Pakistan Economy - News & Updates - Archive

[Neo]

PESHAWAR (May 04 2006): NWFP Minister for Industries, Labour, Law and Parliamentary Affairs, Malik Zafar Azam said that as a result of International Investment Conference 2005, investment of Rs 20 billion had been made and employment opportunities for about 60,000 workers had been generated in the province.

He said this while presiding over a meeting of industries and other attached departments at his office, Civil Secretariat on Wednesday.

Secretary industries, director labour and officers of technical education and social security institute also attended the meeting. The minister said the MMA government was taking keen interest in the rapid industrial growth, hence, as a part of the government machinery it was incumbent upon the Industries Department to redouble its efforts to achieve goals.

He called upon the concerned quarters to have a regular inspection of industrial units so that along with industrial development, the interests of the working class could also be secured.

Referring to the Technical Education Sector, Malik Zafar Azam directed the concerned authorities to improve their performance so that provision of skilled manpower could be ensured at local level. The meeting also discussed the administrative and financial matters of the departments.

 

[Neo]

KARACHI (May 04 2006): Cement share prices recorded appreciable gains on Wednesday, ranging from Re 0.65 to Rs 5.75, on reports that India might impose a ban on cement export as prices in its domestic market have gone up by almost 40 percent.

According to a news report from New Delhi, the Indian government is considering to ban cement exports to curb prices in its domestic market. The cement prices there have gone up from around Rs 135 a bag in January to Rs 210 a bag now. The price rise in the western and northern parts of the country has been described as 'abnormal'. The industry is attributing the increase to higher input costs.

Ajay Dua, Secretary in the Department of Industrial Policy and Promotion, said that as per estimates, cement prices had increased by nearly 40 percent since November 2005, while input costs had increased by 15 percent.

"The cement companies have made an additional profit of Rs 1,000 crore (Rs 10 billion) between October-March 2005-06, compared with the first two quarters of last fiscal year. We have told them that it's a free economy, but the government may have to step in since cement is a crucial input for infrastructure," Dua said.

The share prices of cement are in the buying chart at the Karachi Stock Exchange for the last couple of years and higher demand and expansion plan has resulted in sudden upsurge in their prices locally. However, the prices received heavy erosion last month following the government's decision to allow subsidy of Rs 60 per 50 kg bag. The prices of notable companies, including D G Khan, Cherat, Pakistan, Lucky, Maple Leaf and Fauji Cement had plunged by 18 percent, 16 percent, 15 percent, 14 percent, 12 percent and 11 percent, respectively.

However, on the development in the neighbouring country, once again buying in cement spurted and equities rebounded sharply where Lucky Cement and D G Khan Cement advanced by 10 percent each, Cherat Cement 9 percent, Fauji Cement and Maple Leaf 8 percent each, and Pakistan Cement 7 percent.

A leading analyst said that if the Indian government imposed restriction on export of cement, the import of cement from China or any other Far Eastern country would not be feasible, and the share of local manufacturers would remain intact.

Anwar Ahmad Khan, research analyst at Capital One Equities, said that the government's decision to give subsidy to import cement, apparently worked well as the cement prices started coming down, and currently were moving around Rs 300 - Rs 330 per bag, against Rs 400/bag nearly a month ago.

"We believe that the cement prices may settle around Rs 300/bag because imported cement is likely to retail around Rs 255/bag - Rs 285/bag at the prevailing per ton CIF prices of US $65 - US $75. These prices are quoted by suppliers from China, Russia and Middle East via sea. Since local cement is better in terms of quality and freshness, it is likely to be priced Rs 20 - Rs 25 higher than the imported cement. Therefore, local prices are likely to range from Rs 280 - Rs 310 per bag."

Cement demand is increasing at an average rate of 16 percent per annum, whereas reconstruction of northern Pakistan and construction of dams are yet to add to the overall demand of the commodity.

"We are of the opinion that importing cement is not the solution for rising cement prices. It is primarily a demand-supply mechanism playing in the market. In our view, allowing cement imports at the time when new production capacities are about to come online may draw a bad impact on the economy."

