Pakistan Economy - News & Updates - Archive

[Neo]

Setting up steel mill at Karachi: ministry allowed signing implementation agreement with Al-Tuwairqi

ISLAMABAD (May 28 2007): The Economic Coordination Committee (ECC) of the Cabinet has allowed the Industries Ministry to sign Implementation Agreement (IA) with Al-Tuwairqi Group of Companies for setting up steel mill at Karachi with production capacity of one million tonnes billets per annum, official sources told Business Recorder.

The agreement, first of its kind in Pakistan except with Independent Power Producers (IPPs), had been submitted to the ECC on receiving verbal orders from the Prime Minister secretariat after a summary for the prime minister had been returned by the Privatisation Commission (PC) with comments, they added.

Sources said the petroleum and water & power ministries had suggested some amendments to the IA regarding tariff for gas and electricity to be consumed by the Tuwairqi Steel Mills Limited (TSML).

Giving the background, the sources said that a memorandum of understanding (MoU) was signed between the Government of Pakistan (GoP) and the Al-Tuwairqi Group of Companies on May 28, 2004 for setting up steel mills at Karachi.

Sources said the TSML has requested that an IA be signed with it, wherein the GoP undertakes upon itself obligations towards the TSML on behalf and of its entities.

The issue was placed before the ECC on September 25, 2006, which considered the case in its meeting on September 27 and directed CBR, Planning Commission and Finance Ministry to give their comments to the Industries secretary to be presented in a meeting with the prime minister. It was also decided that the decision of the meeting would be conveyed by the Prime Minister Secretariat separately.

Pursuant to the directions, a meeting was held in the Industries Ministry in October, attended by representatives of CBR, finance and petroleum ministries, Privatisation Commission, and TSML.

Sources said when the views of the Planning Division were placed before the participants an agreement was reached on certain clauses of the proposed agreement, re-examination of following clauses was decided: It was decided that incentive/facilities listed out in schedule-2 of the proposed IA would be re-examined by CBR.

Proposal for gas subsidy demanded by the TSML would be examined by Petroleum Ministry and competent authority's approval obtained thereon. Sources said that government's viewpoint regarding deletion of privatisation clause was agreed by the TSML with the proviso that as the clause had been proposed by their mudarib, they would discuss government's viewpoint.

The issue was finalised in the light of comments received from CBR and Commerce Ministry and EPZA. Subsequently, the Prime Minister Secretariat convened a meeting on gas supply pricing for the TSML on January 17, 2007, for which a detailed working paper was submitted encompassing all outstanding issues.

During the meeting, only the gas price issue was discussed and it was decided that industrial rates would apply in the case of the TSML.

In the light of a meeting held in the Prime Minister Secretariat on January 17, a summary on the issue was submitted to the prime minister by the Industries Ministry proposing that the matter of executing an IA with the TSML be placed before the ECC.

In view of the verbal orders received from the Prime Minister Secretariat for submission of the case to the ECC, the summary for the prime minister has been returned by the Privatisation Commission with comments, the sources maintained.

Sources said the CBR supported consideration of the IA while the Petroleum Ministry also concurred with clauses 3.7, 3.8 and 3.9 of the draft IA with the modification in clause 3.8 that the words "as notified by Ogra from time to time" may be added before the full stop appearing at the end of this clause.

The Water and Power Ministry has proposed that para 11.2(viii) in the draft IA be deleted and instead, following sentence be added at the end of para 3.11 C:

"For the purpose of billing TSML, provision of Nepra, determination, as per Nepra Act will be followed." The Ports and Shipping Ministry also showed agreement with clause 5.2(a) and (b) of the draft Implementation Agreement. However, the Privatisation Commission cleared the draft IA subject to the condition that there is no clause in the Implementation Agreement relating to warranty by the Government of Pakistan in respect of the privatisation of Pakistan Steel and Sui Southern Gas Company and charges of services to be provided by Pakistan Steel to the TSML shall be reviewed on yearly basis.

The Industries Ministry was of the view that except for IPPs, there was no precedent available where the GoP has signed an IA with a foreign investor, the ministry had previously proposed a facilitation agreement (FA) with the TSML.

However, the Implementation Agreement was subsequently processed in the light of Law Division's views, expressed in the meetings held in that Division on August 16, 2006, ie that the GoP had given specific undertakings in the MoU dated May 28, 2004, signed with the TSML.

THE IMPLICATIONS FOR THE GOP WITH REFERENCE TO THE PROPOSED IA WHICH NEED TO BE KEPT IN MIND ARE AS FOLLOWS:

(i) There can be no rollback on incentives admissible to the TSML as an EPZ (Schedule-2 of proposed Implementation Agreement) for a period of 30 years from the Mill's commercial operation date.

(ii) Any violation, or dispute as to violation of the Implementation Agreement and various agreements between the TSML and other government entities, already signed or under negotiation, will have legal and financial implications for the Government of Pakistan.

In case of agreements, which are yet to be executed (Services Agreement with Pakistan Steel, Power Implementation Agreement, Power Supply Agreement with Water and Power Ministry and its entities concerned) the Government of Pakistan is taking on the obligation that these will be executed.

(iii) The agreements already executed between the TSML and various entities are valid for different terms. The term of proposed Implementation Agreement would also have to be decided.

Sources said these issues are submitted for deliberation of the ECC wherein it was proposed that the Industries Ministry may be allowed to modify the IA in the light of decisions taken by the ECC, get it vetted from the Law Ministry.

The ECC approved the proposal subject to and condition that it should be vetted by the Law Ministry.

http://www.brecorder.com/index.php?id=569697&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

Next budget to be tax-free: minister

LAHORE (May 28 2007): Punjab Minister Colonel Shuja Khanzada (Retd) has said that budget 2007-08 would be poor friendly and tax-free. In the next financial year, Development Program would be increased from Rs 100 billion to Rs 125 billion so that development scheme could be completed well in time, he added.

He was talking to various delegations of workers of Pakistan Muslim League and citizens at his residence here Sunday. The minister said that relief would be provided to the common man and no tax would be levied in the next budget. He said that salaries of government employees would also be increased by 15 to 20 percent in the forthcoming provincial budget.

Shuja Khanzada said that during the current fiscal year record revenue had been recovered due to which Annual Development Plan was being increased. He said that Punjab was leading in foreign investment due to the comprehensive economic policies of Prime Minister Shaukat Aziz and Chief Minister Punjab Chaudhry Pervaiz Elahi.

http://www.brecorder.com/index.php?id=569728&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

Budget to provide maximum relief to masses: ministers

LAHORE (May 28 2007): Provincial Ministers, Rana Shamshad Ahmad Khan, Dr Anjum Amjad, Chairperson Chief Minister's Task Force on Environment, Fatima Atif Malhi and Parliamentary Secretary for Environment, Saadia Humayun have said that 2007-08 budget would be reflective of the aspirations of masses and maximum relief would be provided to them.

In a joint statement, the provincial ministers said that the economic condition of people, particularly in Punjab, has improved as a result of implementation of the revolutionary developmental agenda for strengthening economy of the country introduced by President General Pervez Musharraf and Punjab Chief Minister, Chaudhry Pervaiz Elahi.

