Pakistan Economy - News & Updates - Archive

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South Korea likely to import 5500 skilled manpower from Pakistan

ISLAMABAD: May 26, 2007: South Korea is expected to import 5500 skilled Pakistani labour in this year, said Minster for Labour, Manpower and Overseas Pakistani, Ghulam Sarwar Khan.

He said this after his meeting with South Korean delegation headed by President of Human Resource Development Korea, Kim Yong Dal.

During the meeting, the Minister briefed the delegation about the steps taken by his Ministry regarding the training of manpower in the country.

The delegation lauded the performance of Pakistani labour and said that it (performance) is up to Korean standards and authorities of Korean Labour Ministry face quite less problems of Pakistani labour as compare to labour from other countries like India and Sri Lanka.

The Pakistani labour will be treated equally to Korean Labour in term of employment opportunity. Owing to these advantages, Pakistan is now considered as a source country for Labour to Korea.

The President of Human Resource Development Korea promised that inspectors of Ministry of Labour are bound to protect the legal rights of Pakistani labour that will come through Service Commitment Agreement.

The Minister said that through industrial Training System only private Sector used to send labour to Korea and up till 2006 more than 20000 workers went to Korea under this system.

From now onward, the government of Pakistani will send labour abroad through Overseas Employment Corporation.

Both sides also hoped that this co-operation will open new channels of development for human resource and infrastructural facilities.

Around 7.5 million overseas Pakistanis live in various countries including in United States, Canada, Europe, Middle East and Far East.

The remittances from overseas Pakistani will surge to over US $5.2 billion in the current fiscal year against US $ 4.62 billion during last fiscal year.

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Poultry policy aims to achieve 20pc growth

ISLAMABAD: Prime Minister Shaukat Aziz on Friday approved new poultry development policy aimed at increasing the annual growth of poultry sector from the present 12 to 15-20 per cent using modern technologies in production and processing.

The Prime Minister was chairing a meeting here to review progress in the poultry sector and decide steps required for its further development.

He said the government was encouraging development of livestock and poultry sector due to their significant potential in bringing improvement in the living standards of the people.

He said the country’s enormous potential of livestock remained less utilised and the government along with provinces was taking a number of steps in this regard including re-orientation of public sector institutions, improvement of extension services, better R&D facilities, provision of more resources for the sector and infrastructure improvement.

The Prime Minister said new poultry development policy would facilitate private sector for sustainable poultry products to provide meat, eggs and value-added products to the domestic and international markets at competitive prices.

He said the government would encourage environmentally controlled housing for broilers and layers, and would create integrated production and processing system including value addition in the poultry sector.

Approving the policy, the Prime Minister emphasised the need for effective implementation of the policy and seamless coordination between the federal, provincial and local governments.

Earlier, Secretary Ministry of Food, Agriculture and Livestock (MINFAL) Muhammad Ismail Qureshi in his presentation said the poultry had 1.12 per cent share in national GDP and 1.5 million people were employed in this sector.

He said the poultry provided major source of quality proteins, as its contribution in meat production was 20 per cent.

He said the current 10-12 per cent annual growth of poultry sector was a result of steps taken by the government including reduction in tariff on poultry feed ingredients and medication, duty free import of machinery and equipment not manufactured locally and better credit availability to the poultry farmers.

The meeting was attended among others by Minister for Food, Agriculture and Livestock Sikandar Hayat Khan Bosan, Minister of State for Food, Agriculture and Livestock Muhammad Ali Malkani and senior officials.

http://www.thenews.com.pk/daily_detail.asp?id=57636

 

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NIB buys majority stakes in PICIC

KARACHI, May 25: Singapore-based Temasek Holdings Pte has acquired 56 per cent stakes in Pakistan Industrial Credit and Investment Corporation (PICIC). The NIB Bank, a subsidiary of the Temasek, announced on Friday that it agreed to buy 56 per cent stakes of PICIC for about $300 million.

The PICIC had announced on May 14 through a notification that the NIB Bank would pay Rs78 per share for the stake. The NIB Bank endorsed the share price announcement.

However, the NIB will issue 555 right shares for every 100 shares. This was also announced on Friday.

The announcement said the NIB signed agreements with different shareholders of PICIC to buy 56 per cent stakes for a total amount of $300 million.

The expected announcement was taken as a positive sign for the banking sector and Pakistani bankers expected arrival of more foreign banks in the near future.

The Standard Chartered Bank of Pakistan has already acquired Union Bank at a price of $487 million paving the way for ABN Amro to make the same move.

The ABN Amro is in the process of acquiring Prime Bank. The Standard Chartered Bank became the largest foreign bank in Pakistan.

The acquiring of majority stakes in the PICIC would create more interest for major international banks looking for an opportunity to invest surplus wealth created in Middle East after the Iraq war which flared up oil prices.

Most of the wealth created in the Middle East is being managed by large Western banks and these banks are focusing on developing countries, like Pakistan to earn more with slightly higher inherited risks.