 

[Neo]

RAWALPINDI (May 04 2006): Engineering Development Board (EDB) Chairman Wasim Haqqie has said that under the dynamic leadership of President Musharraf, the country was heading towards economic prosperity and progress.

Addressing the opening ceremony of "Open House Job Fair 2006" here on Wednesday, he pointed out that six years before, the economy of the country was in bad shape and by the President's vision and leadership, the GDP growth rate had been increasing now by every passing day. He said they lived in a global village and there were numerous challenges before them.

"We have to tackle these challenges with the help of latest technology, scientific advancement and efficiency," Haqqie said adding that Pakistan had got into growth mode then and to sustain that they needed good governing, institutional growth, strengthening private sector and financial transparency.

He described the education a must for economic progress and said they needed quality education to achieve a respectable place in the comity of nations.

It may be recalled that Open House Job Fair 2006 was held under the auspices of the College of Electrical and Mechanical Engineering (CEME) with the purpose to provide direct link between industry and academia. Students of the college demonstrated various projects in the fair. Industrialists and company managers visited the fair and interviewed several students for appointing them in their respective companies.

 

[Neo]

PTI, NEW DELHI

May 3: Iran yesterday said India had not been "ousted" from the proposed 7-billion dollar tri-nation pipeline, even as it set an August deadline for New Delhi to sign an agreement on the project.

"I want to clarify that contrary to reports, India has not been edged out of the Iran-Pakistan-India pipeline. We continue to engage in discussions leading to tri-nation ministerial meeting next month," Iran's Deputy Oil Minister Hadi Nejad- Hosseinian told reporters after meeting Petroleum Minister Murli Deora here.

He said against the capacity of 110 million standard cubic metres per day, Pakistan has sought between 30-60 mmscmd of gas and India wants 90 mmscmd. Besides, 30-35 mmscmd of gas would be transported through the proposed pipeline from gigantic South Pars gas field to eastern regions of Iran. "The demand figures mentioned ramp up over a period of five years. Initially, a single pipeline (meeting requirements of eastern Iran, Pakistan and India on pro-rata basis) would suffice and a parallel line can be laid as demand rises," he said.

Deora said India favoured implementation of a single pipeline first and upon its successful operation a second line could be laid. He also ruled out any pressure from US for pulling out of the project. "Not at all. I don't think the US is pressurising. I don't think America can pressurise us."

The Iranian Minister said India has to agree on the pipeline by August, failing which Tehran would proceed with bilateral exports to Pakistan.

"We have approval to expedite laying a pipeline to the eastern part of Iran... So if India delays joining the project, we would go ahead," Hosseinian said. The Iranian Minister, however, categorically ruled out building separate pipelines to supply gas to India and Pakistan. "There will be a single pipeline meeting demand of all and if need be a second pipeline would be laid, which too would meet all incremental demand in the three countries," he said. He said oil secretaries of the three countries would meet in Islamabad on May 22-23 to sort out pricing of the gas and culminate discussions into a tripartite ministerial meeting in Tehran in June.

 

[Neo]

KARACHI, May 3: State Bank Governor Dr Shamshad Akhtar has said that the banking industry in Pakistan has witnessed a brisk growth in assets in recent years which now stand at over $60 billion.

Delivering a speech at the Global Transaction Banking seminar here on Wednesday, Dr Akhtar said Pakistan offered a promising ground for financial experimentation and innovation. “Pakistan’s banking industry has seen a brisk growth in assets which today stand at over $60 billion. Bank’s profitability is at an all-time high and unprecedented, reaching close to Rs93 billion by 2005,” she said.

“Aside from higher efficiency, gains in the industry attributable to benefits arising from significant banking sector restructuring and reforms, and high profitability of banks has been achieved because of high interest margins,” said Dr Akhtar.