They said that as a result of people-friendly policies of the government not only poverty and unemployment have reduced but per capita income has also increased. They said that due to record development works, Pakistan Muslim League has become a people's party and Istehkam-e-Pakistan rally held on May 12 is the proof of it.

Provincial ministers said that the budget would be people-friendly and exemplary in which maximum relief would be provided to the people relating to all walks of life. They said that more funds would be allocated for the developmental projects.

They said that people of Punjab have unflinching belief in revolutionary and realistic thoughts of Punjab Chief Minister, Chaudhry Pervaiz Elahi which is evident from the fact that under his leadership during the last seven years unprecedented development and progress has been made in all over the province.

http://www.brecorder.com/index.php?id=569773&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

'Uplift works in industrial zones to be completed next month'

KARACHI (May 28 2007): City Nazim Syed Mustafa Kamal has said that first time in Pakistan construction of roads and streets of international standard was made in all four industrial zones of Karachi besides providing water lines to every factory and linking them with sewerage system.

Investors were also provided with best platform with the help of world class infrastructure, which would not only be beneficial for Karachi but whole country would get its fruits. He asked concerned departments of the city government to pay especial attention on uplift works in industrial zones and ensure completion of ongoing works worth Rs 4.5 billion before June 2007.

This he was stated while addressing the officers and engineers of city district government Karachi and KW&SB on Saturday. During the meeting pace of the development works carried out in industrial areas was reviewed while directives were issued to resolve any hurdle in their execution. The city nazim said that work had been carried out speedily in the industrial areas 9 month ago, which would be completed next month.

He said we have imported GR pipes from Dubai, which have life of 100 years because we want to resolve the problems of these areas for 100 years. "After few years problems of all four industrial zones of Karachi will be resolved for 50 years and when the foreign investors would visit these areas they will feel a refreshing and amazing change there," he added.

Regarding Korangi industrial zone, he said this was the biggest industrial zone of Pakistan, which contained nearly 3,500 factories and contributes Rs250 million daily in the national exchequer but the area was deprived of water and sewerage system till 9 month. Now we have provided an international standard infrastructure to this area and these steps would also boost the investment in this area.

Kamal said that due to recent incidents in Karachi not even a dollar investment was affected. The city district government was the only local government, which has brought in a direct investment of 1.2 billion dollars.

He said that a positive change was brought in the city with the works carried out in four years by the provincial government and in two years by the city government.

He said 24-hour work was started in the factories and those, which were closed down in the past were reinstated and there was a rapid increase in the trade and business activities along with more and more opportunities were made available for the city youth. He said we want to boost the investment and taking rapid measures to bring in good change in the life of the common men.

He said that all people were satisfied with the government policies and happy as the government had taken rapid steps to resolve the problems faced by the common men and raising their living standard.

http://www.brecorder.com/index.php?id=569782&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

Pact signed for offshore exploration

ISLAMABAD (May 27 2007): The Petroleum Exploration (Pvt) Limited (PEL), a local oil & gas exploration and production company has singed agreement with the Petroleum ministry for offshore exploration in deep waters of Arabian Sea. These licenses/production sharing agreements included Indus-J (2266-4) area 2436.3 sq. km. Indus-P (2365-3) area 897.48 sq. km and Indus-O (2266-7) area 833.78 sq km.

In an announcement PEL on Saturday said it has initiated seismic survey through Sichuan Petroleum Exploration (SPA), a Chinese firm for Kandra Block located in Sindh. PEL is Kandra block's operator and its joint venture partners are Frontier Holdings Limited, a Canadian company, and Government Holdings (Pvt) Limited.

Kandra gas reserves have been estimated at 2.3 TCF. PEL and partners have undertaken to develop the field at $40 million cost for power generation. The joint venture partners will collaborate to set up a 120MW power plant costing over $100 million. Since Kandra is located near Sukkur the project will go a long way towards alleviating the power crunch in the area.

PEL is committed to playing a substantial role in enhancing search for oil and gas for meeting Pakistan's growing energy needs. It is presently producing 35 mmcfd gas from two of its concessions, one percent of Pakistan's total gas production.

Badar area 122 sq km, Hasan area 37.05 sq.km. Sadiq area 40.72 sq. km. Khanpur area 41.78 sq. km. Hamza area 173.12 sq. km. Kandra area 286.08 sq. km. Mirpur Mathelo (2769-9) area 1030.7 sq. km. Salam (2769-13) area 200.22 sq. km. Karsal (3272-12) area 724.42 sq. km New Larkana (2768-10) area 2426 sq. km. Badin IV north (2467-6) area 1246 sq. km Badin IV south (2468-5) area 1265.3 sq.km. Jhangara (2567-5) area 358 sq. km. Kaloi (2468-8) area 2485.14 sq.km. Sanghar east (2669-5) area 2493.13 sq. km. Mirpurkhas west (2568-16) area 199.26 sq. km.

Besides PEL holds working interests in Zamaurdan block and Sukkur block. PEL CEO/ Chairman Zaheeruddin said that his company holds large acreage under exploration (both onshore and offshore) and it committed substantial investment programme. The company has planned to drill 31 exploration / development wells in three years.

He appreciated the role and co-operation of all joint venture partners in exploration & production activities of the company. He also acknowledged the support of ministry of Petroleum.

http://www.brecorder.com/index.php?id=569176&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

Energy issue need to be settled quickly: ADB

FAISALABAD (May 27 2007): Asian countries including Pakistan need to urgently find ways of addressing energy issue, if they are to join the ranks of more developed and prosperous countries, said a study report of Asian Development Bank.

According to various forecasts, the world's energy demand will expand by 52 percent to 71 percent over 2003 levels over the next quarter century, driven by continued economic growth averaging over 3 percent per year.

Furthermore, the demand in developing economies, led by Asia, is likely to begin to exceed the consumption of developed countries by 2011. Fossil fuel use is expected to slightly increase its share of energy supplies over present levels during this period, with oil use rising by as much as 55 percent, natural gas by over 90 percent, and coal by more than 50 percent.

Developing countries are also expected to experience faster growth in electricity consumption than the Organisation for Economic Co-operation and Development (OECD) countries, with world-wide electricity generation more than doubling.

Coal is forecast to be increasingly used for power generation, despite rising environmental concerns, especially in Asia. Nuclear power is not expected to grow significantly enough to increase its share in total generation.

Thus, the current energy picture will largely remain unaffected in terms of the supply mix for the foreseeable future, although production will need to increase significantly in absolute terms.

Almost a third of the world's population, consisting mostly of the 2.4 billion rural poor, therefore seem to have no other option but to continue to rely primarily on traditional biomass fuels-wood, dung, crop residues-to meet their basic needs for cooking and heating.

This is reflected in the high proportion of traditional fuel in total energy consumption in developing countries. The number of those without any access to electricity is forecast to remain largely unchanged, falling slightly to 1.4 billion. In other words, the numbers and condition of the "energy poor" in the world will not be altered at all if present baseline trends continue, even as the more affluent sections of the society continue to increase their consumption and many previously deprived segments also gain access to better energy services.

These projections, however, are subject to many uncertainties, such as the underlying economic and population growth assumptions. At the same time, regardless of whether actual world growth occurs above or below the baseline or reference projections, the corresponding variations in energy supply and demand can be anticipated to be divided in roughly similar proportions, and in either case a huge slice of the global population will continue to be condemned to a dark, destitute existence.

