Pakistan Economy - News & Updates - Archive

[Neo]

ADB to provide $1,400 million for two projects

FAISALABAD (June 03 2007): Asian Development Bank will provide $1,400 million for two projects National Trade Corridor Highway Investment Program - Project-I and MFF. According ADB sources, $500 million will be provided for the National Trade Corridor Highway Investment Program (NTCHIP).

Which aims to assist the government of Pakistan in the implementation of its flagship initiative approved by the government in 2005. The objective of NTCHIP is to develop and improve road connectivity along the main north-south national highway corridor that will support the national trade corridor (NTC).

Road sector efficiencies will be linked to policy reforms and action as identified and endorsed by the government's reform agenda on NTC. Consulting services for construction supervision of the National Trade Corridor Highway are required to assist the National Highway Authority (NHA) in implementing the proposed improvements and construction.

Under this project, consulting services will be provided by an international consulting firm in association with a domestic consulting firm to be selected by NHA according to ADB's guidelines on the use of consultants. A total of 3,620 person-months of two teams of consultant inputs are estimated for the four packages of Project I.

It will comprise 496 person-months of international and 3,124 person-months of domestic consultant input. Procurement to be financed under NTCHIP - Project-I will be carried out in accordance with ADB's Procurement Guidelines.

International competitive bidding (ICB) will be used for goods and works funded under the Investment Program. ICB will be utilised for supply contracts estimated to cost the equivalent of $1 million or more. ICB will be used for civil works contracts estimated to cost the equivalent of $5 million or more.

ADB will provide $900 million for second programme "MFF - National Trade Corridor Highway Investment Program (NTCHIP)". NTCHIP will contribute to the economic growth by developing connectivity assets.

This will increase the trade competitiveness and regional co-operation. The program will invest in over 800 km of the NTC network. This will reduce the travel time from Karachi to Peshawar by half and provide faster access to the borders with Afghanistan, the People's Republic of China (PRC), and Central Asia.

http://www.brecorder.com/index.php?id=571992&currPageNo=3&query=&search=&term=&supDate=

 

[Neo]

June 03, 2007
Sindh to earmark Rs50bn for development: Rs230bn budget likely on 15th

KARACHI, June 2: The Sindh government is preparing a budget of about Rs230 billion plus for the next fiscal year, which is likely to include a development outlay of Rs45 to Rs50 billion and a promise of giving employment to 25,000 youths in the provincial government services.

“The budget size will be approximately 25 per cent more than the current fiscal year’s budget of Rs193 billion with 30 per cent more development funds than the revised development outlay of Rs35 billion during 2006-07,” a well-placed and authoritative source in the Sindh government disclosed.

The original size of the current year’s Annual Development Programme was Rs32 billion, which was raised to Rs35 billion.

June 15 is the tentative date for presentation of the Sindh budget.

Next year, being an election year, is of special significance for the ruling coalition in Sindh as it is for the ruling alliance in Islamabad and PML (Q) in Punjab and sources say that strategies are being worked out to pool all available budgetary and non-budget resources to obtain best results.

Sources claim that the Sindh and Punjab governments have huge surplus cash funds — more than Rs100 billion - in their accounts with the State Bank of Pakistan. Professional planners and political brains have been deployed to work out schemes based on these funds to win over the support of the population.

The planners focus on next fiscal year’s budget is on glittering and attractive schemes and projects to get support rather than on sectors where work is slow and results take time to come. “It is an entirely election-oriented budget with all known gimmicks,” the source said.

There will be gimmicks for the rural areas and for the urban areas. There is a Mega City plan for Karachi to be launched with fanfare amidst a media blitz. Then there is a White Revolution plan for rural areas by promoting livestock. In fact this plan was launched early this fiscal year with no visible signs of any improvement in dairy farming.

For the next fiscal year’s budget, the federal government has contemptuously ignored the pleas made by the Central Board of Revenue to allow it collection of agricultural income tax.

The suggestion was that instead of provincial governments, the CBR would collect tax from the agriculturists and then pass it on to the respective provincial governments on purely collection basis.

The CBR officials made a detailed presentation to President Pervez Musharraf with an assurance that it can raise collection to Rs50 to 60 billion instead of less than Rs2 billion at present.