The SBP governor said that in the period ahead, the financial industry, however, had to be positioned for a more competitive environment and had to cater for more diverse and complex requirements of Pakistan’s consumers and infrastructure. Pakistan, like the rest of Asia, is growing fast and a rise in per capita income, emergence of the middle income group and relative wealth increases all together bring with them new demands for the retail banking industry.

“Beside real sector developments and requirements, the financial industry of Pakistan has to catch up fast with the global developments and achieve better financial diversification and strengthen its risk management systems,” said the SBP governor.

“In Pakistan’s context, it has to be recognized that while large banks will continue to thrive on volumes of business, which they have traditionally captured given their reach across the country, it is the foreign banks with their competitive edge in global transaction banking that can offer unique and new financial solutions,” she added.

Pakistan’s real time inter-bank settlement mechanism is at an advanced stage of installation and is expected to be lived by the 3rd quarter of 2006, Dr Akhtar said.

The coverage of online branches as a percentage of total branches (7,245 branches) has now reached 45 per cent. At this pace, the whole branches network of the banking system will be online in the very near future, which will substantially improve efficiency of the payment system.

Usage of cards at POS (Point of Sales) is expanding with the passage of time. This channel recorded remarkable growth of 62 per cent in number of transactions to 13 million transactions in FY05 from 8 million in the previous year. Value of transactions grew by 56pc to Rs42.8 billion in FY05 from Rs27.4 billion in FY04.

“The Global Transaction Banking concept, though newer to Pakistani banks, will help service the ever-growing need for Pakistan’s trade and finance and facilitate investors’ awareness about the growing Pakistani economy and markets. We see inter-exchanges like this would further strengthen the transaction banking business in Pakistan,” Dr Akhtar concluded.

 

[Neo]

Thursday, May 04, 2006

KARACHI: US company Boeing has placed electronics manufacturing orders worth $100 million with Precision Engineering Company and Pakistan Aeronautical Complex.

This was stated by Director Boeing Company Seattle, USA Miguel R Santos at a seminar on “Electronics and Electrical Contract Manufacturing”, held recently.

According to EPB, the objective of the seminar was to sensitize the related Pakistani industry and obtain feedback on the subject.

He said that in next two to three years, Boeing’s outsourcing could surpass $1 billion mark for electronics and electrical manufacturing companies.

“Boeing is not only placing the orders but also providing the technical know-how by deputing their engineers to train Pakistani counterparts”, Santos added.

He pointed out that US aircraft manufacturing company has even supplied the machinery needed to prepare these parts used in their 777 aircraft model series.

The United States of America alone was out-sourcing annually over $ 600 billion worth of products to the developing countries and growing rapidly, he noted.

This unique opportunity provides increased employment and growth in Pakistan from the production and enhanced exports when such goods are exported back to the buyer.

Vice President, Boeing Glen A. Green and a Pakistani-American entrepreneur Pervaiz Lodhi also spoke. “The Next Industrial Revolution” which is outsourcing and contract manufacturing of electronics and electrical parts by the developed countries to the developing nations like Pakistan.

They said the world market is very large and growing fast as cost of production increases in developed countries and technical capabilities improve in the developing ones.

After the Seminar the chief executive and chairman of Philips-Pakistan, Shahid Zaki, director, Boeing Company Miguel Santos and vice president Boeing Glen A. Green, had a meeting with Chairman Export Promotion Bureau Tariq Ikram to discuss this opportunity and outline the way forward.

The EPB chairman constituted an action team comprising persons which are experts in their related fields to chalk out plans to capture opportunities for securing outsourcing assignments for Pakistan.

Pervaiz Lodhi, President, LED Tronics based in Torrance, California. Miguel R. Santos, Director, Boeing Company based in Seattle, Washington, Sultan ul Arfeen, Arfeen Group of Companies, Shahid Zaki, Chairman & ECO, Philips-Pakistan, Zubyr Soomro, CEO, Citygroup-Pakistan Operations, Mohsin Ali, Secretary General American Business Council of Pakistan, Riaz Khan Executive Director Marketing, Export Promotion Bureau are in the committee. It was decided to set up an electrical and electronic contract manufacturing city for this purpose.