According to study, the variability and uncertainty in fossil fuel prices, as demonstrated recently, adds another layer of complexity to the situation, placing the meager amounts of such supplies consumed by the poor increasingly out of their reach and impoverishing them further. Fossil fuel prices are driven not only by available resources, which appear adequate to provide for current demand trends, and the rate at which they can be farmed, but also many other factors beyond the control of developing countries.

According to rough estimates, some $17 trillion in energy sector investments would be required globally by 2030, half of it in developing countries, for expanding energy production and distribution facilities and infrastructure in order to meet additional baseline demand across all fuel categories-which is projected to be much higher than the corresponding increase witnessed over the previous 3 decades.

The developing world's capacity to meet such enormous financing needs is questionable. Even if such resources can be found, they would remain far below those required to significantly alter the situation in terms of the numbers remaining undeserved or completely deprived of modern energy.

The implications of this scenario on reducing world poverty, and the systematic improvement of human development opportunities in developing countries, are obvious and would require alternative strategies that can help expedite and expand energy service delivery to the poorest within the means available.

According to study, there is a need to examine the linkages between energy access, poverty, and the environment in detail to find possible ways of overcoming the vicious cycle that this interdependence can create among those barely subsisting within such circumstances, ie, those most vulnerable to its grinding effects and with the least means for escaping them.

One way of achieving this is by focusing on populations where modest energy supply improvements can result in the greatest economic and human development gains, ie, those at the bottom rung of the energy ladder. This consists largely of the 2.8 billion rural population in developing countries, 86% of whom are too poor to rely on anything other than solid biomass fuels for their basic energy needs, especially for cooking.

They also constitute the majority of the 1.6 billion people in the world today without access to electricity. The rural poor, given their weak economic and political voice, have traditionally been neglected in national planning and development spending, a bias that can only be expected to grow stronger as countries move toward increasing industrialisation and urbanisation, especially in Asia where such trends are the most aggressive (its urban population will exceed the rural figure by 2030).

Furthermore, the use of traditional fuels has a strong deleterious effect on the well-being of the poor, in terms of damage to health, productivity, local environment, and social well being.

This is particularly true for women and children, who spend a great proportion of their time collecting and using the fuel, and thereby suffering the consequences of its use-especially indoor air pollution-and who have little or no time left for child welfare activities, education, or other gainful, income-earning employment.

Thus, not only is traditional fuel use incompatible with the technological aids that modern society takes for granted-electrical devices and appliances, information and telecommunications technology, rapid transportation systems, production and manufacturing tools, electronic mass media, and so on-but it also effectively excludes half of the population that relies on them, along with their young, from accessing even the few opportunities available to them for self growth, education, and economic betterment.

http://www.brecorder.com/index.php?id=569224&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

May 28, 2007
Intercropping technology to raise food production

By Atique-ur-Rehman, Dr Ehsan Ullah & Dr Riaz Ahmad

THE rate of increase in food production is too slow to cope with the rapidly increasing population and with that the rising demand for food. The need of the hour is to increase food production.

The present system of sole cropping has failed to meet domestic needs of small farmers. Monoculture is associated with several problems that intercropping can solve. Intercropping has the potential as an economic and ecological alternative fully compatible with modern agriculture.

Intercropping, the practice of growing more than one crop simultaneously on the same piece of land at a time, may be used extensively in most of the developing world where farmers have limited access to agricultural equipment and products. The modern agriculture, based on monoculture, has increased yield enormously in developed countries, but the improvement has not been without its costs.

The production and operation of machines and synthesis of fertilisers and pesticides involve a huge amount and energy. Other costs can be high as well, ranging from degradation and disruption of environment to human pesticide poisoning. A majority of agricultural scientists are sufficiently aware of environmental and health risks of modern agricultural practices.

Problems: The low cost of synthetic fertiliser may have been a double-edged sword. The inexpensive and seemingly inexhaustible supplies helped to create a false sense of security among farmers, contributing to abandonment of soil conservation practices. Soil lost from erosion is occurring at an alarming rate, exacerbating the need for synthetic fertilisers.

Addressing problems of soil erosion and soil quality is the top priority now. Discontinuation of crop rotation also increases weed problem. Weed species are able to proliferate that can be readopted to the fixed annual planting and harvesting schedules for growing monocultures in continuous sequence. Although mechanical cultivation to remove weeds continues, herbicides rapidly become the primary means of weed control. Pesticides can be extremely useful, but recognition of complications is growing that arise when pesticide especially insecticides are abused. More pests have developed resistance to insecticides than other pesticides but all forms of pesticides have been affected.

Apart from agricultural complications, pesticides’ use is a health risk. There are direct risks in producing pesticides, a greater number of people including, farmers, fieldsmen and labourers are being poisoned from pesticide use.

Advantages: Better use of growth resources, including light, nutrients and water. Better yield stability. Intercropping offers the possibility of yield advantage relative to sole cropping through yield stability and improved yield. It meets diversified needs of small farmers, stability of yield over different seasons, better control of weeds, insect pest and diseases as well as control of soil erosion.

Companion plant: Perhaps the most obvious advantage of growing two crops simultaneously is the substantially reduced risks of total crop failure. Crops differ in their response to physical and environmental stress and it is not uncommon for one crop species to do poorly while a different crop grown under the same conditions thrives. In fact even varieties of the same species differ enormously in their response to the variable climatic condition that typically occurs.

Planting two crops together through intercropping provides an additional benefit because the resources that become available through the failure of one species can be used by the surviving crop. The remaining companion crop can use resources, such as synthetically produced fertiliser, which would otherwise have been lost due to leaching or run off, thus increasing the efficiency with which these expensive inputs are used.

Differential resources: When the distance between plants reaches some critical point, they begin to compete for at least some of their resources .Given a set of fine conditions (environment, planting pattern etc.) competitive interactions between two intercropped species can have three possible outcomes:

Intra-specific competition can be less than inter-specific competition for both species.

Intra-specific competition can be greater than inter-specific competition for both species.

Intra-specific competition can be less than inter-specific competition for one species,

While reverse is true for other species.

Fertiliser requirements: In many situations the presence of second species may actually enhance nutrient availability for the first, although competition is present between a legume and non-legume in an intercropping system. In an intercrop, inevitably competition occurs for some resources, the legume through a mutual association with nitrogen fixing bacteria (rhizobium) may provide additional nitrogen to the associated non-legume. Legumes also form association with a fungal group, vesicular arbuscular mychorrhizae (VAM). Furthermore rhizobium and VAM can act synergistically for the host legume, greatly increasing nutrient availability. Intercrops can also reduce the need for synthetic fertilisers by alleviating soil erosion. Most soil is lost between harvesting and establishment of next crop. Differences in the phenologies of intercrops allow for continuous plant cover. Furthermore, the diversity of root systems of two crops enables them to use and stabilize a broader soil zone.

Reducing pesticide: Intercrops have been shown to reduce the population of numerous herbivore species under a wide range of conditions. Risch et al 1983 reported that in 150 intercropping studies involving 198 herbivore species, 53 per cent of the herbivore species were less abundant in the intercrop.