In 1977, when late Bhutto introduced tax on the agricultural income, the same collection mode was adopted in 1977-78. But after taking over on July 5, 1977, one of the first actions of General Zia ul Haq was to repeal agricultural income tax without any announcement and he won over the support of all big landlords in Sindh, Punjab, Balochistan and NWFP.

The big landlords in Pakistan did not take time in abandoning Bhutto. ”How can Pervez Musharraf be unaware of Zia ul Haq’s tactics,” the source said.

Another feature of next fiscal year’s budget is the distribution of resources on the basis of the decision given by President General Pervez Musharraf. The federal government did not give any hint of forming a new National Finance Commission. The Muttahida Qaumi Movement, the dominant partner of Sindh coalition also did not raise the issue. “Election year is not the appropriate time to raise NFC issue,” the source said.

“Agriculture is getting all attention in resource allocation during next fiscal year,” the well-placed source said and pointed out that livestock farming will get a substantial amount.

-----“Livestock farming was given focus in the current fiscal year’s budget also,” recalled an observer who pointed out that the milk price had increased to Rs34 a litre from Rs28 a litre last year. “We can only pray and hope that history does not repeat itself next year and milk price in Karachi goes to Rs40 a litre,” he said.

Revival of closed 7,000 primary schools in Sindh is another issue to get attention. In Sindh there are 15 primary schools for every secondary school. The government wants to bring down this ratio to five primary schools for one secondary school.

Plans are being made to upgrade a large number of primary schools. But how the quality of education will be improved is not elaborated. At present, the constructed structures of schools, hospitals and community centres are being used for livestock pens, parlours and even police stations in the rural areas.

----Sindh Coastal Highway project will also get substantial amount of allocation in next budget. It is a 325 kilometres long highway that will connect Karachi, with Bhambhore, Mirpur Sakrand, Gharo, Keti Bunder, Ali Bunder and Nagar Parkar. Total cost of the project is Rs8 billion and its construction will open up coastal areas of the province.

The next fiscal year also marks the fifth and final year of the present coalition in Sindh. Since 2003-04 till 06-07, the Sindh government invested Rs88 billion development funds. Karachi still remains half-dug and half-excavated city. Even the main business districts are inaccessible.

Hyderabad, Sukkur and other second tier towns of Sindh are in no better positions. The rural Sindh is primitive and poor. In a few rural districts, the poverty ratio is said to be 90 per cent in Sindh.

With an indicated Rs50 billion development investment in the next fiscal year, the total development cost comes to Rs138 billion during the term of this government.

Two chief ministers took turn one after the other. ”None of the two provided leadership and there was no direction of development investment,” an observer said.

http://www.dawn.com/2007/06/03/ebr2.htm

 

[ahussains]

All the project always is funded by the banks on interst basis and the goverment says we are not taking any more loans ... ? Start the small without loas projects which can give some thing to pakistan and its people..

 

[Neo]

Sunday, June 03, 2007

Export plan for textile and clothing: Textile exports to reach $24 billion by 2013

* Budget 2007-08 to enhance textile sector exports

By Sajid Chaudhry

ISLAMABAD: The Budget 2007-08 incorporates measures to enhance textile and garment sector’s exports by offering fiscal relief to the sector.

The government is expected to allow sales tax and customs duty exemption on all types of synthetic fibres used in textile exportable products, exemption on income of foreign technicians hired by the textile industry and 15% merger tax credit on merger asset value of textile exporting companies, a government official told Daily Times on Saturday.

These proposals on “Export Plan for Textile and Clothing” were discussed at high-level meeting where the Prime Minister Shaukat Aziz directed the Textile Industry to coordinate with the concerned ministries to start implementation of these measures relating to textile and clothing.

The export plan for textile and clothing seeks to enhance textile and garment sector’s exports from $9.98 billion in the fiscal year 2006 to $24.36 billion by fiscal year 2013.

The meeting was informed that usage of synthetic filament is nominal in Pakistan’s industry as duties on synthetic materials are discouraging its use in textile export industries. The meeting, taking note of it decided that cotton research facilities may be consolidated and Pakistan Cotton Committee be restructured. It decided to allow zero rating of all synthetic fibres used in the textile exporting industries. The meeting also directed to strengthen synthetic fibre research institutes at Karachi, and establish new institutes at Faisalabad and Lahore.

