Pakistan Economy - News & Updates - Archive

[Neo]

March 18, 2007
Tremendous growth seen in petroleum sector

ISLAMABAD, March 17: Minister for Petroleum and Natural Resources Amanullah Khan Jadoon said on Saturday that as a result of vibrant policies of deregulation liberalisation and privatisation, the petroleum sector has witnessed a tremendous growth in the last few years.

Talking to the managing director of Hungarian MOL Company, Janos Feher, who called on him to discuss matters pertaining to promoting cooperation in the oil and gas sector, the minister said that the government would encourage and facilitate prospective investors in onshore and offshore oil and gas exploration.

He said that the new petroleum policy would give impetus to the ongoing oil and gas exploration.

He appreciated the MOL’s contribution for boosting the oil and gas exploration activities in NWFP and asked the company to participate in other parts of the country for the mutual advantage.The MD of MOL briefed the minister about the oil and gas exploration activities being undertaken by his company in the NWFP.

He lauded the investor-friendly policies being pursued by the government attracting investment in the country.

Petroleum secretary Ahmad Waqar and member of MOL delegation were present in the meeting.

 

[Introvert]

Pakistan, Kuwait Agree to Enhance Trade, Investment
By Sheeraz Aslam 'Pakistan Times' Special Correspondent

ISLAMABAD: Pakistan and Kawait here on Saturday emphasized on translating the excellent brotherly relations with identity of views on all issues and cultural affinity between them into an equally strong economic relationship.

Dr. Yousef Al-Zalzala, Former Minister of Commerce and Member of Parliament of the State of Kuwait along with a two-member delegation called on Zahid Hamid, Federal Minister for Privatisation and Investment here today.

Zahid Hamid briefed the delegation regarding the privatisation and investment polices and said that there are numerous investment opportunities in Pakistan and all economic sectors were open for 100% foreign equity and investors were free to transmit as much profit or equity without any permission. He said that Pakistan’s GDP growth is exceeding 7%.

He assured all support and assistance from Government of Pakistan to Kuwaiti Investors.

The Minister presented the macro economic indicators, which were improving every year and also briefed them regarding increasing FDI inflows, which touched the record level of US $ 3.5 billion in year 2005-06 and this upward trend was being witnessed during the current fiscal year July 2006-January 07, which stood US $ 3.6 billion including US $ 2.1 billion direct investment, US $ 697 million portfolio investment and US $ 811 million of OGDCL GDR proceeds.

This trend is continuing and will set new FDI record by the close of this fiscal year. He also briefed them about the investment opportunities in various sectors with special reference to PSO and PPL Privatisation.

Both sides emphasized on translating the excellent brotherly relations with identity of views on all issues and cultural affinity between Pakistan and Kuwait into an equally strong economic relationship.

They also agreed on further improving the investment climate beneficial to both the countries and to facilitate business groups of both the countries.
http://www.pakistantimes.net/2007/03/18/top9.htm

 

[Janbaz]

Gosh the fuel and energy sector have been booming over some time now. The IPI in its final stages, the discussion to get gas from Uzbekistan and now a booming petroleoum sector are all great signs. Like the Hibernia in Canada, if offshore oil is found it will be a great boost and along side the reserves in F.A.T.A will transform much of the momentous economy!:flag:

 

[Owais]

'Economic sectors open for 100 percent foreign equity'
ISLAMABAD (March 19 2007): There exist numerous investment opportunities in Pakistan and all economic sectors are open for 100 percent foreign equity and investors are free to transmit as much profit or equity without any permission, said Zahid Hamid, Federal Minister for Privatisation and Investment on Saturday.

He was briefing Dr Yousef Al-Zalzala, former Minister of Commerce and Member of Parliament of Kuwait who called on him along with a two-member delegation here, says a press release.-PR
http://brecorder.com/index.php?id=539971&currPageNo=1&query=&search=&term=&supDate=

 

[Owais]

Inflation and account deficit threats to economy: EIU

KARCHI (March 18 2007): Inflation, a widening current-account deficit and internationally high oil prices remain the biggest threats to Pakistan economy, said The Economist Intelligence Unit (EIU) UK. The Economist Intelligence Unit (EIU) on Saturday has issued a detail report on Pakistan's economy.

In which they have forecast that real GDP growth will slow from 6.6 percent during the current fiscal year to 6 percent in 2007-08, largely owing to a slowdown in the services sector.

Growth will be driven by the continued expansion of textile production and other manufacturing output. The strength of the industrial sector will in turn stimulate growth in service output, particularly in the commerce, trade and transport sub sectors, the report added.

Agricultural growth will also remain fairly healthy throughout the forecast period and the improving outlook for the monsoon has resulted in forecast for real GDP in 2006-07 being revised up from 6.4 percent in October to 6.6 percent currently, as growth in the agricultural sector is now expected to be more buoyant in that year.