An advantage of intercropping has not received much attention is the reduction of weeds, but evaluating this benefit may be complex. If a species used to control weeds, it will probably also compete with its companion crop. Therefore, we might expect that crops yield to be less than it would be if grown in weed free monoculture. However, the economic and ecological cost of maintaining a weed-free monoculture may be excessive.

http://www.dawn.com/2007/05/28/ebr4.htm

 

[Neo]

May 28, 2007
Erratic wheat policy

In a knee jerk response, the government abruptly suspended wheat export on Wednesday while acknowledging that the open market price of the grain has shot up by seven per cent in spite of a record bumper crop of 23 million tons plus being harvested this season.

Shipment of about 30,000 tons of wheat worth more than $6 million is said to have been stopped at the Karachi and Bin Qasim ports immediately after the government decision. By the time, the Economic Coordination Committee (ECC) of the Cabinet headed by Prime Minister Shaukat Aziz decided to suspend export, about 0.4 million tons worth about $80 million is reported to have already been shipped. Besides, there are letters of credits for export of about one million tons of wheat.

In the initial days of the harvest, the profit margin on wheat export was said to be more than Rs3,000 a ton which has slipped down to Rs1,500 per ton because of the gradual rise in prices in the domestic market and also in transportation cost in Karachi after announcement of May 12 rallies in Karachi About 16--18 well connected exporters from Karachi and Lahore and a few from Islamabad are said to have so far made about Rs1 billion in wheat export, for which the low income consumers are paying a high price.

There is now a gap of 0.6 million tons between the booked orders and the shipment made. The exporters were on a buying spree in Sindh and Punjab till last Tuesday to line up wheat for shipment. Now, the exporters lobby has started working overtime in Islamabad to allow them ship the 0.6 million tons of wheat for which they booked orders. A quick decision to scrap these export orders of remaining 0.6 million tons of wheat, the shopkeepers say can have a good effect on local supplies.

An overwhelming majority of small farmers in Sindh and Punjab has already sold away its wheat to the local grain brokers. Bought by these brokers, the wheat is stocked in ginneries, rice husking factories and even in buildings constructed for schools and dispensaries in villages. As the price of wheat in the domestic market went up by Rs80-100 on a 100 kg bag, the government agencies are encountering difficulties in procuring wheat stocks..

The government's target is to build up a strategic reserve of five millions tons plus. Normally, the government releases wheat to flour mills from its stocks from August or September to cover what is called a ``lean period'' from October to March. It is believed that from April to August, the market gets adequate supply of wheat from the farmers and flour mills get their requirement from the open market.

But this season, there is a visible market distortion or what one can be termed ` manipulation’, the price of wheat flour for a consumer in Karachi went up from Rs13 for a low quality flour and Rs16 a kg for a relatively better quality flour to Rs14 and Rs17 a kg respectively. Reports coming from NWFP reveal that wheat flour prices in small and big towns have started creeping up. Balochistan also showed the same trend and Punjab has just started showing a rising trend.

Tandoors, hotels and restaurants started shrinking the size of baked breads and there were reports of a possible price hike next month before the budget. Obviously, the low income groups have been hit badly by this unexpected price hike when elections are scheduled to be held. If World Bank is to be believed, 94 per cent population earns less than two dollars (Rs120) a day which comes to less than Rs4,000 a month. A family of five spends more than 55 per cent of its earning on food bill. A 7-10 per cent rise in flour price has upset the family budget. Three more factors-- other than export-driven push--are being mentioned as causes for price rise of wheat flour for consumers in Karachi. The first is freight of the trucks. Transportation from upcountry to Karachi remains disturbed since early May. Finally an announcement was made to put off a local three-day transport strike till next month. ``Freight for a 100 kilogram bag from Lodhran in Punjab increased from Rs65 to Rs90'', a local trader said.

Another reason for the transport freight hike was that fertiliser import has not commenced this season so far. Normally, imported fertiliser is transported to upcountry from Karachi from May onward. The trucks that bring export cargo or wheat from upcountry carry fertiliser on their return journey. The journey of an empty truck escalates freight cost. A ship carrying fertiliser is about to reach Karachi sometimes next month. Till then a majority of the trucks will continue to come loaded with wheat and export cargo and return empty.

A rise in rice prices has also caused a price push in wheat. Traders say that broken rice is now being sold at Rs20 and Rs22 a kg. Broken rice is used in poultry feed. Wheat is being sold as poultry feed because it still costs less.

Officials in Sindh food department said that government godowns in Karachi have less than 1,000 tons of wheat stock. It may take another few days before wheat starts coming to Karachi which is the biggest consuming centre of the country. Karachi’s consumption is more than a lakh tons of wheat in a month. Out of 78 flour mills in Karachi, more than 20 have closed their operations because they ran out of stocks. A few mills reported wheat has started trickling in. But the prices of wheat flour is still high, There are at present no visible flour shortages but wheat transportation uncertainty is causing a price push at the retail level. A ”reconciliation” move by the Sindh Governor to meet opposition leaders have been well received by the market. The wholesale and retail business in Karachi look relatively relaxed.

A shopkeeper in Soldier Bazar sees improvement in wheat flour supply and prices once the government takes a final decision on the 0.6 millions of wheat for which export orders were booked. If these orders are cancelled, wheat will start coming out from private stocks into the market.

Inconsistency in wheat trading policy has been a distinct feature for the last several years but it has become more pronounced in last four years. In late December, the government announced to clear its carryover wheat inventory of about 3.5 million tons by allowing half a million tons export. It found that inventory cost (bank interest, storage charges and transportation cost) has rendered the wheat somewhat uncompetitive in the international market. But the government in its wisdom quietly increased the export quantity from 0,5 million tons to 0.8 million tons. And when the harvest started and there were reports of a bumper crop-23 million tons plus-the government allowed half a million tons export from the new crop also so that it could be marketed without any inventory cost.

Without any regulatory authority and with weak governance, the market abuse is rampant.. No sooner, wheat export was initiated, , hoarders, profiteers and speculators entered the market to mint money. The State Bank of Pakistan's annual report issued on December 2, 2006, about three months before the wheat harvest, had warned of speculators taking over the control of market, if wheat export was allowed before the build up of strategic reserve and assessment of the crop. This is what happened.

Within a month of the commencement of harvest of what was declared to be a record bumper crop, the wheat prices in the open market and prices of wheat flour for consumers started moving up.

Late last week, the market in Karachi was abuzz with rumours that prices of wheat in open market will touch Rs1,300 for a 100 kg bag. The prices of wheat flour will be Rs20 a kg for a consumer. Hotels, restaurants and tandoors are all set to increase the price of baked bread up to Rs6 or Rs7.

Till Tuesday last, the senior bureaucrats in Islamabad Food ministry were defending wheat export policy. None of them was ready to accept that wheat export has pushed up the prices of wheat flour in the local market. They were all convinced that wheat flour price hike is a passing phase and market will behave normally after the effects of May 12 will be over.