In the meantime, Export Promotion Bureau will contract International Trade Center to get their technical expertise in order to launch the project.

 

[Neo]

Islamabad, May 4, 2006

Barely a week after President Pervez Musharraf laid the foundation stone for Diamer Basha dam in Pakistan controlled Northern areas, the government is planning to change the site after a report that shifting it 30 kms away would save Chilas town.
A German company has proposed to the government to change the site of the dam, saying it will not only save the city but also increase the dam's storage capacity and reduce the cost of the project.

A representative of the German company, Leamher, which prepared the feasibility report in collaboration with a Pakistani company, NDC, suggested that shifting the site would reduce the number of affected people and save the town from submerging, Pakistan's Online news agency reported.

The new location of the dam, proposed in the report, is surrounded by mountains from three sides and a wall will have to be constructed only on one side, thus reducing the cost of the project.

President Musharraf laid the foundation stone for the controversial dam on April 26. Costing around $6.4 billion, Diamer Basha dam would be built on the Indus river near Chilas, about 165 km from Gilgit, the capital of Northern areas.

The Indian government as well as the local people protested over the construction of the dam which would displace about 23,000 people and inundate large tracts.

As per official statistics the dam would submerge 30 villages and 25,000 acres of land, including about 100 km of Korakuram Highway connecting Pakistan with China through the Khyberpass.

 

[Neo]

ISLAMABAD, May 3: The centre would transfer about Rs321 billion to the provinces during the next fiscal year (2006-07) as their share of the federal divisible pool, about 34 per cent higher than current year’s budgeted estimate of Rs240 billion, it is learnt.

The total size of the net proceeds of the divisible pool has been estimated at about Rs700 bn for the next year, after estimated deductions of collection charges and direct fiscal transfers to the district governments under 2.5 per cent general sales tax in lieu of octroi and zila tax, sources in the finance ministry told Dawn on Wednesday.

The sources said the federal government has conveyed to the provinces the size of their share of net proceeds of the divisible pool for the next year at Rs321 bn and has asked them to prepare their budgets on the basis of these estimates. This does not include project aid to the provinces.

The share of Rs321 bn also includes Rs27 bn subventions to be provided to the provinces. Balochistan would be the highest recipient of the subvention pool with a grant of about Rs9 bn, these sources said.

The sources declined to divulge the province-wise details but said the provinces would get a sizable increase in their shares than last year under the revised national finance commission announced by the president a few months ago.

Balochistan’s share would go up to about Rs32 bn including subventions and share of the general sales tax directly going to the districts, compared with its current year share of about Rs18 bn.

They said the figures have been worked out by the federal and provincial governments during a series of recent meetings of the provincial finance secretaries with federal secretary general and secretary finance. The last meeting of this series took place on Wednesday. The provincial governors and chief ministers also held meetings on the subject with the president and the prime minister in recent weeks.

For the current fiscal year (2005-06), the provincial share out of net proceeds of the FDP was estimated at Rs240 bn, which may slightly go up at the end of the year on the basis actual revenue collection. Net provincial transfers including grants, project aid etc were, however, estimated at Rs315.5 bn in the current fiscal year.

The budget 2004-05 had estimated Rs200.9 bn share to the provinces out of federal divisible pool which was later revised to Rs204.8 bn.

 

[Owais]

Lead managers for OGDCL GDRs appointed


KARACHI (updated on: May 04, 2006, 18:41 PST): The government appointed Citigroup, Goldman Sachs and BMA Capital Management on Thursday to manage a sale of up to 15 percent of Oil and Gas Development Co. Ltd. (OGDCL) through an issue of global depositary receipts and a domestic offering.

The PC plans in June to sell between 10 and 15 percent, representing between 430 million and 645 million shares in OGDCL, the country's largest listed firm, with a market capitalisation of around $12 billion.

"Citigroup and Goldman Sachs will act as joint global co-ordinators and joint bookrunners and BMA Capital Management will act as domestic joint lead manager," the Privatisation Commission said in a statement.