Inflationary pressures and a widening current-account deficit remain the biggest threat to economic growth. Monetary tightening by the central bank in July will assist in controlling consumer price inflation, report said.

Year-on-year inflation rose from a low of 6.2 percent in April 2006 to 8.9 percent in August, while it then remained above 8 percent for November and December but fell sharply in January to 6.6 percent.

The EIU forecast said that a slowdown in economic growth and an improvement in food supplies will contribute to a further slowing of inflation in the forecast period. On balance, consumer prices are expected to rise by an average of 7.4 percent in 2007, with inflation falling to 5.5 percent in 2008.

Report said that Pakistan's economy is expanding rapidly, but international oil prices and domestic inflation are high at present, and could undermine macroeconomic stability and economic growth prospects.

Action to stem the rising trend in consumer price inflation came late and this lack of timely action, coupled with an overheating economy, is the main source of economic policy risk in 2007-08.

Nevertheless, Pakistan's policymakers have in the past few years created an environment within which the private sector has begun to thrive. These measures include substantial privatisation, reforms in the banking and utility sectors and efforts to reduce red tape.

The EIU quoted that the World Bank's doing Business reports has said that Pakistan rose to 74th position out of 175 from 126th out of 151 the previous year, with the authors noting that customs and tax reforms had benefited business.
http://brecorder.com/index.php?id=539725&currPageNo=2&query=&search=&term=&supDate=

 

[Neo]

Planning Commission finalises 'Vision 2030': NEC approval likely on March 27

ISLAMABAD (March 19 2007): The Planning Commission has given final shape to the 'Vision 2030' for final approval by National Economic Council (NEC). It foresees Pakistan as a regional hub for industry, trade and education in the next two decades.

Planning Commission Deputy Chairman Dr Akram Shaikh presided over the 6 hours long meeting which gave the final shape to the 'Vision' for the NEC meeting. Earlier the NEC was scheduled to meet on March 22, but it was deferred on Saturday and now it is likely to meet on March 27. Prime Minister Shaukat Aziz would preside.

The working draft of the 'Vision' says that by 2030 Pakistan will be the world's fifth most populous country (around 230 million people), with an economy whose absolute size will be among top two dozen countries, on the basis of only a 6 percent sustained growth, and around 12th on purchasing power parity (PPP). Its people in under-25 age group will have an average of 10 years of education, while tertiary enrolments will be nearly 20 percent of the 17-23 age cohort. It will also be a major regional hub for industry, education, services and arts.

The 'Vision' gives importance to the globally integrated economy, saying that "it appears that the most predictable state of affairs in 2030 will be that of a globally integrated economy". The industrial economy will be transformed inexorably into yet undefined morphologies on the shoulders of the information revolution.

It adds that economies are likely to diffuse across national boundaries into truly global supply chains, whether industrial, services or ownership. This dispersal of work and strategic linkages across national boundaries, coupled with information integration, and a shift in the technological content of world trade towards high technology, will be the most conspicuous feature of globalised economy in the future.

According to the 'Vision', the most abrupt transformation will occur in Asia, which is expected to be the engine of global growth and consumption. This will see a continuation of relocation of manufacturing and an increasing share of design and services from the developed countries. If some emerging economies in Asia can sustain their growth for several decades, then three of the four largest global economies will probably be Asian in 2030 and 2050. Pakistan's economy, currently ranking 39th in size (24th on PPP), could similarly rise to 23rd (12th on PPP) with a sustained growth of 6 percent, it adds.

The 'Vision' maintains that opening of markets in the wake of trade liberalisation would imply fierce competition in both domestic and external markets. The role of the multinationals and regional supply chains will also have expanded, not only in industry but also in agriculture and services.

Attracting and retaining relocation activities and investments, and developing into regional or global hubs, would be the major goals of companies and national policies. In some newly industrialised Asian countries, such activities have already generated major global players and conglomerates. They now offer complete end-to-end services in the supply chain, whether as manufacturers of piece parts and systems, or providers of manufacturing related services.

It has noted that Pakistan needs to put in place the infrastructure and matching of skills with demand, within the country as well as those of transnational agents.

It says that emerging electronically networked world economy is creating a new economic landscape that highlights a shift from geographical industrial cluster to virtual cluster, driven by digital innovation. These clusters are emerging in the new competitive space offered by a Web-based business world, where 'how you do business' is more relevant than 'where you do business'. This requires Pakistan to operate the next generation communication networks, which combine convergence with speed, stability, security, and flexibility. In this regard, globally powerful cities will be competing with nation states, it foresees.

http://www.brecorder.com/index.php?id=539932&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

March 19, 2007
Choices for small investors

By Mohiuddin Aazim

AS Pakistan’s economy continues to grow, many people find surplus funds at their disposal but there are not many areas of profitable yet risk-free modes of investment available to them.