Pakistani bankers believe that attraction in the banking sector was the outcome of prevailing economic growth which on average remained seven per cent for the last three years.

http://www.dawn.com/2007/05/26/ebr1.htm

 

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Saturday, May 26, 2007

Pak seeks EC help in wind power projects

ISLAMABAD: Pakistan has sought the European Commission’s (EC) collaboration in wind-power generation projects in Pakistan at a Pakistan-EC Joint Commission meeting Thursday, a government official told Daily Times.

Federal Secretary Economic Affairs Division, Akram Malik, placed the request before the delegation. Wind-power generation projects include manufacturing wind turbines, sub-stations for wind farms and the transfer of available technology.

The EC delegation was informed that industrial arrangements are available in the Pakistan, leading to a feasible joint venture for manufacturing of the said equipments. It is believed that transfer of technology from European Union (EU) countries, which have state-of-the-art manufacturing technology, to the local industry would be carried out.

Initiating the equipments manufacturing activities would also give EU countries an opportunity to develop their business in the newly emerged hub of wind energy, the same official stated.

The official added that Pakistan also sought the European Union’s help in the development of professional expertise, skill and trained manpower in wind energy. Currently, there are very few professionals in Pakistan available in the field, leading Pakistan to ask the EC delegation to award opportunities to Pakistani professionals to get higher education, training and capacity building in wind energy sector in their countries.

Initiating the manufacturing of renewable energy equipments in the local industry can facilitate the development of wind technology. Moreover, the sustainability of the projects can be ensured if professionals in the EU collaborate with Pakistan.

Explaining the wind energy potential of the Pakistan, the EC delegation was informed that according to present development programmes, by 2030 wind farms would be installed through the private sector to generate 9,700 megawatts of power. In this regard, the Government of Pakistan has planned to set up wind energy projects through the private sector to generate 700 megawatts by 2010, and 1,700 megawatts by 2015.

http://www.dailytimes.com.pk/default.asp?page=2007\05\26\story_26-5-2007_pg5_8

 

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Saturday, May 26, 2007

Lack of sustainability: Services exports dipped heavily in March

By Tanveer Ahmed

KARACHI: The country’s services exports remained volatile and lacked sustainability during the current financial year.

The exports, which posted a substantial growth in February 2007, heavily dipped in March by falling 13 percent because of a declining trend in transportation and government services export.

According to latest statistics on the category-wise exports of services, almost all categories showed a sharp decline in March as against the preceding month of February.

The exports of services stood at $224 million in March, depicting a 13 percent slump as against $258 million worth of services exported in February 2007.

Figures indicate that transportation services dipped by 7.20 percent in the month under review to $81 million as against $88 million in the preceding month. The travel services exports were down by 16.39 percent in the month under review. The exports of communication services also dipped by 60 percent.

Insurance services exports were down by 73.16 percent, financial services exports dipped by 44.19 percent, computer and information services declined by 20.68 percent, government services were down by 19 percent and other business services decreased by 21.70 percent.

The only exception was personal, cultural and recreational services exports, which rose by about 72 percent.

The dismal performance of the export in March also affected the overall exports performance of the services sector in the first nine months (July-March) of the current financial year, which resulted in a marginal increase in exports during this period as against the corresponding period of the previous year.

The imports of services also fell during March, however, not as significantly as exports during the month. Imports during this period decreased marginally by 1.19 percent as against the preceding month of February.

If the imports of services had not decreased, the deficit in services trade would have been much larger due to a major fall in exports. The trade deficit in services in the first nine months totalled at $3.38 billion as against $3.32 billion in the corresponding period of the previous year.

“The exports of services performance was volatile as there was growth during some months, while we witnessed a major fall in the rest,” an analyst noted.

The dismal performance of the services exports is also a source of concern keeping in view the burgeoning trade deficit in goods, which is growing rapidly and crossed the $11 billion mark in the first ten months of the current financial year.

The widening trade deficit in goods and services is also having an adverse impact on the current account deficit, which soared to an all time high of $6 billion in the first nine months of the current financial year.

Analysts said that as the services exports mainly depend on the government services including defence, any fall in this category badly hits the overall exports of this sector, in which construction, IT, banking, insurance etc also make a substantial part. “The export proceeds during the current financial year is not reflective of the potential that the country has in this sector due to a host of issues, analysts believed. The share of country in the world services sector has remained around 0.23 percent over the years.

The country’s services exports are confronted with a number of problems including lack of quality, non-acceptance of professional credentials, visa problems, and most importantly, the image problem of the country.

The export of services fell substantially by 17 percent in March of current financial year as compared to same month of previous year.

It also posted negative growth of 13 percent over the preceding month of February, the latest statistics released by Federal Bureau of Statistics showed on Thursday.

However, marginal growth in export and import in services in first nine months of current financial year kept the trade in balance with the deficit widening just 1.86 percent.