The meeting was informed that there is un-necessary competition among textile exporting units, which is resulting in lower unit price of Pakistani textile products. To improve the economies of scale in the textile sector, the meeting has directed to provide incentives to facilitate merger of companies by way of providing “15% merger tax credit” on merger asset value. The meeting has also directed to initiate study to enforce minimum capital requirements in textile companies within minimum possible timeframe.

While discussing the non-availability of required human resources, the meeting was informed that against the total requirements of 12750 technical graduates in various fields of textile only 7950 are available and a shortage of 4800 exists in the country. The meeting taking serious note of this situation directed the concerned authorities to immediately hire foreign technicians to fill the skill gap in the textile and clothing sector.

http://www.dailytimes.com.pk/default.asp?page=2007\06\03\story_3-6-2007_pg5_3

 

[Neo]

Sunday, June 03, 2007

Government to offer Rs 200 billion relief measures

LAHORE: Advisor to Prime Minister on Finance Dr Salman Shah said on Saturday that the government is going to offer Rs 200 billion in terms of subsidies, grants and salary increases in next budget.

Addressing newsmen at a local club, the advisor said that the government intends to increase social sector spending by 20 percent, particularly in health and education sectors.

“We would take the development work at the doorstep of deserving ones in the next fiscal year,” he said. On construction of dams, Dr Shah said that Basha dam would be completed in next eight to nine years, adding that Kala Bagh dam would also be constructed, as the public understands that the construction of Kala Bagh dam has become inevitable now.

He said government, keeping in mind the rising demand for housing, is going to focus on housing finance next year aggressively. According to him, 10 new Engineering universities, worth Rs1000 billion, would be set up in the next few years and he urged the business community to pay taxes honestly to enable the government to meet the expenditures in this regard.

On the rising prices of essential commodities, Dr Shah admitted that a common consumer is hit hard due to increase in prices but he added in same breath that it was an international phenomenon and surveys show that prices of food items are increasing by 15 percent annually all over the world.

Dr Shah said government has targeted inflation to remain at 6.5 percent next fiscal year as well. According to him, the latest bumper wheat, pulses and sugarcane crops have played effective role in curtailing the price hike. Similarly, he added, government will focus on improving the supply chain as a measure to control prices.

He said support prices offered to farmers for wheat and sugarcane have also contributed in high prices, though farmers are direct beneficiaries of these measures. He said country’s reserves would cross $15 billion by June 2007 and government has fixed one trillion rupees as a revenue target for next year.

http://www.dailytimes.com.pk/default.asp?page=2007\06\03\story_3-6-2007_pg5_10

 

[Neo]

Budget to add new chapter in history: Shaukat


ISLAMABAD (June 04 2007): Prime Minister Shaukat Aziz has said that presentation of the new budget next week would add a new chapter in the democratic history of Pakistan since the current Parliament is set to become the first one to present its fifth consecutive budget.

He congratulated the parliamentarians belonging to both treasury and opposition benches for this forthcoming historic occasion.

The prime minister was talking to a group of parliamentarians comprising Federal Minister for Information and Broadcasting Mohammad Ali Durrani, Chief whip in the National Assembly Sardar Nasrullah Khan Dareshak and Minister of State Omar Ayub Khan.

He said that the new budget would be welfare-oriented and would carry forward the reform and development agenda of the government. The meeting also discussed the upcoming budget session. The prime minister appreciated the efforts of Sardar Nasrullah Khan Dareshak and Omar Ayub Khan in interacting with members of the parliament and seeking proposals for the new budget in order to give them representation in the budget making process.

Shaukat Aziz said that during the last five years the government had worked for the welfare of people and was confident of contesting the next general elections on the basis of its performance in office. Omar Ayub Khan said that budget would be presented on June 9 and the general discussions would commence from the 12th.

http://www.brecorder.com/index.php?id=572255&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

ADB to provide KESC $150 mln for power generation

ISLAMABAD: June 05, 2007: The Asian Development Bank (ADB) and Karachi Electric Supply Corporation (KESC) here on Monday signed an agreement to provide the Corporation with a $150 million loan to help increase power supply and coverage in Pakistan's biggest city, industrial and commercial heartland Karachi.

Agreement to this effect was signed by Chief Executive Officer of KESC, Syed Muhammad Amjad and Robert Bestani Director General of ADB's Private Sector Operation.