Keeping money in bank accounts or parking it in the National Saving Schemes (NSS) is the safest way of investment but for some years banks have been offering a real negative rate of return on deposits i.e. lesser than the rate of inflation. For example, the average rate of return on one-year fixed deposit stood at 5.26 per cent at the end of the last fiscal year, when inflation that year was 7.9 per cent.

Investment in NSS has been a bit more profitable than the bank deposits but the real return on NSS too is barely a few percentage points above inflation on certificates of 10 years. For example, the return on 10-year Defence Saving Certificates (DSCs) stood at 9.46 per cent till the end of the last fiscal year slightly higher than the inflation for that year.

Investment in stocks and in the real estate yields far better returns than bank accounts and NSS. But both modes of investment are chiefly speculative and much less secured than bank accounts and NSS.

Bank deposit: Whereas bank accounts can be opened with Rs10,000 and minimum investment required in DSCs and special saving certificates (SSCs) is Rs500, one needs much more money to enter into the stock market or in the real estate.

At the end of June, total bank deposits stood above Rs2817 billion and the total number of bank accounts exceeded 26.3 million. Statistics compiled by the State Bank show that more than 47 per cent of the total deposits (Rs1332 billion) were in saving accounts on which the average return was only 1.67 per cent. Senior bankers often quote high concentration of bank deposits in saving accounts as a prime reason for very low average return on overall bank deposits. That is true. But what is equally true is that even the fixed term deposits have not been attracting a reasonable rate of return. See the table.

As the Table shows, the average return on fixed deposits of over one year to over five years ranged between 5.26-5.57 per cent.

Detailed analysis of deposit rates beyond June 2006 is not available but a nominal increase in the weighted average return on fresh deposits has been witnessed afterwards. The latest SBP data reveal that the average return on fresh deposits mobilised in January 2007 crawled up to 5.05 per cent from 4.72 per cent in June 2006.

The weighted average return on overall deposits of the banking system, however, stood at 3.72 per cent in January 2007 up marginally from 2.89 per cent in June 2006.

National Saving Scheme: Compared to very low profits on bank accounts, NSS’s offer better returns to investors.

The scheme covers five major saving instruments namely DSCs, , SSCs, regular income certificates (RICs), Bahbood (Welfare) Saving Certificates (BSCs) and Pensioner Benefit Accounts (PBAs). The last two have been tailor-made for the widows, senior citizens over 60 years of age and pensioners. The DSCs, BSCs and PBAs are of 10-year maturity whereas SSCs and RICs are three-year and five-year papers.

Till end-June 2006, the return on DSCs was 9.46 per cent whereas it was 11.04 per cent on BSCs and PBAs. And SSCs and RICs offered 8.74 and 8.88 per cent return respectively.

From July 2006, the government increased the rate of return to 10 per cent on DSCs and to 11.52 per cent on both BSCs and PBAs. The return on SSCs and RICs was increased to 9.34 per cent 9.24 per cent respectively.

These rates of return are applicable on full maturity and investors get lesser if they make premature withdrawals, yet the effective rates of return even on these withdrawals remain higher than the rates of return on fixed bank deposits.

For example, if one redeems DSCs on the completion of the fifth year, he gets eight per cent interest, which is far higher than the average return of 5.57 per cent on five-year fixed bank deposits. And in case of SSCs, profit is paid at the rate of nine per cent on the completion of the first six months out of the full maturity period of three years. This is almost double than the average return of 4.64 per cent on six-month fixed deposits.

Apart from higher returns, NSS are better than fixed bank deposits also because the minimum investment required is much lower than in fixed term deposits. Minimum investment for DSCs and SSCs, for example, is Rs500 only. Contrary to this, in most of the fixed deposits, people need to keep money in multiples of Rs10,000 or in multiples of Rs100,000.

Stock Market: Perhaps, the stock market offers a better alternative in terms of high dividends combined with appreciation in the stock value. But not everybody can make money out of stocks for the lack of the expertise needed for it. Those of the small and ordinary investors who dare invest into the stock market are benefited primarily with the dividends because the kind of speculative activities going on in the market makes it difficult for them to earn net price differentials in a given time. Long -term investors, however, not only earn dividends but also benefit from the appreciation in the stock value.

According to a study carried out by Jehangir Siddiqui, the estimated average annual return on stock investment stood at 11.14 per cent in the outgoing year. The researchers have arrived at this number by averaging out the dividends paid out by 60 leading companies in 14 listed sectors of the Karachi Stock Exchange.