The export of services stood at $ 2.78 billion in July-March 2006-07, as compared to $ 2.72 billion in the same period of previous year whereas the import of services were $ 6.17 billion over $ 6.05 billion worth of services imported in the period under review.

The trade deficit in March curtailed by 12.63 percent by standing at $ 432 million as against $ 495 million in same month of last financial year.

The export during the month totaled at $ 224 million, depicting a negative growth of 17 percent as compared to $ 271 million in March of 2005-06.

The import during the month under review stood at $ 657 million, reflecting a decrease of 14 percent as against $ 766 million worth of import in the corresponding period of previous year.

Also worrisome is the falling export of services in March compared to preceding month of February when export dipped by 13 percent. Export proceeds were $ 224 million as against $ 258 million in February last.

The import during March also fell marginally by 1.19 percent as against $ 665 million in preceding month of February 2007.

http://www.dailytimes.com.pk/default.asp?page=2007\05\26\story_26-5-2007_pg5_9

 

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Saturday, May 26, 2007

‘ADP increasing from Rs 100bn to Rs 125bn’

* More than 50 percent of ADP to be allocated to development programmes in southern Punjab
* Salaries of govt employees, pensioners to be increased by 15 percent to 20 percent
* Elahi asked to award road construction contracts to FWO or private companies

By Qamar Jabbar

LAHORE: Shuja Khanzada, Chief Minister’s Inspection Team (CMIT) minister, said on Friday that the Punjab government had decided to increase the Annual Development Programme (ADP) from Rs 100 billion to Rs 125 billion next fiscal year.

He told Daily Times that more than half the ADP would be allocated to current development programmes in southern Punjab and that allocations to education, health, provision of clean drinking water and agriculture would also be increased.

He said the upcoming Punjab budget would be tax-free and people friendly because tax receipts and other revenue collection went well compared to the previous year. Salaries of government employees and pensioners would also be increased by 15 to 20 percent, he added.

Khanzada said Punjab lead other provinces in foreign investment because of the effective economic policies of Prime Minister Shaukat Aziz and Chief Minister Pervaiz Elahi. “Because of this the government has enough funds to start large projects in Punjab,” he added.

He said former chief minister Shahbaz Sharif had introduced the ADP of Rs 10 billion by getting foreign loans amounting Rs 7 billion, but Elahi’s government was spending money on projects from its own resources. He said Shaukat Aziz had promised to provide subsidies in wheat and other eatables to Punjab, which would help the government control scarcity.

Khanzada said CMIT had told the chief minister to award contracts of road construction and rehabilitation to either the Frontier Works Organisation (FWO) or private construction companies. He said the Communications and Works (C&W) Department had several development projects on its plate, but because of a lack of heavy machinery and manpower most projects could not be started or completed in time.

He said CMIT had also recommended the government award contracts of constructing government housing colonies to Malaysian and Chinese contractors. He said that during the next fiscal year foreign companies would be asked to start constructing housing colonies in Punjab.

Khanzada said the government was considering not giving development funds for constructing roads, sewerage systems and water pipelines to districts governments.

“CMIT has seen that most district and union council nazims award contracts on the basis of favouritism, which has resulted in contractors using sub-standard material and delaying projects to increase production costs,” he added.

He said the FWO would also be involved in development projects at the district and union council level.

http://www.dailytimes.com.pk/default.asp?page=2007\05\26\story_26-5-2007_pg7_26

 

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Pakistan Central Bank Expects Faster Economic Growth (Update4)

By Farhan Sharif

May 26 (Bloomberg) -- Pakistan's economy may expand as much as 7.2 percent this fiscal year because of a record wheat harvest and higher cement and sugar production, the central bank said.

The $129 billion South Asian economy could surpass the government's 7 percent growth target in the year to June 30, following a 6.6 percent gain in the previous 12-month period, Shamshad Akhtar, governor of the State Bank of Pakistan said at a news conference in Karachi today, restating her previous forecast.

``The indication that growth could exceed 7 percent is quite positive,'' said Nasim Beg, who oversees the equivalent of $320 million in stocks and bonds as chief executive of Arif Habib Investment Management Ltd., in Karachi. ``The real challenge for the tax collectors is balancing tax relief and higher tax collection in the upcoming budget.''

The government needs to increase tax collection and seek to narrow the current account deficit, which is likely to widen to 4.8 percent of gross domestic product this year, Akhtar said. Pakistan's economy is expanding even as the nation experiences its greatest unrest since President Pervez Musharraf seized power in 1999, as protests against him mount.

``The long-run health of the economy requires a lower sustainable current account deficit and an increase in tax receipts,'' Akhtar said.

Military Coup

Musharraf, who seized power in a military coup and remains army chief of staff, is facing protests that erupted after he removed Supreme Court Chief Justice Iftikhar Muhammad Chaudhry from his post on March 9 for alleged misuse of authority. Demonstrations have escalated into protests over the president seeking a second five-year term in elections that are scheduled to be held by January 2008.

