered into an agreement with Malaysian oil giant Petronas to jointly participate in bidding to acquire 51 per cent majority stake in Pakistan State Oil along with its management control, MCB officials said on Monday.
The Privatisation Commission is privatising the PSO by June this year. PSO, the largest public sector oil giant in Pakistan with annual turnover of over $ 5.8 billion, is engaged in storage, distribution and marketing of petroleum products.
MCB Bank and associates, comprising Nishat Mills Ltd, Nishat Chunian Ltd, DG Khan Cement and Adamjee Insurance, were among the groups that have submitted their statement of qualifications in the privatisation commission for PSO in Jan 2007.
It is believed that the MCB Bank has joined hands with PETRONAS to meet the official mandatory requirement of having exposure in the oil sector before acquiring the PSO.
PETRONAS, Petroliam Nasional Berhad, was incorporated on 17 August 1974 under the Companies Act 1965. It is wholly owned by the Malaysian government and is vested with the entire ownership and control of the petroleum resources in Malaysia through the Petroleum Development Act 1974, an Act of Parliament. At present, PETRONAS has 51 producing oil fields in Malaysia. These oil fields produce five blends of crude: Tapis, Labuan, Miri, Bintulu and Dulang. All these blends are of high quality and generally command a premium price over benchmark Brent crudes on the world market.
PSO currently has around 3,700 retail outlets across Pakistan, with another 209 outlets operating on lease. The company enjoys 78 per cent share of the black oil market and 57 percent of the white oil market in the country. PSO has a net worth of 0.34 billion dollars (Rs20.8 billion) and market capitalization of around 0.9 billion dollars (Rs59 billion).
PETRONAS is fully-integrated oil and gas corporation with total assets of 73 billion dollars and a turnover of over 44 billion (FY ended 31st March 06). A fortune 500 company, it is engaged in the entire spectrum of oil and gas business from exploration to marketing, both in Malaysia and globally, with operations in over 31 countries.
PETRONAS, currently produces an average of 24 million standard cubic feet of gas per day in Pakistan and is involved in three upstream blocks in the country. Interest in onshore Mubarak Block, Sindh Province. Completed the construction of Rehmat Gas Plant that is now supplying processed gas to the pipeline and the refinery.

The Nation.
http://www.nation.com.pk/daily/feb-2007/27/bnews1.php

 

[Neo]

2005-06 PRSP spending exceeds budget provision

ISLAMABAD (February 27 2007): A total expense of Rs 434.591 billion has been spent on Poverty Reduction Strategy Paper (PRSP) during 2005-06, disclosed in PRSP Draft Annual Progress Report. The expenditure was far above the budget provision of Rs 324 billion.

The draft report was presented in a PRSP workshop on "Structural Issues in Poverty Reduction" organised by PRSP Secretariat, Ministry of Finance and Asian Development Bank, Pakistan Resident Mission, held here on Monday.

State Minister for Economic Affairs Hina Rabbani Khar, who presided over the concluding session, said PRSP has served Pakistan well. The poverty has been brought down to 23.9 percent, it was 34.5 percent in 2000-01.

Moreover, she said, some prerequisites are essential to bring structural changes in alleviation of poverty, which are linked with country's growth mentioning of new vistas of employment opportunities and income generation.

State Minister said poverty is not related to money only but other factors like education and accessibility also counts a lot. There is lot of work to be done to achieve the goals of PRSP and it is a difficult task. There are numerous challenges ahead like education, health, and employment etc, she added.

Deputy Director General, Central and West Asia Regional Department ADB Xianbin Yao said, Pakistan has come a long way from regional instability, economic growth, decline in poverty and this workshop would provide opportunity and help to resolve many issues, he added.

These events, he said, develop integration, innovation and inclusiveness. Explaining that Yao said that innovation would come from technology and institutions and community participation and involvement is important for persistent economic growth.