“Why should not there be a permanent Wheat Board”? Responding to this question, a senior official in the federal food ministry disclosed that such a board is now being constituted. But the composition of the board and its mandate are yet to be decided.

http://www.dawn.com/2007/05/28/ebr2.htm

 

[Neo]

May 28, 2007
Seed priming: reducing salinity impacts on crop productivity

By M. Tariq Javed, Dr Shahzad M.A. Basra & Dr Irfan Afzal

THE total geographical area of our country is 80 million hectares or 197 million acres, with a very good canal irrigated system of about 62,400 km long and mainly confined to the Indus plain covering an area of 19.43 million hectares (48 million acres). The salt- affected soil is mainly situated in this plain.

Of the total, about 6.30 million hectares are salt-affected. The magnitude of the problem can be gauged from the fact that the area of productive land was being damaged by salinity at a rate of about 40,000 hectares annually.

It is estimated that out of 1.89 million hectares saline patches, 0.45 million hectares exist in Punjab, 0.94 million hectares in Sindh and 0.5 million hectares in NWFP. Out of 19.3 mha area available for farming, irrigated agriculture is practised on about 16 mha. Irrigation water is mainly supplied through canal system arranged through dams. Intensive and continuous use of surface irrigation has altered the hydrological balance of irrigated areas, especially the Indus basin. The substantial rise in water table has caused salinity and water logging in large areas of Sindh, Punjab, NWFP and Balochistan.

The country is located in arid and semi-arid climatic zones. Generally high evapo-transpiration in semi-arid and arid zones is the basic cause for salt accumulation on soil surface. The average summer temperature is 40°C and the minimum winter temperature remains between 2°C to 5°C. The annual rainfall varies between 100 mm to 700 mm throughout the country. The evaporation rate is generally very high and exceeds that of precipitation. Thus, the insufficient rainfall followed by high evaporative demand and shallow ground water depth, enhances the movement of salts towards soil surface.

Salinity is a serious problem affecting irrigated agriculture. Improper irrigation practices and lack of drainage have generally led to accumulation of salts in soil in concentrations, which are harmful for the crops. There is a major imbalance in the amount of salt entering and leaving the soil. Each year about 120 million tons of salts are added to the land in canal water and brackish underground water. Only about 1/5th of this salt finds its way to the sea. The remaining accumulates in the soil, it continues to reduce the growth and survival of crops.

Salts exert general and specific affects on plants which directly influence crop growth and yield, and also affect certain soil physio-chemical properties which, in turn, affect the suitability of the soil as a medium for plant growth. The major effect of salts on plants is that it reduce plants growth rate. Chloride, sodium and boron may exert specific toxicity effects on susceptible crops, especially woody perennials. Plants vary in their tolerances to salts and many are sufficiently tolerant, especially after seedling establishment, to produce well when irrigated with saline waters, especially typical drainage waters, provided appropriate cultural management practices are followed.

The soils with electrical conductivity less than 4 dSm-1 are considered salts free, where all crops can be grown. As salt concentration increases, the choice becomes limited and one has to go for tolerant plants suited for specific conditions.

There is usually no single way to achieve salinity control in irrigated lands and associated waters. Many different approaches and practices can be combined into satisfactory control systems. The appropriate combination depends upon economic, climatic, social, as well as edaphic and hydro-geologic situations.

The leaching of salts through irrigation however, requires extreme care as this should not add to underground water table. Tube wells are generally sunk to get rid of such shallow water tables without which leaching may not be advisable. The upward movements of saline water from shallow water tables can cause salt build up in the plant root zone. A water table should be at least 41/2 to five feet below the surface during most of the crop growing season.

Green manure through leguminous crops and application of farm yard manure not only provide organic matter and other nutrient, but also make the soil porous for aeration and moisture absorption and enhance soil micro-organisms, thus improving the overall condition of the soil. Similarly replacement of sodium-ions by calcium using gypsum helps in mitigating the adverse conditions.

Modern research has identified more than 1500 plant species that have high levels of tolerance to saline soils, these are called halophytes. Some of these are able to withstand salt concentrations in excess of those found in sea-water. These plants (trees, shrubs and salt tolerant grasses and herbs) are a major resource that can be used in the development of agricultural systems for salt-affected soils. In addition, there are opportunities to increase salt tolerance of existing crops using conventional plant breeding and molecular biological approaches.

Beside several efforts success rate is least due to number of constraints. Output obtained is much less as compared to time and money exhausted. So there is a need to pioneer cost effective and farmer friendly strategies. If the plant survives the shock at seeding/ transplanting stage, the chances of its subsequent survival and growth are likely to be increased. Since less germination rate and reduced plant population is a major setback under saline conditions, so improving seed emergence is the only cure to the problem.

Pre-sowing seed treatment or seed priming is best fit in this scenario. Seed priming is a controlled hydration process followed by re-drying that allows pre-germination metabolic activities, to proceed rapidly. Generally priming improves the rate and uniformity of seedling emergence and growth particularly under saline conditions. The effectiveness of various priming agents differs under different stresses as well as in different crop species.

Seed priming is an easy low cost and low risk technique and an alternative approach recently used to overcome agriculture salinity problems. It can be effectively used for a number of crops like wheat, maize, rice, tomato, sunflower, parsley, pearl millet, cotton, beans, peas, carrot, lettuce and onion.

Interaction between salinity, soil water and climatic conditions change the plant’s ability to tolerate salinity. A basic understanding of the interaction between salinity and environment is necessary for an accurate assessment of salt tolerance in crops. In addition to precipitation, atmospheric humidity and temperature can markedly influence salt tolerating capability of crops.

The rapidly growing demand for increased food, fibre and fuel in the presence of rapidly declining availability of agricultural land use due to increased soil salinity make it imperative that crop production under saline conditions be significantly improved. Now the importance of seed priming techniques goes without saying as well as the application of seed priming techniques to almost all agricultural crops is easy, feasible and cost effective maximising output to the farmer. So there is dire need to boast up research activities involving various crops and priming agents under both laboratory and field conditions. This will help to get rid of such turmoil salinity situation and will reduce our dependence for wheat and cereals on foreign countries.

http://www.dawn.com/2007/05/28/ebr6.htm

 

[Neo]

May 28, 2007
Issues in tax management

In 10 months of this fiscal year, the Central Board of Revenue (CBR) has collected Rs656.5 billion against the target of Rs645 billion. The CBR officials believe that the full year collection would also exceed the annual target of Rs835 billion. The government is expected to set the next year target at Rs1 trillion.

In Islamabad, economic managers are busy giving final touches to budget proposals for FY2008. The government does not want to introduce any new tax on the eve of elections. But it is looking for ways to broaden the tax base. The CBR has put forward a number of proposals to increase tax collection without levying new taxes.

It has instructed tax collectors to bring all those in the sales tax net who are required to pay the tax but are not registered. The CBR has also advised the collectors to use third party information to see who could be brought into the net and to verify whether those already in are paying the taxes honestly. It has sought a report on the subject by June 15.

The tax collectors have powers to compulsorily register those providing excisable services, including airlines, banks and financial institutions, foreign exchange companies, money changers, cable operators, and service-providers of vehicle tracker and burglar alarm systems.

The CBR and Securities & Exchange Commission of Pakistan (SECP) are also planning to task chartered accountants to issue a separate audit report of companies verifying that they are paying federal and provincial taxes.

The revenue collectors have identified various areas where tax evasion is high and the proposed ways to plug it. “Still we are not sure if political expediency would overrule our professional advice,” remarked a senior CBR official. He said that the third quarterly report of CBR issued last week, contained “professional advice on critical issues in tax policy and management”.