The National Economic Council, headed by Prime Minister Shaukat Aziz, will announce on May 31 the government's estimate for growth this fiscal year and its forecast for the next 12 months. The figures will be released 10 days prior to the announcement in parliament of the 2008 national budget on June 9.

Prime Minister Shaukat Aziz is targeting annual economic growth of 7 percent to 7.5 percent in the next five years and the expansion will be driven by agriculture, manufacturing, services and infrastructure spending, the government told an April 26 meeting of donor nations.

Pakistan's tax collection rose 18 percent in the 10 months ended April 30 to 646.9 billion rupees ($10.64 billion), the Central Board of Revenue, the federal tax authority said on April 30.

Farm Growth

The farm sector could grow as much as 5 percent this year, exceeding the target of 4.5 percent because of a record wheat harvest, the report said. Pakistan is expected to produce 23 million tons of wheat this year. Agriculture, which accounts for one-fourth of the economy expanded 2.5 percent last year.

South Asia's second-largest economy may expand 7.2 percent in the fiscal year starting July, quickening from 7 percent this year and 6.6 percent in the previous 12 months, Standard Chartered Plc said in a May 22 report. The $129 billion economy has grown at an average pace of 7.5 percent in the past four years, the report said.

Consumer prices are likely to rise faster than forecast, the central bank report said. Inflation, as measured by the consumer price index, could rise between 7.5 percent and 7.8 percent in the year to June 30, faster than the 6.5 percent target, the report said.

Monetary Policy

``It is important that appropriate monetary policy be sustained as price stability is important to sustain long-term growth and for poverty reduction,'' the report said.

Rising prices prompted the State Bank of Pakistan to lift its key interest rate half a percentage point to 9.5 percent in July last year, the first increase in 15 months.

Consumer prices rose 6.92 percent in April from a year ago, following a gain of 7.67 percent in Marc. Consumer prices in the first 10 months of the year rose an average 7.89 percent from 8.03 percent a year earlier.

Aziz's government is betting sustained expansion will help to reduce poverty in a nation where the World Bank estimates about 70 percent of the population of 160 million people lives on less than $2 a day.

The government's fiscal deficit is likely to be on target at 4.2 percent of gross domestic product in the year to June 30, the central bank report said.

The current account deficit is likely to widen to 4.8 percent of GDP, higher than the 4.3 percent target and last year's 3.9 percent, the central bank report said.

``The current account deficit is likely to be comfortably financed in the short-run, particularly given strong international liquidity flows toward emerging markets,'' the report said.

Overseas Bonds

Pakistan raised $750 million selling foreign currency bonds to investors in Asia, Europe and the U.S., in the South Asian nation's fourth debt offering in three years, Prime Minister Shaukat Aziz said on May 24.

``It is positive that international investors are looking at Pakistan in a long-term perspective,'' Akhtar said. More than two-thirds of the investors have never invested in Pakistan before, she said.

Pakistan got offers of $3.54 billion for the sovereign bonds, or seven times more than the government's initial plan to sell $500 million bonds, he said.

``This positive response puts recent fears of waning international interest aside and indicates that attention toward Pakistan's growth story remains firmly in place despite ongoing political issues,'' BMA Capital Management Ltd. in Karachi, said in a report yesterday.

To contact the reporter on this story: Farhan Sharif in Karachi, Pakistan on Fsharif2@bloomberg.net

Last Updated: May 26, 2007 10:39 EDT

http://www.bloomberg.com/apps/news?pid=20601087&sid=aFoMB1dYYqA8&refer=home

 

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Inflation to be higher than target

KARACHI (May 27 2007): The State Bank of Pakistan has said that inflation, current account deficit, monetary assets and imports will be higher than targets, with export's target falling below target for FY 07. While strongly linking the GDP growth target for FY 07 with a robust and strong performance of large scale manufacturing (LMS) and services sectors.

SBP's third quarterly economy report issued on Saturday said that by July 07 end real GDP growth would be 6.8-7.02 percent against the target of 7 percent, inflation would be 7.5-7.8 percent against the target of 6.5 percent and monetary assets would be 14.5-15.5 percent against the target of 13.5 percent.

The report said that "real GDP growth is now estimated to comfortably reach the annual growth target of 7 percent in FY07, and could potentially exceed it, if LSM growth reaches double digits, livestock growth exceed targets and the services sector growth remains on target".

However, the continued strength in aggregate demand, together with the resilience in food inflation, has meant that despite sustained monetary tightening the downtrend in inflation has been gradual and variable. As a result, domestic inflation is now forecast to remain in a relatively higher range than forecast earlier, and well above its annual target for FY07, the report added.

The central bank's monetary policy is compounded by the unexpectedly strong resurgence in broad money in recent months, with M2 growth forecast to exceed the original 13.5 percent target, to fall in the range of 14.5 - 15.5 percent.