Secretary Water and Power Muhammad Ismail Qureshi and Country Director ADB, Peter Fedon also witnessed the ceremony. In his address of welcome, Syed Muhammad Amjad highlighted KESC's power expansion plan adding that present installed capacity is 1756 MW and derated capacity is 1249 MW.

He said after rehabilitation as on June 2007 is 1464 MW. He further said that after completion of rehabilitation the total generation capacity would be augmented to 2244 MW by March 2009.

Syed M. Amjad, said he appreciated ADB's support for the utility's urgent turnaround and for its role in bringing together a big financing package.

The successful turnaround of the utility is viewed as important for future privatisation in Pakistan, he remarked.

"This capital injection is essential and will greatly improve the utility's ability to provide a quality service to Karachi", said Robert Bestani, Director General of ADB's Private Sector Operations Department. Karachi is facing energy crisis and its 16 million residents have to contend with frequent power outages.

ADB's loan will go toward on the corporation's dollars 809 million (Rs. 52 billion) capital investment programme.

The balance of funding will come from shareholders, the international finance corporation and local commercial banks. The move comes less than two years after the utility was privatised.

The investment will increase electricity generation by more than 785 megawatts, from about 1,500 megawatts today, as well as greatly improving the utility's transmission and distribution network and its commercial systems and customer responsiveness.

With the economy rapidly expanding, demand for power in Karachi is increasing well above the national average and this trend is set to continue, putting further pressure on an already strained power sector, not just in Karachi but countrywide.

The Karachi Electric Supply Corporation has an exclusive license to supply electricity to Karachi and surrounding areas, but suffered from years of under investment and poor maintenance before it was privatised. The US $ 150 million loan is being provided from ADB's ordinary capital resources without a government guarantee.

The loan will have a maturity of 10 years and a grace period on repayments of upto three years.

Brecorder

 

[Neo]

Oil refining capacity to be jacked up to 13 million tons

ISLAMABAD (June 04 2007): Pakistan's oil refining capacity is planned to be doubled, from 6 million tons to 13 million tons per annum by setting up new refineries to meet growing energy requirements in the wake of high economic growth rate.

In addition to making efforts to enhance refining capacity of the present five refineries, foreign investment is being tapped for setting up another oil refinery near Port Qasim.

The history of oil refineries in Pakistan started when Attock Refinery began its operations in 1922 with a small capacity of 119,000 tons per annum, and now has reached 1.82 million tons per annum.

Attock Refinery Limited (ARL), situated in Morgah, near Rawalpindi, was incorporated as a private limited company in November 1978 to take over the business of Attock Oil Company Limited relating to refining of crude and supplying of refined products.

ARL was then converted into a public limited company in June 1979 and is currently listed on all three stock exchanges. The company is also registered with the Central Depository Company of Pakistan Limited (CDC).

ARL's configuration enables it to process the lightest to the heaviest indigenous crude and produce a complete range of both energy and non-energy products (non-energy products include lubes and greases, asphalt, solvent oil, mineral turpentine (MTT), benzene toluene xylene (BTX), jute batching oil, processing oil, carbon oil, and wax).

ARL has already obtained ISO 9001 (2001), ISO 14001 (2002), and OHSAS 18001 (2006) certifications.

The second refinery, National Refinery Limited (NRL), was incorporated as a public limited company in Karachi in 1963 and the government took over its management under the Economic Reform Order, 1972.

NRL has now been privatised, and management was handed over to new owner (Attock Oil Group) on July 7, 2005.

The Attock Oil Group succeeded by offering the highest bid of Rs 16.415 billion to acquire 51 percent shares and management control of NRL.

The Group is being represented through shareholding acquired by Pakistan Oilfields Limited (POL), Attock Refinery Limited (ARL) and Attock Petroleum Limited (APL).

In addition to a crude refining capacity of over 2.7 million tons per annum, the NRL has two lube refineries that have a combined capacity of 176,000 tons per annum of lube base oils (LBO) and a BTX unit that has a 25,000 tons per annum capacity.

As the only refinery in Pakistan that produces LBO, the NRL enjoys a competitive edge over other refineries. The NRL has acquired certification under ISO 14001 for compliance with international standards on its environment management system.

Pakistan Refinery Limited (PRL), third in the country, was incorporated as public limited company in May 1960 and is listed at the Karachi and Lahore stock exchanges.

The refinery is situated in Karachi and is engaged in the production and sales of petroleum energy products as well as MTT, its only non-energy product.