Speaking on the operational challenges, he said the strong commitment of the government to undertaking wide-ranging reforms, improved macroeconomic fundamentals including high sustained growth that reached 8.4 percent in FY 2005 as well as enhanced debt sustainability, and the current and emerging development needs of the economy, have all set the stage for high levels of ADB assistance to the country.

Joint Secretary External Finance and Policy, Ministry of Finance Ahmed Farooq said that PRSP was preceded by Interim-PRSP that was instituted in November 2001 to arrest the high and rising trend of poverty in Pakistan at the start of the new millennium. It changed to full-fledged PRSP in 2003.

He said Pakistan in the region has an edge over other countries of social mobilisation, which would be included in PRSP-II, he added. He said PRSP presents a comprehensive strategy for poverty alleviation encompassing both broad macroeconomic and growth framework along with targeted micro level interventions, based on the four pillars: accelerating economic growth while maintaining macroeconomic stability, improving governance, investing in human capital and targeting the poor and vulnerable.

He said economic growth is obvious from many point of views like, even the lower class have a mobile, banks have expanded, foreign investment has increased. If the country, he added, was not progressing, how the industrialists and foreign investors would had been interested in investing more, they are sharp enough to assess and invest in safe ventures.

By virtue of this economic growth, 38 million people have been taken out of poverty, he concluded. The workshop paid lot of emphasis on the monitoring of the data, which is a basic need and a very important aspect to read the ground reality and economic situation.

Apart from the above, the report also unveils that 81.07pc and 25.63pc expenses on administrative of justice and law and order respectively have increased from the previous year.

Deputy Secretary, Ministry of Finance, Babur Beg said the budget for PRSP for 2005-06 was Rs 324 billion, BUT IT exceeded, mainly due to natural calamities in the form of earthquake, which struck the nation on October 8, 2005. The expenses of natural calamities in the budget as shown in the draft are 1976pc more than the previous year.

http://www.brecorder.com/index.php?id=532961&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

'One village-one product': Smeda to execute 100 pilot projects under Ahan

LAHORE (February 27 2007): The Small and Medium Enterprises Development Authority (Smeda) in collaboration with the Business Support Fund, established by the Government of Pakistan, has planned to execute 100 pilot projects in two years under 'Aik Hunar-Aik Nagar' (Ahan) programme so as to replicate successful models of 'one village-one product' adopted by Japan and Thailand to give boost to their exports.

As many as 50 pilot projects would be executed in each year for which products and areas have already been identified, sources told Business Recorder here in Monday.

They said Ahan seeks to modernise micro and small enterprises in rural and peri-urban areas through business development services leading to creation and diversification of sustainable income earning opportunities, particularly for landless, women, and wage earners.

After his visit to Japan and Thailand, Prime Minister Shaukat Aziz had asked Smeda to evolve comprehensive strategy for adopting models of 'one village-one product' in Pakistan so that hidden potential in various towns could be exploited by providing technical skill, improving designs of the products which would not only help alleviate poverty but also fetch precious foreign exchange for the national exchequer.

The pilot methodology prepared for the execution of projects include area identification, product studies, product development and quality assurance, focus groups formation, capacity building, technology up-gradation, promotion and market linkages. The range of products selected for the pilot projects are: traditional handicrafts, decoration pieces, items of daily or occasional use, any other product, which, if developed, can bring income to its poor community.

The targeted cities/towns in Punjab for the potential products that have been selected included; Sillanwali for handicrafts (lacquer work), Multan/Dera Ghazi Khan and Bahawalpur for embroidery, Karror Pacca for block/screen printing, Murree/Kotli for work 'gabba' (woolen embroidery, Chiniot for wooden furniture, Multan for blue pottery, 'Khussa', camel bone, Kamalia for 'Khaddar', Gujranwala for 'Khais', Jhang for basket making, Rawalpindi and Multan for 'Gota' work, Rawalpindi for doll-making and 'Moti Karrai', Chakwal and Rawalpindi for crochet, Multan and Ghakkar for 'Darree' weaving, Taxila for stone work, Kasur for 'Khussa' and Khushab has been identified for 'Lungi'.