A part of this is a consequence of the concessional re-finance to strategically important sectors of the economy, which significantly raised reserve money growth in FY07, and will consequently have knock-on impacts by raising monetary growth in subsequent periods, the report said.

According to the SBP projection, exports will around $17.6 billion against the target of $19.8 billion, imports will go up to $30.2 billion against $28 billion target and the current account balance would be 4.8 percent of GDP against of 4.3 percent target during FY 07. Workers remittances would surpass the target of $4.5 billion to $5.3-5.5 billion.

The report said that the impact on reserve money growth of this development has been compounded by the heavy reliance on central bank borrowings by the government and the growth in Net Foreign Assets (NFA) of the banking system. The impact of the former may be limited, if the government appropriately ensures that the SBP borrowings are retired as external and domestic non-bank receipts improve.

However, the resurgence in NFA of the banking system poses an additional challenge - the country needs to sustain these flows, but it is simultaneously imperative to sterilise the monetary impact of these flows in order to contain inflationary pressures, the report said.

The need to sustain the external flows is implicit in the growth of the current account deficit during FY07, which is now forecast to rise to 4.8 percent of GDP, up from the initial forecast of 4.5 percent of GDP the report said.

Adding it said that it is a source of comfort that the monthly growth in the current account deficit continues to decelerate, and that the current account deficit is likely to be comfortably financed in the short-run, particularly given strong international liquidity flows towards emerging markets.

However, it should also be kept in mind that international capital flows can be volatile, and are sensitive to a host of domestic and global factors including economic as well as political, the SBP report said.

The long run health of the economy, however, requires a lower sustainable current account deficit, concurrent with a rise in the domestic savings rate and a gradual reduction in the fiscal deficit.

http://www.brecorder.com/index.php?id=569206&currPageNo=1&query=&search=&term=&supDate=

 

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Current account deficit to rise to 4.8 percent

KARACHI (May 27 2007): The State Bank of Pakistan has forecast the current account deficit to rise to 4.8 percent of the GDP, up from the initial forecast of 4.5 percent, which translates into more than $7 billion. Pakistan's current account deficit continued to widen during July-March FY07, rising to a record $6 billion, up sharply from the corresponding period of FY06.

The third quarterly report 2006-07, issued by the State Bank of Pakistan, says the principal factors responsible for the widening of current account deficit include a widening trade deficit by $1.3 billion and a $730 million rise in income deficit.

Trade deficit has contributed approximately 76 percent in the absolute rise in current account deficit during the period, while the share of income deficit is 41.3 percent.

The deterioration in country's trade account was despite a precipitous decline in import growth, as export growth also fell sharply. The import growth though slowed down to 10 percent during July-March FY07, but the exports grew by only 4 percent as against a healthy growth of 12.4 percent during the corresponding period last year.

The SBP has stressed that the need to sustain the external flows is implicit in the growth of the current account deficit during FY07. It is a source of comfort that the monthly growth in the current account deficit continues to decelerate, and that the current account deficit is likely to be comfortably financed in the short-run, particularly given strong international liquidity flows towards emerging markets, the report says.

http://www.brecorder.com/index.php?id=569210&currPageNo=1&query=&search=&term=&supDate=

 

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13 percent LSM target may not be achieved

KARACHI (May 27 2007): A 13.0 percent growth target of Large-Scale Manufacturing (LSM) sector for FY07 is not likely to be achieved, according to State Bank of Pakistan's Third Quarterly Report.

The report said the detailed LSM data of 100 items for quarter one of FY07 and limited information for quarter-two and three of the current fiscal year implied that LSM growth may be higher during July-March FY07 against the same period of FY06 however, the report suggests that the 13 percent growth target of LSM sector for FY07 may not be achieved.

Major industries supporting the recovery in LSM include textiles, sugar, cement and basic metals, the report said and added that automobile industry registered a slowdown in growth during July-March FY07 relative to the corresponding period of FY06.

Similarly, industries such as fertiliser, paper & board and engineering saw a decline in production during this period mainly due to weakness in demand and temporary shut down for maintenance, as well as expansion.

The report said that LSM analysis is based on the limited information regarding production data collected by various associations and committees and due to non-availability of any aggregate manufacturing indicators. This analysis may not be a true picture of overall LSM growth. In addition, it may also not be comparable with trends reported in earlier SBP reports.

The production data provided by the Pakistan Sugar Mills Association (PASMA) shows a 12.5 percent growth during the first nine months of FY07, the second highest in the last six years, the report said.

This is not only a strong reversal from the 2.4 percent decline during the same period of the previous year, but is also significantly higher than the 3.0 percent annual growth target for FY07. This growth is largely due to the 22.9 percent rise in the sugarcane harvest during FY07 on the back of high sugarcane prices in the previous season, the report added.

An acceleration was also observed in the cement production during the first nine months of FY07 with growth rising to 24.5 percent, significantly higher than 18.6 percent in July-March FY06, the report said.