The 70-page report sheds light on developments in the revenue collection in nine months to March 2007. It reveals that although the CBR met revenue collection target set for July-March FY07, a decline in import-related taxes and additional payments to the power sector squeezed potential tax collection by Rs60 billion.

It says the CBR may have to absorb similar shocks in the last quarter of the fiscal year as well but the full year target of Rs835 billion remains within the reach. It claims that even the overall tax to GDP ratio is expected to improve further. (In the last fiscal year it stood around 9.8 per cent).

Discussing the role of CBR in increasing tax-to-GDP ratio, the report points out that the policy of facilitating various segments of the economy “needs to have appropriate controls”. The rest of the report elaborates this point effectively.

Experts say that one of the reasons for a low tax-to-GDP ratio is a mismatch between the contribution of various sectors of the economy towards GDP and their respective tax contribution. For example, in FY06, agricultural tax revenue totalled Rs874 million or 2.4 per cent of the provincial taxes of which it is a part, whereas the share of agriculture in GDP was 21.6 per cent. And in the first half of this fiscal year, tax collection from agriculture sector stood at Rs268 million or 1.6 per cent of total provincial taxes. The CBR attributes agricultural tax evasion to the fact that it is out of the purview of the federal taxes.

What else encourages tax evasion, according to the CBR report, is a law that allows a person to pay income tax only on non-agriculture income, if his agriculture income exceeds Rs80, 000. “Experience shows that the income from other sources is also reported under agriculture income to avoid taxation.”

The provincial governments of the Punjab, Sindh and the NWFP collect an insignificant amount of agricultural income tax as presumptive tax. And Balochistan has no contribution at all, says the report. The only federal tax paid by agriculture sector is in the form of indirect taxes on agricultural inputs like fertiliser and pesticides.

The report points out that tax contribution of textile sector is also far less than desired. In FY05 the industry paid Rs13.8 billion as indirect taxes whereas CBR paid Rs40.7 billion as refund and rebate. Thus, net tax contribution of the industry was minus Rs26.9 billion.

The report links this situation partly to zero-rating of exports for sales tax and partly to the wide-ranging tax exemptions and concessions “granted by the taxation system due to pressure by the strong textile lobby”. In case of income tax, the industry only pays withholding tax 0.75-1.5 per cent at the export stage. Tax collection through this mode is also unimpressive, the report claims.

It reveals that the levy of three per cent sales tax on domestic sales of textiles fetched an insignificant amount of Rs4.4 million only against the potential of Rs1.9 billion. Similarly, a one per cent income tax on textile retailers fetched only Rs7.7 million. “

At this stage it is pertinent to determine whether the textile sector is paying any amount under sales tax or income tax on its domestic supplies that are not zero-rated,” the report suggests. (CBR estimates that 80 per cent of textile produce is exported and 20 per cent sold in the local market).

An official of the All Pakistan Textile Mills Association said the textile industry is paying all the taxes that it is required to pay. “As for the tax on domestic sales of textiles, we would certainly support CBR’s efforts to realise the tax potential,” said Mushtaq A. Vohra, member, managing committee.

Market sources say that the CBR can reconcile its data on tax paying retailers with that available with the city governments to plug tax evasion. “In Saddar Town (Karachi) some 4000 retailers have got licenses from the city government to do business in and around the Empress Market alone. I know for sure that hardly 10 per cent of them are registered with CBR,” said a businessman based in Saddar. “Now, if the CBR reconciles data with the city government it would be easier for them to see who is evading taxes.”

The CBR report has devoted a special section for iron and steel industry. After analysing the tax trends from various angles, the report says that the tax contribution of this industry has been insignificant in relation to its size. The industry as a whole paid Rs24.5 billion tax in the last fiscal year including income tax of only Rs800 million.

The report points out that whereas the tax contribution of Pakistan Steel Mills has remained consistent with its production, this has not been the case with private sector’s iron and steel producers. The report also accuses those located in Lahore and Gujranwala of not paying “their due share of taxes”.

The representatives of iron and steel industry have reacted strongly to the CBR findings. In a meeting with a senior CBR official immediately after the release of the report, they said they would oppose any change in the tax regime based on the so-called findings of CBR.

“We are neither involved in under-invoicing nor in tax evasion,” a participant of the meeting was quoted as saying. “The CBR figures on tax collection indicates that their own system, perhaps, is not functioning properly.”

The report also analyses tax collection from major sectors of the economy i.e. agriculture, mining/quarrying, manufacturing and services. The study shows that the Revenue Productivity (RP) is the lowest and that of the manufacturing is the highest. (Revenue Productivity is an indicator that measures the relation between the extent to which a sector can be taxed under a given tax rate and the potential base and its actual contribution to revenues).

Though the tax contribution of manufacturing sector remains the highest as measured through the RP and that is because of better tax compliance by some selected sub-sectors and is not spread evenly across the components of the manufacturing sector.

The report points out that food and beverages sub-sector has 10 per cent share in manufacturing and contributes two per cent to the GDP. But its revenue productivity is only two per cent in direct taxes and 27 per cent in indirect taxes.

All types of food, agricultural or marine, including fruit juices and cereals are exempt from sales tax and customs duty at domestic and import stages. Only the processed food and beverages are liable to tax.

The rationale behind tax exemption on food industry is to keep food prices in check. But the CBR report indirectly suggests that the government may withdraw tax exemptions on this industry and find ways of providing direct relief to the poor through social safety nets.

http://www.dawn.com/2007/05/28/ebr1.htm

 

[Neo]

May 28, 2007
Are we squandering home remittances?

ARE we squandering the increasing home remittances of overseas Pakistanis which will exceed $5 billion in the financial year ending June 30.

This issue has arisen as in the first 10 months of this financial year total remittances of $4.450 billion have been received, while large trade deficits and balance of payments deficits plague the economy. The average monthly remittance stands at $445 million.

This issue has also become relevant to the decision to raise foreign exchange reserve of the country to $15 billion. Building that reserve is easy while it is nearly $13.8 billion. In fact this target could have been achieved last June when the reserve stood at $14.59 billion, but it declined due rising trade and current deficits.

Now when a reserve of $15 billion is being sought, the deficit in balance of trade for the first 10 months of the year is $11 billion, while the current account deficit for the first nine months is $4 billion after absorbing home remittances and the foreign investment of $6 billion.

Building larger reserve by converting the rupee reserves of the government is rather easy. In fact the reserve was built up to the current level from billion dollars bought by the State Bank of Pakistan from open market and partially through inter-bank deals. But now it has been decided to raise additional reserve only through inter-bank deals.

So the real solution to the problem with the scary trade deficit is more of exports than of imports and not to delight in the apparent imported affluence. We are now having more of trading and less of manufacturing and expansion of the service sector. Ample proof of this lies in the decline in import of machinery for textiles which will have its impact on the exports later. And if the reserve is to be raised, it should be raised to 20 to 25 billion dollars.

The present reserve is a tiny fraction of the Chinese foreign exchange reserves of over $1,000 billion and very small as compared to India’s reserve of about $190 billion. But the reserve has to be raised in a proper manner and not through artificial mechanisms.