In Sindh, Hyderabad has been identified for bangles, Khyber (Near Hala) for 'Ajrak', Khairpur for hand-made silk, Theri (near Khairpur for dates processing, Shikarpur for pickle, Nasarpur for ceramic tiles, Mirpur Khas and Islamkot for carpets (handlooms), Larkana/Thattta/Hala for cap, Hala for heritage furniture, Rali, ceramic, clay products and Thar for 'Rilli'.

Similarly, the towns/cities from NWFP-Northern Areas and AJK identified for various products, including Swat for 'Topi', 'Khes', shawls, embroidery/'Khaddar' weaving and Swati 'Pulkari', Charsada/Kohat for 'chappals', 'Khaddar' weaving, Peshawar for brass work, wax work, Gullman for rugs, Dera Ismail Khan for heritage furniture, 'Zari' work, 'Tagar' weaving, mirror work, 'Dukki and dates, Muzaffarabad for paper Mache, Chitral/Gilgit for thread weaving, Mardan for Khaddar weaving, and Hunza for Sharma weaving.

While the cities identified from Balochistan are; Loralai, Kalat, Mastung, Changhai, Quetta, Qila Abdullah, and Lehri for handmade carpets, knives, daggers and guns, Pishin, Khuzdar, Khulo, Loralai, Zhob, Musakhel, Barkhan, Muslim Bagh, Dera Bugti, Sui, Mustung, Kharan, Punjgar, Mitheri and Quetta for embroidery, Dera Bugti, Sui, Jaffarabad, Pishin, Khuzdar, Kalat, Barkhan, Loralai, Quetta for 'Chappals',

Quetta, Mustung, Kalat, Sibi, Lorali for silver jewellery, Sibi, Bakhtiarabad and Quetta for clay pots, Qila Saifullah, Barkhan Lorali and Quetta for woolen blankets and leather embroidery.

The project of silverware has already been initiated in Bahawalpur in collaboration with the Beacon House National University, the Jewellers Association, and the Bahawalpur Chamber of Commerce and Industry. A 12-day course was launched that benefited 10 craftsmen and 300 others indirectly.

http://www.brecorder.com/index.php?id=533011&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

Emerging business opportunities, risks elaborated

KARACHI (February 27 2007): Rohit Talwar, an internationally renowned futurist and business strategist from UK, said there were four key factors, which would dominate the business environment in the period to 2020.

According to a press release on Monday, he was addressing an exclusive corporate gathering on the key issues of building organisations that could create global impact.

Rohit, in his talk during the first exclusive visit to Pakistan, focused on how companies could address emerging opportunities and risks, develop powerful and inspiring future visions and create organisations capable of achieving and sustaining peak performance in a fast changing environment. He has consulted and spoken in over 20 countries and his clients include ABN Amro, BBC, BAT IBM, Intel, Nokia, Novartis, Shell and many more.

http://www.brecorder.com/index.php?id=533013&currPageNo=2&query=&search=&term=&supDate=

 

[Janbaz]

Orascom completes $750 million bond offering

ISLAMABAD (February 27 2007): Orascom Telecom Holding S.A.E., the parent company of Mobilink recently announced that it had successfully priced and placed 750 million dollars of Senior Notes due 2014 (the "Notes").

The transaction was increased from 500 million dollars due to favourable pricing and very strong investors' demand. The offering is a milestone for Orascom Telecom, for Egyptian corporate issuers and for emerging markets in Europe, the Middle East, Africa and Asia.