Its present design capacity is 2.1 million tons per annum. The majority of PRL shares are held by its associated companies (PSO, Shell, Chevron, Central Insurance and Dawood Corporation), whose combined shareholding amounts to 69.3 percent. Financial institutions (9.4 percent), public sector companies and corporations (2.8 percent), individuals (14.7 percent) and joint stock companies, banks, development financial institutions, Modaraba companies, insurance companies and others (3.8 percent) hold the rest.

PRL has been awarded ISO 14001 certification and Occupational Health Safety Assessment Series (OHSAS) 18001 for maintaining its health, safety and environment (HSE) and quality control standards.

The fourth refinery, Pak-Arab Refinery Limited (Parco), was incorporated in Pakistan on May 9, 1974, as a public limited company. The shares of the company are owned by the Government of Pakistan (GoP) and Abu Dhabi Petroleum Investment Company, LLC (ADPI), based in Emirate of Abu Dhabi, in the ratio of 60 percent and 40 percent, respectively.

The company is engaged in refining, sale and transportation of petroleum products. The company is also undertaking marketing of petroleum products (lubricants) under the brand name of 'Pearl'. The refinery of the company is situated at Mahmood Kot, in District Muzaffargarh.

Parco initially started as a pipeline operator, moving petroleum products from Karachi to Mehmood Kot and later on to Machike via Faisalabad. Parco has commissioned another cross-country pipeline 817 km, 26-inch diameter in November 2005.

White oil pipeline is designed to carry up to 12 million tons per year of refined petroleum products from Karachi to Mahmood Kot, starting with initial throughput of 5 million tons per year.

A joint venture company, called Pak-Arab Pipeline Company Limited, has been formed by Parco having 51 percent share in collaboration with country's major oil marketing companies (OMCs)--Shell, PSO and Caltex--having 49 percent share.

In year 2000, Parco's oil refinery, the largest in the country, was commissioned with a refining capacity of 4.5 million tons per annum. The company has an asset base approaching Rs 100 billion.

Parco has entered into a joint venture agreement with 'Total', of France, for marketing its consumer petroleum products under the co-branding of 'Total-Parco' through a rapidly emerging national network of retail outlets. Parco is also marketing 25 percent of its LPG under the brand name 'Pearl Gas' in collaboration with SHV, of Holland.

In addition, Parco also markets the imported lubes from OMV of Austria under the brand name of 'Pearl Lubes', and its locally blended lubes as 'Pearl Energy' and 'Pearl Zabardast'.

Bosicor Pakistan Limited (BPL) was incorporated in the country as a public limited company in January 1995, and is quoted on the Karachi and Lahore Stock Exchanges.

The principal business of the company is refining and marketing petroleum products. The refinery has a designed capacity of 1.5 million tons per annum. After the completion of its trial run from November 2003 to June 2005, the company started commercial production in July 2005 and can produce a wide range of petroleum products, including LPG and naphtha. It has a long-term sale and purchase agreement with Pakistan State Oil Company (PSO) for marketing of its products.

http://www.brecorder.com/index.php?id=572272&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

June 04, 2007
NWFP’s ambitious development plan

By Mohammad Ali Khan

THE North West Frontier Province government is set to announce a Rs32 billon Annual Development Programme (ADP) for the financial year 2007-08.

A major chunk of the fund, of the all-time high ADP, according to Finance Minister Shah Raz Khan, will go to the social sector, including health, education, water supply and communication.

Eying the forthcoming general elections, completion of the projects, which have been initiated by the MMA government, will get top priority in the next budget.

The NWFP government deserves the credit for getting the budgetary allocation for the ADP raised from Rs6 billion in 2001 to Rs27 billion in the current financial year.

But, many believe that even with higher budgetary allocations, no significant improvement could be witnessed towards social indicators of the province mainly because the government lacks a coherent approach to the development sector.

They say that in the NWFP only politically-motivated projects dominate the ADP, which secures the interests of those in power instead of targeting the needy and deserving sections of the population.

Abdul Akbar Khan, parliamentary leader of PPP-Parliamentarians in the Frontier Assembly, says: "Article 119 of the 1973 Constitution confers the provincial assembly with the power to involve parliamentarians in the budget-making process. However, unfortunately even after passage of 30 years, the Frontier Assembly is following the rules framed in 1937, which restrict the involvement of parliamentarians in the exercise.