The average dividend can differ with the change in the JS index but since the list of the 60 companies include every big market player there are least chances for a major change in it. Though the mutual fund industry is still in its infancy yet various mutual funds have also been offering better-than-banks returns to their investors over the years.

For those who cannot afford to invest directly in the stock market for the lack of expertise or time management, mutual funds are the best alternative but what irks most investors is that these funds often issue right or bonus shares instead of handing out cash dividends.

Real Estate: Investment opportunities abound in the real estate market but for wealthier people. Small investors stand no chance in this field as prices have skyrocketed in the past few years. Besides, most investment in the real estate is for speculative purposes thereby making this a doubly dangerous proposition for small investors. However, if the Real Estate Investment Trusts become a reality, small investors too, may be able to park their surplus funds in this area. Once established, these trusts would be working like mutual funds pooling the money of a number of investors for buying a piece of land and then distributing the profit proportionately as the market price of the land moves up.

http://www.dawn.com/2007/03/19/ebr2.htm

 

[Neo]

March 19, 2007
Macro-economic targets unlikely to be met

By Khaleeq Kiani

ISLAMABAD, March 18: Pakistan is likely to miss some major macroeconomic targets this year, but high agriculture output will enable national economy to show much higher than envisaged seven per cent growth rate, it is learnt.

As a result, the government is expected to revise annual targets for the current year — downwards in areas like foreign trade, current account and prices and upwards in agriculture and services output — in the next few weeks.

Official sources said the government was expecting a bumper wheat crop — reasonably higher than targeted 22 million tons of produce. This, coupled with better production in some other crops and higher livestock production, was expected to put agricultural growth at five per cent, instead of the original target of 4.5 per cent.

The sources said the government was also expecting better results in the services sector. However, the targets for wholesale and retail trade sector are being reduced to 7.2 per cent compared with the original annual target of 8.8 per cent growth.

They said the government had fixed an annual growth target of 7.1 per cent on the basis of six per cent growth in transport and storage, 12 per cent in finance and insurance, 3.5 per cent in housing ownership, 3.7 per cent in public administration and 5.6 per cent in social and personal services.

They said the government had set an inflation target of 6.5 per cent, but this was unlikely to be achieved.

On the basis of seven months data, the annualised rate of inflation as measured by consumer price indicator has stood at 8.14 per cent as against 8.48 per cent during the corresponding period last year. Food inflation has increased from last year’s 7.6 per cent to 10.33 per cent this year and non-food inflation has come down to 6.60 per cent from 9 per cent last year.

Similarly, the sensitive price indicator on annualised basis has almost doubled to 11.84 per cent in the first seven months from 6.58 per cent of the same period last year. Wholesale price index, however, declined to 7.44 per cent compared with 10.97 per cent in the last seven months of last year.

The sources said the government had set export target of $19.8 billion for the current year against $16.8 per cent of the last fiscal year, envisaging 18 per cent growth rate. This target is very unlikely to be achieved given the export performance so far. In the first seven months of the current year, exports have struggled at $9.6 billion, which is only 3.86 per cent higher than last year’s $9.27 billion.

Imports for the current fiscal year were also projected to grow at 16 per cent to $27.4 billion. In the first seven months, however, imports have stood at $17.2 billion against $15.8 billion of the same period last year, recording a growth rate of 9 per cent.

As a result, the trade deficit touched a record $7.6 billion in the first seven months – a figure the government had projected for the whole year. The trade deficit has touched $8.9 billion in the first eight months and is likely to cross $13 billion by the year end. Similarly, the current account deficit is also expected to touch $8.8 billion or so against an annual target of $6.3 billion.

The sources, however, said higher foreign direct investment, remittances coupled with better agricultural output and relatively higher manufacturing growth would enable the GDP not only to achieve 7 per cent growth rate but also take it to near 8 per cent if the current trend continued. However, the current political situation could hamper the growth estimates, they added.

http://www.dawn.com/2007/03/19/top12.htm

 

[Neo]

IFC To Help Boost Pakistan's Housing Finance Market

ISLAMABAD -(Dow Jones)- Pakistan's housing finance market could grow to PKR140 billion ($2.33 billion) by the end of this decade if it is properly developed, an International Finance Corporation official said Thursday.

"There is huge unmet demand for housing in the country," said Syed Farhan Fasihuddin, IFC's Program Manager for Housing Finance.

"Potentially, housing finance can go from 1% of GDP to 4-5% of GDP in three to four years," he added.

Fasihuddin said Pakistan faces a shortage of 6 million houses while just 300, 000 are built each year.

IFC, the private-sector arm of the World Bank group, has been working to develop Pakistan's real estate finance market, particularly in terms of financing for the low income group.