The placement of the Notes is one of the most successful debt capital markets transactions of its kind and sets a benchmark in the market in several respects, including first international corporate bond issuance by an Egyptian corporate since 1999, the largest ever debut bond for sub-investment grade issuer in Eastern Europe, the Middle East and Africa and the largest ever sub-investment grade corporate bond in the Middle East and Africa to date.

The bond received tremendous response with fund managers buying 60 percent, banks and retail intermediaries 30 percent and insurance companies 10 percent. More than 400 accounts participated. The attraction was driven by a company that is developing a mobile empire whose six main operating subsidiaries are in Algeria, Tunisia, Iraq, Egypt, Pakistan and Bangladesh. Pakistan's Mobilink offered the best comparable, having issued bonds last year with an 8-5/8 percent coupon but trading some 100bp tighter - 238bp over mid-swaps - as Orascom prepared to launch last week. ABN Amro and Deutsche Bank were joint books and Citigroup and Credit Suisse co-leads for Mobilink, while ABN and Deutsche were co-leads on last week's bond, reversing roles for banks that have all lent money to Orascom.-PR

Business recorder.
http://www.brecorder.com/index.php?id=532975&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

'Growth benefits upper class only’

ISLAMABAD: The gap between the rich and poor has widened in Pakistan during the rule of the incumbent regime, as the higher growth trajectory provides benefits only to the upper class compared to the poorest segments.

This was the crux of the discussion held during a workshop organised by the Asian Development Bank (ADB) in collaboration with PRSP Secretariat, Finance Ministry on “Structural Issues in Poverty Reduction” here on Monday.

Minister of State for Economic Affairs Hina Rabbani Khar told the participants in the concluding session that the higher growth was not enough condition to bring the chronic poor out of poverty line.

Dr Talat Anwar who is currently working in the State Bank of Pakistan as Joint Director and previously affiliated with Centre for Poverty Reduction and Income Distribution (CPRID) of the Planning Commission, said that during the period from 1998-99 to 2004-05, the growth effects remained dominant, the redistribution seems to have benefited only in urban areas. On the other hand, redistribution seems to have adversely affected the poor in rural areas. The growth strategy is important for poverty reduction in Pakistan but the redistribution in favour of poor should not be ignored if the government intends to enhance the effect of growth on poverty reduction.

“There are some studies which show that there is an increase of one per cent amongst the poorest population of the country between 2001-02 to 2004-05. This growth strategy is resulting into exclusion of poorest from the whole thinking of the government and there is need to adopt targeted approach to protect the poorest segments of the society,” he added.

Dr GM Arif from Pakistan Institute of Development Economics (PIDE) said that the unemployed educated youth was a matter of concern especially in NWFP and Balochistan. He said the tackling of chronic poor would be the main issue for the government in years ahead.

Dr Sarfraz Qureshi said on the occasion that there is lack of Independent research institutions in Pakistan. He said the nature of prevailing poverty does not know by anyone in the country and without having in-depth analysis it will not be easy to tackle this complex problem.

The chronic poverty, he said, will remain there as the government in last seven years have done all easier things but the difficult decisions are lying ahead. He said all safety nets have lowest coverage and funding and there are also problems of leakages.

Mohammad Saleem said in his presentation that there are 52 million illiterate people in the country. The government, he said, is planning to bring changes in the definition of literate population as currently all those are literate who can read and write. He said the government will change this definition and all those will be considered literate who can read a paragraph of English with understanding and be able to do simple calculations.

With the existing definition of literate persons, he said the literacy ratio stood at 54 per cent at the moment. The economists also recommended the government to adopt targeted cash transfers for alleviating poverty.

An independent economist Dr Kaisar Bengali said on the occasion in most of the presentation the data and analysis was done on the districts of Punjab, which cannot be replicated for whole Pakistan.

He also criticised the term community participation in development strategy is continuously misused in the context of Pakistan as during the Social Action Program the feudal prevailed on the name of community participation resulting into failure of that scheme.

http://www.thenews.com.pk/daily_detail.asp?id=44594