“Budgets and the ADPs are prepared by bureaucrats on the whims of the ruling parties rather on the basis of need. That is why visible development could not take place in the NWFP even after increasing the spending on public sector uplift programmes," he says.

Apart from limited participation of the public in ADP formulation, there are a number of impediments such as lack of capacity of the implementing agencies and procedural hurdles, which hamper the development process despite higher budgetary allocations.

Background interviews with officials involved in the ADP formulation suggest that government agencies have shortage of technical staff which is creating the biggest hindrance in achieving the required development target.

In the current financial year, out of Rs27 billion worth ADP, the government has earmarked Rs16 billion for those projects which are being financed by provincial resources.

The government had set completion target of 411 projects by the end of current fiscal year. However, by the end of the third quarter hardly 14 projects have been completed. Though, the government anticipates completion of the remaining 397 projects within the specified period of time, the past experiences show that hardly 300 projects could be completed within this period.

According to officials, the Planning and Development Department, being the prime agency for preparing and monitoring uplift activities in the province, doesn't have the capability to achieve the development targets.

Instead of strengthening such department, the government has abolished 180 staff positions during departmental downsizing in 2001.

Currently, there is only one chief of infrastructure, who has to technically scrutinise engineering proposals worth more than Rs5 billion annually.

Similarly the planning capacity of the Works and Services Department is under strain. The department plays pivotal role in the execution of civil works in related projects, but since 1995 no technical person has been inducted to this department, which has badly affected its working.

Earlier, the plan restructuring department had posts of three chief engineers which have been reduced to two along with the staff associated with the office of a chief engineer.

According to officials, the total sanctioned technical staff position of the W&S department is 300, out of which hardly 110 are filled while the rest are vacant.

At the district level, the planning and project appraisal capacity is almost non-existent which is creating procedural hurdles in the preparation of development plans. Such problems are also causing delay in the execution of projects.

A project has to be formally approved prior to its execution by a number of institutions and authorities such as pre-provincial development working party and provincial development working party, concerned department and finally by the chief minister’s secretariat.

The approval of PC-1 of a project takes seven to eight months and the period some time prolongs even to one year in case of its approval by the federal government. Owing to such impediments, the general public of the province is far away from getting any significant benefit from the huge spending at the government level.

Just increasing the budgetary allocation can not mitigate the rampant poverty in the province unless coherent plans devised with public consultation are adopted.

Accountability with responsibility, job training for the concerned officials, introduction of a system of punishment and reward for the officials, placement of right man at the right place with a fixed tenure, strengthening the institutions by protecting them from political pressures and a strong evaluation and monitoring mechanism could produce positive results to a greater extent.

http://www.dawn.com/2007/06/04/ebr10.htm

 

[Neo]

June 04, 2007
Industry-specific incentives

Pakistan's manufacturing and industrial sector suffers from various structural problems causing slow growth of output and exports, low level of investment and high concentration of manufacturing industries.

And like in the past, this time too the government is examining a number of proposals submitted by various official agencies and trade bodies for providing some relief to the industry in the budget 2007-08.

The Board of Investment (BoI) and the Federation of Chamber of Commerce and Industry (FPCCI) have separately prepared their recommendations. And the Central Board of Revenue (CBR) is believed to have agreed to offer certain concessions to make the industry competitive in the international market.

"The government is considering some industry specific concessions in the coming budget", said the Secretary General Revenue Division and the Chairman of CBR, Abdullah Yousuf.

He told Dawn that some of the problems faced by the industry have been identified to help improve the sector. Technical inefficiencies have to be overcome and the poor quality of products needed to be improved. Asked to indicate the specific concessions being considered, he said that it would not be appropriate for him to talk about them before the budget.

"We are very much aware of the problems of our industry and we will try to resolve them in the budget", he said adding that the government wanted the industry to grow at a faster rate to become competitive. All possible measures have been proposed by various bodies including the CBR to help our industry", the chairman CBR added.

The government was trying to create a right environment to help the industry. For making exports competitive, various recommendations have been formulated which are being considered by the government. He said 3.3 per cent growth in exports is surely a matter of concern and that the issue needed to be taken very seriously by the government as well as the exporters.

Mr Yousuf said that one of the factors that contributed to the low growth of exports was the competition from the Chinese and Indian products. "The government can offer fresh concessions and other possible fiscal and non-fiscal incentives to help increase our exports.