The government holds a 95 percent stake in OGDCL, while the remaining 5 percent is listed on the Karachi Stock Exchange.

OGDCL shares closed 70 paisas down at 164.25 on Thursday, in a broader market which ended down 0.32 percent.

 

[Owais]

Global banking transaction concept to unlock trapped capital: Shamshad addresses Deutsche Bank seminar
RECORDER REPORT

KARACHI (May 04 2006): The Global Transaction Banking Concept will unlock working capital trapped in inefficient order-to-cash and purchase-to-pay cycles and enable businesses to achieve greater integration of the supply chain.

This was stated by State Bank of Pakistan (SBP) Governor Dr Shamshad Akhtar while addressing the Deutsche Bank Annual Global Transaction Banking Seminar held at a hotel here on Wednesday.

The SBP Governor said: "Today, Pakistan offers a promising ground for financial experimentation and innovation. Pakistan's banking industry has seen brisk growth in banking assets which today stands at over $60 billion. The banks' profitability is at an all time high and unprecedented, reaching close to Rs 93 billion by 2005. Aside from higher efficiency gains in the industry attributable to benefits arising from significant banking sector restructuring and reforms, high profitability of banks has been achieved because of high interest margins."

She said that in the period ahead, however, the financial industry has to be positioned for a more competitive environment and has to cater for more diverse and complex requirements of Pakistan's consumers and infrastructure. Pakistan, like the rest of Asia, is growing fast and the rise in per capita income, emergence of the middle income group and relative wealth increases all together bring with them new demands for the retail banking industry.

Beside these real sector developments and requirements, she said, financial industry of Pakistan has to catch up fast with the global developments and achieve better financial diversification and strengthen its risk management systems.

She said that in Pakistan's context it has to be recognised that while large banks will continue to thrive on volumes of business, which they have traditionally captured, given their reach across the country. It is the foreign banks, with their competitive edge in global transaction banking, that can offer unique and new financial solutions and lead the way for the rest of the banking industry to provide to customers an integrated solution that caters for emerging consumer and industry requirements, she added.

About global changes in financial industry, the SBP Governor said that compulsions to go this route are mounting. World-wide financial landscape has changed driven by:

-- Changing macroeconomic factors such as economic growth and demography and institutional development as capital markets have matured and population demands for retirement funding and insurance has grown.

-- The phenomenal growth in financial markets and cross-border flows.

-- The ability of the financial industry to take advantage of the opportunities provided by the lending and mortgage markets, and development of credit risk transfer instruments which involves structuring and trading of credit derivatives and asset backed securities that allows risk inherent in a loan to be repackaged into two or three tradable components to offer optimal allocation of risks it is particularly relevant in the context of developing financial markets where the risk profiles of banks are still dominated by credit risk predominantly of the issuance of loans even though there are moves towards corporate bonds or transactions in over-the-counter markets, which involve the risk of a counterparty defaulting.

-- Adoption and adaptation of technological advancements in communication and information technology that has seen the explosion of financial innovation with service providers now offering multiple and diverse solutions that enhance efficiency and reach of products across boundaries and across national jurisdictions.

-- Need to globally integrate financial systems and encourage end-to-end straight through processing capabilities and development of payment, clearing and settlement systems to overcome time zone and currency constraints.

-- With globalisation of markets & businesses, there is greater need for global transaction solutions for effective cash management, trade finance, trust & securities services, and Continuous Linked Settlement (CLS).

Finally, there are now mounting regulatory pressures to seeking greater IT solutions to tracking money laundering as well as adopting the new risk management framework including the Basle II.

About the role of the central bank, SBP Governor said that recognising that Pakistan banking industry after its restructuring is now positioned to move to the next level of development, SBP has been focusing on promoting gradual migration from a predominantly cash and paper based system to electronic payments.