A strong performance is mainly attributed to capacity expansions due to rise in local demand and strong external demand. The total sales of cement recorded a growth of 31.3 percent during the first nine months of FY07, which is significantly higher than 13.9 percent growth in July-March FY06.

The number of local cement dispatches rose by 25 percent in the first nine months of FY07 compared with 13.4 percent growth in the same period of FY06. The growth in exports was even stronger, touching 2.1 million tonnes during July-March FY07 against 1.2 million tonnes during the same period of FY06, the report added.

The automobile sector growth shows a decline during the first nine months of FY07. As per the data provided by the Pakistan Automotive Manufacturers Association (PAMA), the automobile sector displayed 5 percent growth during the first nine months of FY07, much lower than the 28.4 percent growth recorded during the corresponding period of FY06.

The report said that fertiliser industry registered a 0.3 percent fall in output during July-March FY07 as against a growth of 4.8 percent during July-March FY06.

A temporary closure (for maintenance and up-gradation), slowdown in demand due to untimely rain and a considerable rise in prices, mix of the fertilisers and expectation of a subsidy announcement by the government are the major factors for decline in the production of non-urea fertiliser during July-March FY07.

The import of fertiliser also declined by 60.1 percent during the first nine months of the current fiscal year, as against a 69.7 percent rise during the corresponding period of the preceding year, which reflects a slowdown in fertiliser demand during July-March FY07.

The fall in the production of POL products was also declined in the first nine months of the current fiscal year, falling by 5.7 percent as against an increase of 2.3 percent in the corresponding period of the preceding year.

http://www.brecorder.com/index.php?id=569214&currPageNo=1&query=&search=&term=&supDate=

 

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Agriculture sector poised to surpass growth target for fiscal year 2007

KARACHI (May 27 2007): Growth of major crops could reach as high as 5.8 percent in FY07, significantly better than the target growth of 4.3 percent for the year. The State Bank of Pakistan's Third Quarterly Report said that a record wheat harvest, and upward revision in the production figures for key Kharif FY07 crops has raised the prospects of a strong recovery by the agriculture sector in FY07.

In particular, the most significant contribution to the improvement in the agri-growth estimates was from the exceptional FY07 wheat harvest. The 23 million tonnes is not only well above the target of 22.5 million tonnes, it is the largest-ever recorded in Pakistan, the report said.

On the expectations of higher irrigation water availability and continued policy support, production targets for Kharif crops for FY08 have been fixed higher as compared with the realised harvests in FY07. However, actual performance will depend critically on market prices and favourable weather conditions.

On the former count, the FY07 increases in price of cotton and rice and persistently high sugarcane prices will be encouraging for the farmers in FY08. The banking system provided a supportive role to agriculture sector by meeting the growing financial needs of the farming sector, as agriculture credit disbursement rose to Rs 111.2 billion during July-March FY07, up by 22 percent relative to the corresponding period of FY06, the report said.

This growth is well above the 16.4 percent annual target, though 1.5 percentage points lower than in July-March FY06, the SBP report said. The pace of agri-credit disbursement suggests that Rs 160 billion annual target for FY07 would be met comfortably.

The report said that rise in the area under cultivation for wheat, higher irrigation water availability, policy support and efficient use of inputs were the main reasons for the exceptional growth of 6.0 percent in FY07 wheat harvest.

A strong contribution also came from favourable weather as good monsoon rains left sufficient moisture in non-canal areas and subsequently timely rains through the growth phases of the crop supported a rise in yields.

The output of gram showed an exceptional growth of 58.2 percent in FY07 against 30 percent decline registered last year. This performance resulted from strong yield growth of 57 percent owing to higher monsoon rains, relatively better sowing practices, and winter rains that especially favoured the non-canal areas.

Further, the crop yield was well supported by the increased fertilisers mix use during FY07 following to the rising price signals from the market. The available data suggested that except for maize, other crops posted strong production growth rates in FY07 than in the pervious year, the report concluded.

http://www.brecorder.com/index.php?id=569198&currPageNo=1&query=&search=&term=&supDate=

 

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Gas demand to be met from import: Musharraf

By Saad Hasan

KARACHI: President Gen Pervez Musharraf on Saturday said the gap that has emerged between limited supply and substantial demand of gas would have to be met through imports in spite of massive investment to find more domestic reserves.

Speaking at a project launching ceremony of the fast-track floating LNG terminal and extraction plant here at CM House, he said five years ago he did not see an increase in demand for gas.

“With the economic upsurge, we are short of gas and power,” he said, adding the project that was expected to come online in next 12 months would change the supply scenario.

The LNG (liquefied natural gas) import project of Pakistan Gasport Limited, a subsidiary of Associated Group, is being implemented at a cost of $162 million and envisages supply of 400mmcfd of gas to augment depleting domestic supplies.