Among its initial goals is to restructure government-owned House Building Finance Corporation, with which it signed an agreement last June.

IFC intends to take an equity stake in HBFC, Fasihuddin said.

http://www.nasdaq.com/aspxcontent/N...CQDJON200703160531DOWJONESDJONLINE000467.htm&

 

[Owais]

Fiscal year 2007 July-December corporate sector profits down 10 percent

KARACHI (March 20 2007): Profitability of the country''s corporate sector (71 companies, having market capitalisation of over 80 percent of KSE-100 index), declined by 10 percent to Rs 93 billion in the first half of FY07 from Rs 104 billion in the same period in FY06.

The best performing sectors during the first half of current fiscal year were E&P and Banking, whose profitability grew by 22 percent and 8 percent, respectively, while the worst performers were the downstream oil chain ie refinery and OMCs, whose profitability witnessed respective plunge of 120 percent and 69 percent, with the refineries suffering a net loss, a research team at Atlas Capital Markets said.

Exploration & Production (E&P) sector ( three companies) earned Rs 35,308 million in the first half of FY07 as compared to Rs 28,976 million in the same period of FY06 with a growth of 22 percent, and the Banking sector (18 companies) earned Rs 28,891 million in this period against Rs 26,865 in the same period of last year with a growth of 8 percent.

Auto assemblers'' (six companies) earnings declined by 11 percent to Rs 3,270 million in the first half of FY07 against Rs 3,671 million in the same period in FY06. Textile sector (five companies) earnings declined by 18 percent to Rs 1,054 million against Rs 1,293 million. Telecom Sector (two companies) earnings declined by 20 percent to Rs 8,752 million against Rs 10,922 million. Fertiliser sector (four companies) earnings declined by 21 percent to Rs 6,209 million against Rs 7,897 million. Gas sector (two companies) earnings declined by 32 percent to Rs 1,670 million against Rs 2,461 million.

Power sector (two companies) earnings declined by 32 percent to Rs 3,569 million against Rs 5,284 million. Chemical sector (four companies) earnings declined by 50 percent to Rs 1,425 million against Rs 2,840 million. Cement sector (18 companies) earnings declined by 62 percent to Rs 2,211 million against Rs 5,810 million. OMC sector (three companies) earnings declined by 69 percent to Rs 1,581 million against Rs 5,14. Refinery sector (four companies) earnings declined by 120 percent to Rs 581 million (loss) in the first half of FY07 as compared to Rs 2,876 million profit in the same period in FY06.

E&P Sector: The E&P sector (OGDC, POL and PPL), simply put, was plain lucky to get away with 11 percent higher crude oil prices on the international front on year-on-year basis despite a 14 percent drop during the second quarter. On the other hand, their total production of both crude oil and gas remained more or less flat. Additionally, POL contributed by way of a one-time reversal on its exploration cost while PPL enjoyed a lower effective tax rate, inflating its earnings and therefore taking total industry profitability to Rs 35.3 billion, up 22 percent from Rs 28.976 billion previously.

BANKING SECTOR: The banking sector''s profitability witnessed a growth of just 8 percent to Rs 28.891 billion in the first half of FY07 (excluding BankIslami, Bank of Khyber and Crescent Commercial Bank). The reason for low growth was tight monetary growth target of 13.5 percent set by the State Bank of Pakistan for FY07 as compared to 15.2 percent observed in FY06. Total advances of scheduled banks grew by 13.3 percent to Rs 2.4 trillion in December 2006 as against Rs 2.1 trillion in June 2006 as compared to 16.2 percent rise in the same period last previous year, whereas deposits surged by 7.6 percent to Rs 3.0 trillion in the first half of FY07 as against 12.0 percent upsurge in the last comparable period. The interest rates spreads in the first half of FY07 stood at 7.45 percent as against 7.16 percent in the first half of FY06. Besides this, the equity market also did not perform well in the period under review thus resulting in low growth in non-core business income.

Automobile Assemblers: Profitability of the automobile assemblers, which includes four car assemblers (PSMC, INDU, HCAR and DFML) and two tractor assemblers (AGTL and MTTL), was down by 11 percent to Rs 3.27 billion in the first half of FY07 as against Rs 3.67 billion in the same period in FY06. Disintegrating the two, the earning of the car assemblers was down by 17 percent to Rs 2.34 billion as against Rs 2.81 billion whereas the earning of tractor assemblers was up by 8 percent to Rs 929 million against Rs 859 million. Major reason for the decline in profitability was the lesser growth in sales volume because of rising car financing rates; plant shutdowns because of capacity expansion; surging prices of raw materials ie steel; rising financial charges mainly to fund their expansions and decline in other income because of reduced delivery periods.