Regarding Clearing and Settlement Systems in Pakistan, she told the seminar that as a custodian of the Payment System of the country, SBP has nurtured and supervised the operation of the Clearing House for the member banks operating within its jurisdiction. Automated clearing services are now provided by National Institutional Facilitation Technologies (NIFT) under the supervision of SBP in nine major cities of Pakistan. The Local US dollar clearing system provides a low-cost and efficient clearing system for US dollar denominated local instruments. The new system has reduced the clearing time of US dollar cheques from three weeks to only four days and has reduced the cost to the account holders.

She said that Pakistan's Real time Interbank Settlement Mechanism (PRISM) is at an advanced stage of installation and is expected to be live by the Third quarter of 2006. It will automate the current interbank settlement systems for large value payments at SBP and will minimise the risks, like credit, liquidity and settlement risk, inherent in the end of the day settlement system. Its implementation will make the payments systems much more efficient and resilient, offering transactional features, which are hard to achieve under the current settlement systems.

She said PRISM will not only automate the InterBank funds transfer but will also facilitate the settlement of government securities transactions in Primary and Secondary Markets. After the implementation of PRISM, settlement of securities between the participants will be on Delivery vs Payment basis, thus reducing the risk in securities trading by minimising the settlement lag. SBP will also be able to settle the open market operation transaction through PRISM.

The SBP Governor said that to facilitate nation-wide RTGS and electronic fund transfer, Pakistan has now drafted 'Payments System and Electronic Funds Transfers Act 2005' that ensures conformance with industry demands and Bank for International Settlements Core Principals for Systemically Important Payment Systems. The proposed Act addresses issues like operation of payment systems, including the clearing and settlement obligations of the parties involved, supervisory role of SBP, documentation requirements by the participants, liabilities of parties in payment systems and legal proceedings in case of any conflict, finality and irrevocability of settled transactions etc. The Act also gives necessary legal coverage to PRISM. SBP is also framing the requisite rules and regulations for the smooth operations and participation in PRISM.

About the progress in of Electronic Payment System, she said there has been substantial improvement in payment system infrastructure and consumers' payment patterns over last few years, particularly in urban areas, which is evident from the exponential growth in Automated Teller Machines (ATM) Cards, Debit & Credit Cards, ATM outlets, Points of Sales (POS) accepting payments through cards and number of online branches of commercial banks providing SWIFT interbank account to account funds transfer facilities and the interconnectivity of the two ATM switches viz. the MNet and 1-Link. With strategic focus of SBP to develop a well functioning and efficient payment system in the country coupled with rapid technological changes, the pace of growth in payment system infrastructure will further accelerate in the medium term and its outreach will extend to even smaller towns.

She said that the online branch network is also expanding at a fast pace and reached up to 3,265 at the end of December 2005 from 2,475 at the end of the preceding year, indicating an impressive increase of 32 percent or 790 branches. The addition of 315 branches into the online network in the fourth quarter is signalling further acceleration in the pace of growth of the online branches. The coverage of online branches as a percentage of total branches (7,245 branches) has now reached 45 percent. At this pace, the whole branches network of the banking system will be online in the very near future, which will substantially improve efficiency of the payment system.

Dr Shamshad said that usage of cards at POS is expanding with the passage of time. This channel recorded remarkable growth of 62 percent in the number of transactions to 13 million transactions in FY05 from 8 million in the previous year. Value of transactions grew by 56 percent to Rs 42.8 billion in FY05 from Rs27.4 billion in FY04.5.3: Number of Cardholders

She said the Global Transaction Banking (GTB) concept, though new to Pakistani banks, will help service the ever-growing need for Pakistan's trade & finance and facilitate investors' awareness to the growing Pakistan's economy and markets. "We see inter-exchanges like this would further strengthen the transaction banking business in Pakistan. SBP is conscious of the need to further strengthen the payments and settlement systems in Pakistan to reduce inherent settlement risk and bringing efficiency to the financial system. We look forward to global banks, like DB, in performing their due role to facilitate in providing awareness and expertise in further strengthen the financial system."