We need to make not only a larger volume of exports but far more of the value-added. We have to export our skills if not our brain power and not far more of our sweat for which we get a paltry price and have to acquire alluring brand names and make them truly popular.

Similarly we have to export more skilled labour to earn far more per head and not the unskilled manpower which vanishes in foreign countries after expiry of work visa.

Even those who are skilled in domestic chores earn a great deal abroad as do the Pilipino and send home large sums.

But we have a dearth of skilled labour for our own industries and particularly new skills. Workers skilled in domestic chores are also getting fewer in Pakistan so the per capita income of our overseas workers is small as compared to those of people from Philippines.

Still our larger earnings of overseas workers come from the US which average $1.2 billion a year followed by earnings of workers from Saudi Arabia and the UAE.

A tragic feature of this operation is that a large number of workers are duped by agents. A number of workers have died of suffocation in the process of trying to be smuggled out through ships or other contraptions. Official efforts to check such abuses have not been successful because of the desperate efforts of Pakistanis to seek employment abroad by any means.

And yet the overseas remittances of $4.450 billion in the first 10 months of this year exceed the amount sent last year in the same period by $820 billion or 22.6 per cent. The remittances from the US have lead again with $1.176 billion. The year may end with total remittance of $5.5 billion. For the first time it has crossed the $5 billion limit.

The remittances had gone under a billion dollars before 9/11. While the hundi system was being used to send money home, but after 9/11 sending money through banking channel began picking up and $2.389 billion was sent in 2001 and 2002. Remittance rose steadily to reach $4.326 billion in the following year.

There has been criticism that large remittances have not been put to the best use in the country. Last year at the Pakistan Development Forum of the donors, there was a charge that a great deal of remittances was used for speculation in share market and in the real estate. But the fact remains that the money does not belong to the country or the government. It belongs to those who earn them and send them home and they are free to use it the way they choose.

Of course some of the tax-evaded money in the country is sent through the hundi system and brought back as clean money and used the way their senders like. The Chairman of the Central Board of Revenue, Mr Abdullah Yusuf, wanted to lay hands on such money but the prime minister did not approve that lest that dries up the remittances which are flowing in plenty through the banking channel.

Getting tax-evaded money sent out through the still operational hundi and getting it back home through banks is a sure way to clean up black money.

As long as the government does not have the means to check the outflow of money from the country, it does not want to interfere with the inflow in such abundance more so when the balance of trade and current account deficits and the balance of trade deficits are too large and the government is underestimating its impact despite the warnings of the World Bank.

Meanwhile, the rupee is largely steady with marginal attrition. The government has left the rupee afloat and sensitive to the market mechanism. The State Bank intervenes in the market to control volatility of theexchange rate.

The government will soon claim that for the first time the foreign exchange reserve has gone up to $15 billion while the economy demands that the reserve is raised to $15 to $25 billion in view of the very large trade and balance of payments deficits.

Meanwhile, a memorandum of understanding has been signed between Pakistan and South Korea to employ Pakistani workers there. An agreement has been signed with Malaysia too to employ Pakistanis, but some hitches remain to be removed. Working in South Korea can provide good training to Pakistani workers and more of them should be sent there.

But if such attempts have to be a success, we have to provide for large training facilities and create a large pool of workers with technical qualifications both to export them as well as meet the needs of the domestic industry.

Our food import is now costing $2.3 billion and the food import is likely to rise further to beat inflation. Milk costs far more now and so does palm oil. The price of crude oil is expected to rise and the oil bill next year will consume $8.8 billion. We have to earn more to meet such diverse demands of the country.

http://www.dawn.com/2007/05/28/ebr13.htm

 

[Neo]

May 28, 2007
KSE 100 index breaches psychological barriers to settle at 12,700

THE Karachi Stock Exchange 100-share index breached three psychological barriers during the last week as a judicious blend of both local and foreign buying drove bears out of the market at least for the near-term.

The breach of barriers of 12,500, 12,600 and 12,700 in a week is a significant development and reflects that investors are toeing the line of higher corporate earnings, a good national budget and an active presence of foreign fund buying.

The market derived its strength from rumours that a high-powered KSE delegation will meet the prime minister seeking his intervention to resolve the CFS issue, which had already touched its upper ceiling of Rs55 billion.

Speculative buying based on the perception that the CFS limit may be raised to Rs65 to Rs70 billion did not allow investors to lay their guards and they continued to build-up positions on selected counters.

The share market, therefore, staged a broad-based rally as both local and foreign investors made an extensive buying at lower levels almost on all blue chip counters.

The KSE 100-share index, which earlier showed either-way movements surged to new all-time high so far at 12,732.41 points, up by 392 points. Its junior partner KSE 30-share index also rose by 609.86 at 15,897.01. The market capital swelled by over Rs100.00 billion at Rs3,713 billion.

The market was adversely affected by the three-day strike threat by transporters from May 25-27 against the May 12 city violence. The postponement of the strike, however, gave the much-needed push to foreign investors and local bargain-hunters who spent lavishly in the market at current levels.

Market's mid week snap rally boosted by active short-covering in oil shares followed by reports of increase in world oil prices and sympathetic earning-based covering purchases on other counters, notably leading banks showed that it had the will to rise further in normal trading conditions.

“Essentially, it was an institutionally-based rally which was later joined by foreign investors”, said a leading stock analyst Faisal Abbas. He said: “Tired institutions could not sit idle on their heavy liquid cash, and resumed normal business at lower levels”.

Another analyst Hasnain Ali Asghar hopes that the snap rally could be sustained in coming sessions also, but has doubts as background news from different fronts are not positive.

But Tuesday's snap rally gave a pleasant surprise to most of the leading market players awaiting clearer picture on the corporate thinking in coming sessions, he added.

However, bad news both from political and law and order fronts are following in quick successions which is not allowing investors to plan a long-term portfolio adjustment strategy, says analyst Ashraf Zakaria and adds : “everybody is awaiting to invest after the political dust settles down.”

The perception that the index will settle somewhere well above the level of 13,000 points despite developing political situation as investors will think twice to invest even at the falling prices. But some others said it has already survived the shock and is well on the road to set new record.

“There is more than one reasons, which could have bearish impact on the share market in the coming weeks, the main among them being a perception of political uncertainty”, analyst Ahsan Mehanti said and added “all political indicators originating from official and private sources are terribly bearish”.

FORWARD COUNTER: Leading shares on this counter followed the lead of their counterparts in the ready section and mostly finished with fresh gains, major gainers among them were MCB, National Bank, OGDC and Bank Alfalah.—Muhammad Aslam

http://www.dawn.com/2007/05/28/ebr17.htm

 

[Neo]

Prime Minister confirms export target to be missed marginally

ISLAMABAD (May 29 2007): Prime Minister Shaukat Aziz on Monday conceded that exports target of $18.6 billion for the current fiscal year would be missed but claimed that dip would be marginal. He announced at a press conference on Monday that GDP grew by 7.02 percent in 2006-07, against 6.1 percent of the last year.

Per capita income rose to $925 from $833 last fiscal. The Prime Minister claimed that per capita income would cross $1,000 mark next year. He said revised GDP growth rate for 2004-05, stood at 9 percent. It was 8.6 percent in the original estimates. The Prime Minister said agriculture grew by 5 percent whereas crops sector growth was registered at 6 percent and livestock by 4.3 percent.