President Musharraf said the project would meet 13pc of country’s gas demand and assured the government’s complete support for its timely implementation. Gas import in the form of LNG was vital to fill the energy gap till Iran-Pakistan-India (IPI) pipeline was materialised, he added.

The government was diverting maximum resources for indigenous development of gas resources, he said and added: “But in spite of all the exploration, we have to bank on (gas) imports.”

Earlier, Iqbal Z Ahmed, Chairman Pakistan Gasport Limited and Associated Group, said electricity produced using LNG as fuel would be three cents per kWh cheaper than that obtained through furnace oil.

He said the project would also help obtain 1,000 tonnes of liquefied petroleum gas (LPG), helping the country to become an exporter of the fuel in coming months.

However, he voiced concern of the LPG industry, insisting that more domestic extraction plants should be set up on competitive bidding to increase its output.

“Decision to link local price (of LPG) with international price is not fair,” he said, arguing that the job to determine the price should be left to the industry.

State Minister for Petroleum Naseer Mengal said though LNG would be costlier than domestic gas, it would be cheaper than furnace oil.

Federal Ports and Shipping Minister Babar Khan Ghauri also spoke at the ceremony, attended by Governor Punjab Lt Gen (Retd) Khalid Maqbool, Sindh Chief Minister Arbab Ghulam Rahim and other dignitaries.

http://www.thenews.com.pk/daily_detail.asp?id=57801

 

[Neo]

May 27, 2007
Bright prospects of increase in trade with India

ISLAMABAD, May 26: The volume of two-way trade between Pakistan and India may reach $10 to 15 billion per annum in case of trade liberalisation by removing tariffs and non-tariff barriers, said a senior Pakistani diplomat.

With over one billion dollars worth of bilateral trade, the trans-border movement of goods has increased nearly five times during the last five years, but it is obviously a fraction of what it possibly could be, said Pakistan's Ambassador to WTO Dr Manzoor Ahmad while presenting country's paper on Indian trade policy review at Geneva.

The paper said most studies show that the potential bilateral trade volume between the two neighbours is worth about $10-15 billion per annum.

"Our business community feels that due to numerous non-tariff barriers and complications in sanitary and phyto-sanitary (SPS) standards in Indian economy, the balance of trade remains heavily tilted in favour of India,", the envoy added.

India and Pakistan are not only geographical neighbours, but also share a common history.

"We are partners in Saarc free trade area, and are engaged in negotiating bilateral economic cooperation through a composite dialogue," he said.

Mr Ahmad said transparency is another concern faced by Pakistani exporters. It is usually hard to find a single official publication containing all the information on tariffs, fees and para-tariffs on imports, such as countervailing duty, special CVD, national calamity duty, additional excise duty and education cess, etc.

The tax rates keep changing from time to time, and the taxes levied by the state governments on inter-state commerce add further cost to doing business.

"We have raised some of our concerns through questions in writing and are looking forward to receiving their response," he added.

"We are confident that with added level of comfort at political level between the two neighbouring allies, the Indo-Pak cross-border trade is expected to take a quantum jump," he said.

The envoy said Pakistan valued Indian trade policy as a rewarding outcome of robust unilateral tariff reforms.

He added that while trade in industrial goods and services has shown a remarkable progress, the agriculture sector remains protected in India, hence a significant decline in growth of agriculture sector.

Some of the noteworthy achievements of India in the last six years include substantial reduction in overall applied MFN tariffs on industrial goods from 32.3 per cent to 15.8 per cent and reduction of peak tariff from 25 per cent to 10 per cent in the last four years.The growth in industrial sector averaging almost seven per cent per annum has been rapid.

The services sector has performed exceptionally well, growing at the rate of 9.8 per cent each year.

On the other hand, India's agriculture sector has remained protected with the result that compared with services and industrial sectors, this sector has seen decline in growth from three to two per cent.

Dr Manzoor said at multilateral negotiations, both India and Pakistan have common negotiating positions on a number of issues.

"We are working for seeking extensive reforms in agriculture sector, in particular steep reduction in trade distorting subsidies through our common membership of G-20.

http://www.dawn.com/2007/05/27/ebr6.htm

 

[Neo]

May 27, 2007
Qatar offers to make $2 billion investment

ISLAMABAD, May 26: Qatar has identified five major areas to make over $2 billion new investment that also includes an industrial zone and an important power project in Pakistan, a senior government official told Dawn on Saturday.

Mr Talat Miyan, executive director-general of the Board of Investment (BoI) said that the finance minister of Qatar, Mr Yousaf Hasan Kamal, is arriving here next week to finalise discussions over his country's new investment plan in Pakistan.

Later, he said Amir of Qatar will visit Pakistan next month, most, probably after the announcement of the next budget on June 9, to sign many agreements and Memorandum of Understandings (MoUs) between the two countries.

Giving details, Talat Miyan said Qatar has proposed to set up $500 million power project at Checho Ki Malian, near Sheikupura, Punjab.