 

[Owais]

CONTINUE:
The Governor said that the GTB will help in providing fully integrated risk mitigation, settlement, financing and information solutions, which help unlock working capital trapped in inefficient order-to-cash and purchase-to-pay cycles. It will also assist businesses to achieve greater integration of the supply chain, which facilitates greater efficiencies and streamlined work flows, whilst reducing operating costs and accelerating payment cycles. More efficient trade processes also mitigate risk exposure and help the businesses optimise returns from trade assets.

Werner Steinmueller, Managing Director, Head of Global Transaction Banking, Stefan Schneider, Director, Chief International Economist and Head of Macro-Trends, Paul Camp, Managing Director, Global Head of Cash Management Financial Institutions, Shahzad Dada, Managing Director, CCO and Head of Global Banking Pakistan, Nadim Nizam, Managing Director, Global Transaction Banking Head - MENA Region, Ahmed Jabran, Vice President, Cash Management FI MENA Region and Daniel Smaller, Managing Director, Asset Management Head - MENA also spoke on this occasion.

 

[Owais]

OGDCL's GDRs to be listed at London Stock Exchange

ISLAMABAD (May 04 2006): The government on Wednesday decided to list Oil and Gas Development Company Limited's (OGDCL) global depository receipts' (GDRs) at London Stock Exchange for floating 10 to 15 percent shares with 15 percent green shoe option.

The green shoe option will be used only in case of over subscription.

The authorities discussed the issue at a meeting held here with Privatisation Minister Zahid Hamid in the chair. The senior officials of Privatisation Commission, OGDCL, Law Division and lead manager's representatives attended the meeting.

Sources said OGDCL officials gave a comprehensive presentation and informed the participants that they were ready to facilitate GDRs' offering in the local as well as international market.

The meeting was apprised that a two-pronged strategy would be followed to attract international investors for the offering. It will include organising of road shows in UK, Singapore, New York and other countries. The first one will be held in London.

The meeting also endorsed a proposal to list GDRs at London Stock Exchange. The road shows will be held before summer break in the UK, US and the other countries listed for the presentations.

The ministry of petroleum and Privatisation Commission will organise the country road shows. The organisers will give detailed presentation at the road shows on Pakistan's overall economic growth, measures taken by the government to liberalise the economy and the major programmes initiated during the last few years for achieving the targets of economic growth.

The country road shows will be followed by the company road shows at the same destinations. The OGDCL will give presentations to the investors at these road shows about its role in developing Pakistan's oil and gas sector, besides its future exploration and production plan.

The sources said that the meeting also endorsed offering of 2 percent shares in the local market. The offering at home and international market will be made simultaneously.

In order to attract maximum investors, the IPO will be discounted. However, the rate of shares will be slightly less than the actual value at that point in time when the offering will be made.

It may be noted that in 2005, the government had offered the OGDCL shares through initial public offering (IPO) at 50 percent subsidised rates.

The sources said the meeting also discussed the time-frame for the offering and discussed various options. However, the final time-frame will be set after taking all the aspects of the transaction into account.

The government wants to complete the transaction before the closing of the fiscal year basically to plug the current account deficit from the money raised through the offering. However, the lead manager, a consortium comprising Citigroup, Goldman Sachs and BMA Capital, has suggested some delay to take full advantage. The lead manager views that June was not a proper time for such a big transaction as at that point in time all the countries, which were being targeted, go on holidays.

 

[Owais]

Local governments asked to generate own resources
RECORDER REPORT ISLAMABAD (May 04 2006): Prime Minister Shaukat Aziz on Wednesday said Local Governments (LBs) should generate their own resources rather than relying on transfers from federal and provincial governments.

"They (local governments) need to raise as much resources as possible through various avenues available to them rather than only relying on transfers from federal and provincial governments," he said this while speaking at an International Conference on Fiscal Decentralisation organised by the National Reconstruction Bureau (NRB) in collaboration with the World Bank.

He said Pakistan was facing challenges in devolution and fiscal decentralisation of resources, better fiscal management and expanding tax base at lower levels without hurting the economy, especially the user charges to reduce exclusive reliance on higher level of transfer.