Textile sector: Textile sector''s profitability reduced by 18 percent totalling to Rs 1,053 million as compared to Rs 1,293 million for the corresponding period of last year for the five major companies in the sector(NML, NCL, KTML, CHBL and ADM). The most common reason behind this decline can be attributed to the sharp increase in cost of sales for the textile sector. This increase was due to the total cotton consumption rate ie Rs 2,451 per maund as compared to Rs 2,329 per maund in the corresponding period of last year. Similar trend was observed for imported cotton for which rate of consumption is Rs 3,422 per maund as compared to Rs 3,196 per maund for the corresponding period half year. Apart from this, minimum wages, fuel and power cost and financial charges also increased by great extent.

Telecom Sector: The telecom sector, constituting PTCL and WorldCall Telecom, adversely performed in the first half of FY07, depicting a decline of 20 percent in net earnings to Rs 8.8 billion in the first half of FY07as compared to Rs 10.9 billion in the first half of FY06. Continuously reducing international tariffs and decline in domestic prices due to high competition were among major reasons of the fall. PTCL observed a decline of 23 percent in profitability as the revenues declined by 6 percent and the operating costs surged by 24 percent because of high provisions of doubtful debts. WTL, on the other hand, posted growth of more than three times in profits to Rs 386 million in the first half of FY07 as against Rs 88 million in the first half of FY06 owing to stable revenues and Rs 16 million reduction in the operating costs as a result of cost optimisation strategy.

Fertilizer Sector: The core to the agricultural growth and hence to the economy witnessed a depressed financial performance in the first half of FY07. Cumulative profitability of the listed manufacturers ie. FFBL, FFC, DAWH and Engro fell by 21 percent to Rs 6.2 billion from last year''s Rs 7.9 billion. The major culprits for the decline in the earnings were higher cost because of rising cost of fuel and surging financial charges because of higher interest rates. This double-digit decline can also be attributed to the extraordinary gains by DAWH in previous half year as it divested some of its stake in SNGP and PTA.

Gas Sector: Overall profitability of the sector fell by 31 percent in the first half of FY07 as compared to the corresponding period of last year. Earnings of SNGP plunged considerably by 43 percent while SSGC surged by 34 percent as a result of increase in operating profitability of SSGC emanating from an increase in operating assets. However, the adjustment in UFG target set by Ogra and increase in financial charges did not increase the profitability by the growth in operating assets for SNGP. Furthermore, SNGP''s immense decline in profitability was also a result of increase in effective tax rate which stood at 35 percent for the first half of FY06 as compared to 26 percent last year.

Power Sector: Profitability of the two biggest independent power plants ie. Hubco and Kapco declined by 32 percent to Rs 3.56 billion as against Rs 5.28 billion in the same period last year. Hubco witnessed a marginal decline of a percent while Kapco, whose earning declined by 40 percent mainly because of imposition of normal corporate tax rate as its tax exemption period expired on June 26, 2006 contributed the most to the decline in industry profitability.

Chemical Sector, including ICI, DSFL, IBFL and PPTA, saw decline in profitability during the first half of FY07 by 50 percent to Rs 1.4 billion as against Rs 2.8 billion in the same period in FY06. Although the core operation performance was well above par it were the one-time gains of ICI and PPTA in terms of deferred taxation last year and loss of DSFL this year which led to the overall earnings to half.

Cement sector: During the first half of FY07 total dispatches recorded a growth of 26 percent to 11.04 million tons in the first half of FY07, which in the same period last year stood at 8.75 million tons in which local cement dispatches were 9.976 million tons, up by 25 percent and exports were up by 37 percent to 1.061 million tons. This growth in sales was offset by the depressed scenario in the cement prices, which hovered at around Rs 180-220 per 50 kg bag during the period under review. Total profitability of the cement sector fell considerably by 62 percent as a result of tumbling prices along with higher financial charges as a consequence of expansion taken up by several cement manufacturers.

Oil Marketing Companies: PSO, Shell and APL''s combined profits for the half year ended December 2006 fell by a massive 69 percent to Rs 1.58 billion compared to Rs 5.15 billion recorded during the corresponding period of last year. The reasons for the decline were: ex- refinery product prices on a weighted average basis for the industry rose by approximately 10 percent on year-on-year basis; decline in oil prices during the phase of first half of FY07 on the international front led to inventory losses; change in pricing formula applicable to OMCs led to a deterioration in their margins and a significant hike in financial charges of the industry was observed due to build-up of outstanding receivables from the government.

Refineries: The first half of the current fiscal year, particularly the second quarter, was the worst the sector as a whole witnessed since FY03 when refinery dynamics were modified. The combined bottom line turned negative for the first time during the second quarter of FY07 standing at Rs 629 million, taking the first half of FY07 loss to Rs 581 million, down 120 percent from a profit of Rs 2,876 million posted during the corresponding period of last year.