Similarly, he said in Khanewal, a livestock farm at 5,000 acres had been planned to be established by Qatar at a cost of around $100 million.

"The Qatari government has informed us that it is interested to build two five-star hotels, each in Karachi and Lahore at a cost of $150 million", the executive director of BoI said.

He said Qatar is also interested to make roughly $1 billion investment in Lahore-Sialkot industrial zone.

Also, Qatari government, he said, was negotiating with the National Logistics Cell (NLC) to enter into a joint venture with it for constructing a multi-storey building in Islamabad for offices and other business activities. The project, he said, would cost about $100 million.

Qatar, he said, has shown keen interest to further set up a cement plant near Thatta at a cost of $100 million.

"The issue of launching a new airline will also be discussed for which Qatar has shown a lot of interest,” Talat Miyan added.

Responding to a question, he said all these new projects by Qatar would be set up during two to three years.

The power project, he said, could be set up within this year as certain homework had already done by the Qatari government.

He said Qatar is also interested in establishing "Qatar Islamic Bank" for which initial negotiations have been held with the central bank and the ministry of finance.

To a question, he said Qatar will be required to arrange 49 per cent equity for establishing an airline while 51 per cent equity is needed to be arranged locally.

"This issue may take time, but other five projects are expected to be finalised soon between the two governments."

Talking about China, Mr Talat Miyan said land had been identified for setting up of China-Pakistan Economic Zone for which the government would be offering five-year tax holiday.

"The Chinese government has informed us that its investors will reach Pakistan in one year once various infrastructure facilities are finalized," he said, adding that there would be zero-rated customs and excise duty in the economic zone for importing plant and machinery.

For the first time, he said, real one-window operation will be facilitated in the economic zone which will have the offices of the BoI, customs office, technical centre and other required government officials.

Responding to a question, he said there will be a 40 per cent necessary Chinese equity in establishing projects in the economic zone while the remaining equity was expected to come from Saudi Arabia and some other countries besides some local participation by Pakistanis.

He said the economic zone would be set up at Kala Shah Kako, near Lahore for which the Punjab government has provided land on market price.

He said electricity, gas and other facilities will be instantly made available to the zone.

To a question, he said foreign investors have completed legal protection to their investments and that all economic sectors were open to foreign direct investment (FDI).

Foreign equity up to 100 per cent had been allowed and no government permission was required for making investment.

To another question, he said there had been a 37 per cent increase in the FDI during July-April 2007, compared to the corresponding period last year.

The first 10 months of 2006-07, he said, have witnessed $4.1 billion FDI against $3 billion of the same period last year.

"We are expecting to have more than $6 billion foreign investment during the current financial year", said the executive director-general of the BoI.

http://www.dawn.com/2007/05/27/ebr8.htm

 

[Neo]

Over 100 projects put on back burner as funds withheld

ISLAMABAD (May 28 2007): Over 100 projects, some of them of very critical nature, have either delayed or simply put on back burner due to unavailability of funds as the finance ministry withheld Rs 62 billion of fourth quarter of Public Sector Development Programme (PSDP) 2006-07.

The finance ministry squeezed release of funds of fourth quarter of the current fiscal year to add to the number of ill-fated projects which now stands at more than hundred.

The situation has worsened to such an alarming level that the Federally-Administrated Tribal Area (Fata) administration and the Azad Jammu Kashmir (AJK) government have to approach President General Pervez Musharraf to tell him that injustice was being done in the release of funds allocated for their development projects in the last PSDP, and he should intervene to make sure they get their share in allocation to complete the on-going development projects without delay.

Sources said the projects, suffered due to slowing down the release of funds included acquiring of land for the new water reservoirs, Higher Education Commission's more than 12 projects, National Highway Authority's (NHA) at least six projects, including M-1 and M-2 Peshawar-Islamabad and Lahore Islamabad sections of motorway, Mother-Child Care Project, at least 20 projects of social uplift and food security of the federal government, National Clean Drinking Water Project and social sector projects in Fata and Azad Kashmir, which included construction of the new schools, repair of roads and basic health units to cater to the need of the people in those remote areas.

The officials conceded that the finance ministry was not releasing funds and different projects were not progressing as per schedule, but they do not either know or intentionally give the reason of withholding funds by the ministry.

In a bid to introduce good governance culture and ensure the availability of developmental funds in time the government decided at the highest level last year that the finance ministry will release funds to all the federating units on quarterly basis. The agreed procedure was followed for the first three quarters and the finance ministry released Rs 172 billion of PSDP by the end of February.

Then comes bad phase as the finance ministry stopped major portion of releases reminding the federal, provincial, and AJK governments, and Fata of the last years days when they have to literally plead for the release of PSDP funds. Mostly they used to get funds in June just few days ahead of the federal budget.

Sources said the finance ministry was following the June days procedure, but it can not help the government maintain its image of spending record funds for social sector development.

http://www.brecorder.com/index.php?id=569700&currPageNo=1&query=&search=&term=&supDate=