Aziz underlined that the local governments depend primarily upon fiscal transfers from provincial governments for meeting their expenditure requirements and local revenue mobilisation is an important activity for the sustainability of the local governments.

"Changing international economic conditions, structural adjustment programmes designed to improve public sector performance and growing services demands are forcing the central governments to rely more on local governments, untapped resources available at that level" he added.

In general terms fiscal decentralisation means empowerment of government at various levels to levy taxes, set the rate of taxes and to generate a substantial portion of their revenues themselves. In Pakistan, it refers to the complete financial system including distribution of resources, transfer of funds, taxation, budgeting, accounting and auditing.

"We have covered a lot of ground in fiscal decentralisation, a lot more is needed to be done. Our economic philosophy based on deregulation, liberalisation and privatisation accompanied by deep and wide-ranging reforms has put Pakistan on a high growth trajectory. Substantial improvement in our revenue stream is enabling us to accelerate our development pace and increase fiscal transfers to sub-national and local levels," he said.

Pointing out challenges in devolution and fiscal decentralisation, the Prime Minister said that resolving overlaps in expenditure responsibilities between various levels of government and de-facto assumption of government because of weak capacity at the lower level was a challenge to be tackled.

Besides, he said addressing the complexities in inter-governmental relations because of uniqueness of provinces was still a challenge. Because, one of them is larger in terms of population, other is huge in area, the third is relatively backward, and fourth has high economic activities and relatively higher per capita income.

Developing the right mix of indicators for incorporating in distributive formula and associated weights, both vertical and horizontal transfers, while taking into account the fiscal capacity and infrastructure endowment in each district was another challenge which the government is trying to address, Prime Minister concluded.

 

[Owais]

CBR to obtain real estate buyers' CNIC numbers
RECORDER REPORT ISLAMABAD (May 04 2006): The Central Board of Revenue (CBR) has decided to obtain the Computerised National Identity Card Numbers (CNICs) of real estate purchasers for compilation of a national database.

The CBR on Wednesday issued instructions to all Regional Commissioners of Income Tax (RCITs) to ensure collecting CNICs of the persons engaged in buying and selling of property during the tax year.

According to the directive, information regarding investment, inclusive of NIC/CNIC of the purchasers, is to be obtained for a consolidated database at CBR level.

Official sources told Business Recorder that CNICs of the persons engaged in real estate investment are a prerequisite for maintaining authentic database. The income tax database, called 'National Tax Number (NTN) Master Index', only recognises CNICs as identifier numbers allocated to the taxpayers.

The CBR will use CNICs for allocation of NTN to taxpayers on the basis of information available with the 'Master Index'.

They said that the CBR directive to obtain CNICs of property purchasers has many complications. It is an uphill task for an income tax officer to obtain the CNICs from provincial registrars, who maintain manual record. The computerisation of property transactions is necessary for obtaining data on property. The provincial governments have issued instructions to registrars of land revenue departments to cooperate with the income tax department. But manual maintenance of record in Urdu language creates serious problems in obtaining the requisite record, officials added.

 

[Neo]

Thursday May 04, 2006

HYDERABAD: Economic cooperation between India and Pakistan has "huge potential", said a Pakistani official here Wednesday.
The advisor to Pakistan Prime Minister Shaukat Aziz on finance, revenue, and economic affairs, Salman Shah, said the two countries should have an agreed vision and lay a roadmap to intensify cooperation.

Shah, who was in Hyderabad to attend an informal meeting of South Asian finance ministers on the sidelines of the Asian Development Bank’s (ADB) annual meeting, also expressed satisfaction over the economic growth of Pakistan, which recorded a growth rate of 8.4 percent last year.

He said the focus was now on stabilizing macro economic parameters and ensuring that it is translated into benefits for the common people. "The goal is to remove poverty," Shah said.

"The meeting (of the finance ministers of South Asian countries) will discuss what should be the future agenda and the projects on which countries can agree," he said.