Large scale manufacturing (LSM) registered 8.8 percent growth against revised estimate of 10.7 percent of last year. He quoted the major industries, which performed exceedingly well to take GDP growth slightly over its estimated 7 percent.

He quoted the following sectors that contributed positively: Sugar 19.6 percent, beverages 28.4 percent, cotton yarn 12 percent, footwear 13.2 percent, paint and varnishes 43.8 percent, motor tyres and tubes 1 7.2 percent and 45 percent respectively, Other industries included cement 21.1 percent, iron and steel products 24 percent, air conditioners 36.4 percent, electric transformers products 25 percent, and tractors 11 .4 percent.

The Prime Minister said that wheat production in 2006-07, set a record with 23.52 million tonnes output, sugarcane production was 54.7 million tonnes against 44.7 million tonnes of the last year and cotton production was 13 million bales.

He said that services sector grew by 8 percent and total economy size stood at $146.3 billion. Shaukat Aziz repeatedly claimed that Pakistan's economy was booming and his government was making the best efforts to make sure that its benefits trickle down to all particularly to the poor.

He said that the rural poor were already getting benefit of economic boom and their better living standard was an ample proof. He said the government was fully alive to the situation arising out of growing prices of essential items and taking various measures for improvement. He, in particular, mentioned ban on wheat and cement export, subsidy on fertilisers and hoped that these decision would help the government check price-hike.

He disagreed with a questioner that FBI team was in Pakistan to probe insid- trading scam in US banks. However, shared with the media that he has directed the State Bank of Pakistan (SBP) and Securities Exchange Commission of Pakistan (SECP) to cooperate with regulatory bodies of the US and other countries investigating the matter.

He said Islamabad supports Turkey's efforts for checking human smuggling from Pakistan and it will continue to support it till the end of this menace. The Prime Minister added that the government would take measures to control inflation, which was primary reason of price-hike.

The Prime Minister condemned the use of harsh language against the military at a seminar held at Supreme Court building last week and demanded that apex court should take notice. He said army as an institution was Pakistan's asset and it should be protected by all segments of the society. Earlier, National Account Committee (NAC) met here to finalise GDP and other estimates for 2006-07. Statistic Division secretary was in the chair.

http://www.brecorder.com/index.php?id=569894&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

Manufacturers against import of old trucks, buses: waste of investment feared

KARACHI (May 29 2007): Any change in the current policy that would allow import of more than five years old trucks and buses, even after payment of 30 percent penalty, may jeopardise the Rs 5 billion investment in commercial vehicles manufacturing plants and over Rs 8 billion vendors' investment in the country.

According to truck manufacturers, the policy announced in July 2005-06 for liberal import of used trucks and buses has caused loss of sales revenue to the tune of Rs 16 billion to local manufacturers, and Rs 8 billion to vendors. In addition, 0.3 million new job opportunities with the manufacturers and vendors were lost.

Following the announcement of government policy the import of used trucks swelled to over 11,000 vehicles, while sales of locally produced trucks dropped to only 7,400. This meant that the number of vehicles imported was more than vehicles produced locally. In the same period, over 1,200 used buses were also imported, against local production of 1,500 buses.

According to manufacturers, commercial vehicles industry is one of the oldest industries in Pakistan. Trucks and buses were being produced in the plant of General Motors in 1954. At that time, the government had patronised this nascent industry to the extent of restricting one or more trucks and buses under the gift scheme with the condition that such imported trucks should not be more than two years old.

The importer was required to present documents, such as earning certificate and registration book of imported vehicle, to determine the age of the vehicle. In 1993, minor changes in the import policy were made. In 2000, import conditions were slightly modified, waiving the two-year-old condition under 'Transfer of Residence' (TR) scheme, but requiring vehicle registration in the name of the importer one year before departure for Pakistan.

Much to the disappointment of local manufacturers, the rules for import of vehicles were grossly changed in July 2005 whereby import of used trucks and buses wass allowed and the condition for registration of the vehicle in the name of the applicant for one year before departure for Pakistan was also waived. The condition of registration documents of the vehicles to be attested by Pakistan embassy, too, was also withdrawn.

In July 2006, although import of vehicles even under TR scheme was restricted only to five-year olds, an SRO was issued allowing clearance of illegally imported vehicles on payment of 30 percent additional duty as fine. This opened floodgates for import of even very old trucks and buses, with all types of description and models, with no guarantee of availability of parts and service facilities.

However, the decision to change the rules was eventually withdrawn upon constant protests by vehicle manufacturers and a new SRO was issued on March 17, 2007 disallowing import of vehicles more than five years old. Such vehicles cannot be imported even after payment of 30 percent penalty.

Manufacturers have appealed that the current policy must be continued to save the truck industry from disaster and to encourage it to play its due role in meeting the needs of a growing economy.

Their plea is that the world is heading towards friendly environment and vehicles are produced with euro-compliant engines to reduce pollution. They have described recent introduction of buses in Pakistan operating on natural gas engine as a welcome step in the right direction. Once a large number of such buses ply in the city, pollution intensity would greatly come down and create an environment healthy for those who live in towns.

Import of 10 to 15 years old used vehicles with non-euro-compliant engines would be a step in reverse direction, and operation of such vehicles would create pollution and cause serious health risks, they say.

The manufacturers emphasised that since they were focusing on euro-standard vehicles and multi-axle trucks to meet the demands of new trade corridors requiring expansion in plant facilities, high investment in machinery aand equipment, massive training in skills for technology transfer, it was important that the current policy of stopping smuggling of used trucks and buses should continue uninterrupted.

They say that the government should come up with a long-duration firm policy in this regard to discourage vested quarters active in lobbying for import of about 10,000 used trucks so that the investors' confidence is reinforced and local manufacturers' determination is boosted to build up and support the efforts to modernise the trucking sector.

http://www.brecorder.com/index.php?id=569905&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

Two coal-based power plants to be set up near Karachi

KARACHI (May 29 2007): Discussions are afoot between two foreign companies and the Private Power Infrastructure Board (PPIB) for the establishment of 1,000 mw plants each in the coastal belt near Karachi, based on imported coal. The representatives of United States AES Corporation and Mitsui Japan had recently met PPIB officials to finalise formalities of the projects regarding setting up of these units.

Sources told Business Recorder on Monday that the government had already approved the proposals of both foreign companies and major decision would be taken by the third week of June.

In the key talks, construction of a jetty for coal import would be highlighted, which probably would be built at Keti Bunder. They said that the government had received letters of interest (LoIs) from both companies and had approved them to go ahead with their plans.

For overcoming power shortfall in the country, the government is desperately seeking resources for electricity production, while furnace oil prices have climbed beyond reach, gas reserves are depleting and water resources for power generation are in doldrums.

However, producing electricity from coal-based power units are the best option for the government, sources said. They said the coal could be imported from Australia, South Africa or China for this purpose.

Experts believe that three to four million tonnes imported coal (depending upon high BTU) required for producing over 1000 mw thermal power would mean that the country would import for two proposed projects about eight million tonnes coal.

http://www.brecorder.com/index.php?id=569936&currPageNo=2&query=&search=&term=&supDate=