A plunge in earnings during the period under review was witnessed across the board during the first half of FY07. NRL, ARL, PRL and BPL depicted a decline of 36 percent, 82 percent, 221 percent and 873 percent respectively with PRL and BPL incurring a cumulative loss. Losses overshadowed the sector on the back of a decline in Gross Refining Margins (GRMs) following a plunge in global oil prices coupled with inventory losses.
http://brecorder.com/index.php?id=540751&currPageNo=1&query=&search=&term=&supDate=

 

[Owais]

Pak-Chinese trade for mutual benefit stressed
LAHORE (March 20 2007): Chinese and Pakistani traders should initiate joint planning to promote trade and investment for mutual benefit of the two countries. Punjab minister for trade and investment Dr Sohail Zafar Cheema said while talking to a delegation of Chinese investors here on Monday stated a handout.

Trade minister revealed that in 2003-04 trade volume between the two countries stood at 1,442 million dollar and in 2005-06 it increased to 3,170 million dollar showing an increase of 120 percent. However, he said that government is working to improve the trade balance between the two countries. Pakistan, because of its ideal location, can serve a gateway to international markets and also fulfil the required energy needs of industries in South Asia.

He said the government's foreign investment policy is providing a lot of opportunities to investors in various sectors. He said that investment and joint productions are possible in areas such as energy, machinery, chemicals, building material, textile, electronics, leather, surgical instruments, paper etc.
http://brecorder.com/index.php?id=540816&currPageNo=1&query=&search=&term=&supDate=

 

[Owais]

'Gwadar port to change fate of Balochistan'
ISLAMABAD (March 20 2007): Pakistan's first deep seaport, Gwadar would become functional in a next few days, and would change the fate of the area by transforming its socio-economic landscape. Gwadar Port would generate tremendous opportunities for the people of Balochistan as thousands of jobs and new business will be created by it, PTV reported.

It would fulfil another commitment of the government to the people of Balochistan and would usher in a new era of development and prosperity.

Free economic zones would be set up near the port which would help harness vast potential in natural resources of the area.

This port would also lead to the development of heavy and large-scale industries, petrochemicals and manufacturing sector. Pakistan has already strategically located and this seaport has increased this importance and would make the access to the Central Asian States easier.

Singapore Port Authority, which would look after Gwadar, port for 25 years is running ports in almost 9 countries and would invest almost 3 billion dollars for the development of this port.

This port had been declared tax-free for 40 years and it is estimated that almost 50 million-ton cargo would go through this port in next 10-15 years. It is almost 14.5 m deep and was completed with the cooperation of China in record time period of three years and costs almost Rs 16 billion.

As soon as it becomes functional, it would give boost to the economy of the country and Pakistan would become the economical and trade hub of the region. The people of Balochistan are highly appreciative of the initiatives undertaken by government for the development and prosperity of Balochistan, which remained neglected in the past.

http://brecorder.com/index.php?id=540853&currPageNo=2&query=&search=&term=&supDate=

 

[Owais]

President to inaugurate Gwadar Port today
ISLAMABAD: President Pervez Musharraf would formally inaugurate in a splendid ceremony the mega project Gwadar Port today (Tuesday).

A Chinese delegation has already arrived in Pakistan to attend the ceremony.

In this connection, several programmes including musical shows, Basant and other recreational programmes for the amusement of guests have been arranged.

The Gwadar Port has been given on lease to a Company of the Singapore for 40 years.

About 40 billion dollars income besides, 4 billion dollars annual revenue is expected from the Port. Balochistan would get its share from the income of Gwadar Port.
http://geo.tv/geonews/details.asp?id=3623&param=1

 

[Owais]

World Bank asks Pakistan to cut transportation cost

DUBAI: The World Bank has asked the Pakistan government to lower the transportation cost, saying it is severely constraining the economic growth and making the country's exports uncompetitive.

According to sources, the government had been advised to remove 'inadequacies' of the transport system that was resulting in an annual loss of Rs220bn or 6% of the Gross Domestic Product (GDP).

Inadequate physical capacity, inadequate maintenance system, poor targeted priorities of investment, operational and financial inefficiencies of the public investment, lack of private sector participation and environmental impact were identified as serious issues which needed to be sorted out for improving the performance of the transportation system.

An official study, 'Industrial Vision and Strategy for Pakistan's Socioeconomic Development,' submitted to the government for approval, called upon the authorities to overhaul and revamp the transport sector, particularly by modernising the maintenance system.

It said the current system was inadequate and needed major improvements. The government was asked to encourage the private sector to make sizable investment in the sector. The report said incentives should be offered to encourage the private sector to participate in road projects.
The study said the share of railway in public investment had drastically declined mainly due to aging of the assets, long delays in arrival and departure, frequent accidents, lack of locomotives and insufficient train speed.

The major goal was to revitalize the railway and make it the choice of the commuter and freight haulers through a service-friendly environment, it said.

The public sector investment could be used for strengthening the transport capacity through improvement of facilities, including doubling tracks, electrification, rehabilitation of tracks, revamping of signalling and repair of bridges, it said.

The main issue in air transportation, the study said, was poor quality of the services and airport facilities.

The goal was to improve the service standard to passengers by private sector participation in the industry. Besides, the operational efficiency of Pakistan International Airlines (PIA) needed to be improved, including cost control, reduction of manpower-aircraft ratio, aircraft renewal and higher rate of aircraft utilisation, it said.

The assessment of roads done by a joint study of the World Bank and the National Highway Authority (NHA) indicated that 37% of the national highways were in poor condition and only 28% were in good condition.

A major cause of the deterioration of the road network was the rapidly increasing traffic volume.
http://geo.tv/geonews/details.asp?id=3611&param=3

 

[Neo]

March 20, 2007
Rs1.4bn investment likely to enhance jewellery export

By Ihtashamul Haque

ISLAMABAD, March 19: The government plans to enhance export of gems and jewellery from $29 million to $1.5 billion annually by 2017 through a new Rs1.4 billion investment.

Official sources told Dawn on Monday that a decision has been taken to develop an internationally competitive gems and jewellery industry by removing various impediments in it.

They said Pakistan's gems and jewellery industry suffers from limited investment in research, product development and training, low levels of technology, traditional mining techniques, underdeveloped lapidary facilities and skills, high raw material costs, poor international marketing and branding.

The industry also suffers from underdeveloped designing capabilities, limited linkages with domestic and international support infrastructure, limited identification and certification, and lack of hallmarking.

With new project, they said, there would be a significant impact on value-addition, productivity, income levels and exports.

Exploration and exploitation of gemstone resources and value-addition based on them is a part of medium-term development framework (MTDF).

The proposed project is based on a comprehensive plan and strategy for upgrading the gems and jewellery industry in Pakistan.

It will focus on establishing common facility training and manufacturing centres to upgrade existing technology and processes and jewellery manufacturing.

It also seeks to establish gem identification and certification laboratories to ensure better understanding of gemstones and their properties, along with establishing gem exchange centres to facilitate linkages between buyers and sellers.

Despite its abundant reserves of precious and semi-precious gemstones and rich history of jewellery manufacturing, Pakistan has been unable to develop an internationally competitive gems and jewellery industry.

Capitalising on its vast natural resources, low labour costs, and skilled craftsmen and growing national and international demand, Pakistan has the potential to position itself as regional hub for precious stones cutting and jewellery manufacturing.

"Developing this potential will have a significant impact on Pakistan's economy in terms of increase in employment and entrepreneurship, income-generation, export, revenue and poverty alleviation" said a document submitted to the Planning Commission by Pakistan by the Gems and Jewellery Development Company (PGJDC).

The project will introduce modern know-how and practices and equipment, both for jewellery manufacturing and gemstone mining and processing/cutting, to finished products for local and export market.

Foreign experts would be engaged which include sector experts, master trainers and geologists, along with the transfer of technology.

Gemstone deposits are concentrated in NWFP, Northern Areas, Azad Kashmir and Balochistan. Most gemstone processors are clustered in Karachi and Peshawar with smaller clusters in Lahore, Quetta and Islamabad.

Consisting of mainly small and medium entities, growth of this sector will also have positive externalities for social indicators, such as heath and education, the Planning Commission was informed.

Current mining technology and processes are considered rudimentary and unscientific resulting in significant wastage at the extraction stage.

Indiscriminate blasting damages the gemstone crystals and mineral specimen, thus drastically reducing their value. In a majority of the mines, basic machinery and equipment, like compressors and drill sets, are not available.

"A large number of mines are currently inactive due to lack of equipment". Training in modern mining practices will reduce wastage and improve the quality of extracted gems, thereby, increasing the income in productivity and consequently in salaries.

Access to mining equipment will rehabilitate closed mines which will have an immediate impact on employment levels.

"Due to lack of adequate processing infrastructure and skills, approximately 75 per cent of Pakistan's exports are in un-worked stones, representing a significant loss in value-addition".

With the up-gradation of gemmological and lapidary training and processing infrastructure, a higher volume of exports will be in processes stones, leading to tremendous value-addition.

By enhancing the income levels of those directly involved in mining and trading, it will have a spin-off effect for the entire region, the Planning Commission was further told.

http://www.dawn.com/2007/03/20/ebr13.htm