"Now we are examining what kinds of exemptions or incentives could be offered, especially on raw material, plants and machinery", he said, adding that poor quality of products and absence of proper research and development activities lead to slow growth rate of productivity, making the country's products uncompetitive in the international market. Diversification of products is another important issue which needs to be taken into account by the businessmen and the entrepreneurs, he said.

A senior official of the Planning Commission said that issues concerning the weak performance of industry and low level of exports have been discussed during the last few important meetings. Some of their problems will be addressed in the budget, he said, adding, in a world of aggressive competition it is not enough to keep generating growth exclusively from factors accumulation. Empirically, between 20-25 percent of growth has emanated from productivity gains in various countries.

The entire process for increasing productivity needs to be based upon the realisation that most people who actually do work are hardly educated and lack training. The objective is to promote higher value manufacturing while maintaining traditional edge in low technology and resource based industries. For this to happen, we must not only make policies, but also implement them effectively.

The wide range of activities and skills available, even when they are limited or circumscribed or scattered, lead us to believe that it is possible to achieve these objectives.

It is necessary to move out of the low skills equilibrium which traps both individuals and employers in a low expectations and low productivity environment. A focused policy thrust, supported by adequate resources, will be sought for raising the threshold levels of technology and skills which will lead to better productivity and better quality.

Pakistan has to make important strategic choices to ensure sustainable growth in the manufacturing sector in a rapidly changing, and international competitive environment. This requires massive structural changes rather than marginal change, a shift in production paradigm to technology and knowledge-based industrialisation, with a focus on the quantitative and qualitative growth of an integrated and competitive industry in the private sector.

"The inefficiencies of import substitution must give way to an export led strategy, and to diversification away from traditional industries and services", he said.

http://www.dawn.com/2007/06/04/ebr13.htm

 

[Neo]

June 04, 2007
Too many ministries stifle exports

PRIME Minister Shaukat Aziz has said that exports in this financial year will marginally miss the target of $18.6 billion, but the economic growth will be above the target at 7.2 per cent, exceeding last year’s growth of 6.8 per cent.

Exports are able to grow by three to four per cent only, says Chairman of the Trade Development Authority of Pakistan Tariq Ikram while the rate of economic growth exceeds seven per cent.

Commerce Minister Humayun Akhtar, who has recently returned from tour of Europe, says the commerce ministry is not solely responsible for the disappointing exports. The financial managers of the country are focused on higher revenue collection, lower external debt and higher economic growth, and achieving success in that area. He wants lower taxes in the exports sphere and larger concessions to the exporters to make exports cheaper and more competitive. But the authorities find that even when more concessions are given, they have not lead to exports’ success and the results are far from adequate.

Usually when the growth rate is high and tax resources are larger, the exports are also higher. In fact many countries in recent times have enjoyed export-led growth instead of growth becoming a deterrent to larger exports.

Mr Humayun is right when he says that exports are not any longer the sole domain of the commerce ministry. The commerce ministry can help export only on what is produced at competitive prices. And that is the responsibility of the ministry of textiles and the ministry of industries. Also in the picture is the ministry of investment promotion to accelerate industrial investment and development of the economy and increase in production all round..

The old export promotion bureau is also in focus which has now rechristened as the Trade Development Authority with Tariq Ikram as its chairman with all his energy and drive, but he finds himself cluttered by too many organisations in the export race. Of course the last word in this area is with the finance ministry with the Central Board of Revenue in tow as the prime minister is also the finance minister.Any decision made by the prime minister cannot be reversed easily.

And the prime minister’s priority is maximising the revenues spent on official activities and on larger development projects. Of course he listens to his ministers when they have a genuine problem.

The expanding textile industry has been agitating for long for a ministry of textile and that has been stoutly resisted by the commerce and industries ministers. They used to argue that if 40 per cent of the industry goes out of the industries ministry, too little authority is left for them and the commerce minister used to argue that if 66 percent of the exports which were textiles were out of his purview, his portfolio will shrink exceedingly. But now for some years, we have not only a textile minister with a cabinet rank but also a minister for state, although there is not enough work for both.

It is to avoid a conflict between the demands of trade and industry that the US has a powerful commerce secretary but no industries secretary. Similarly, Britain has no industries minister but a powerful board of trade headed by a cabinet minister and Japan’s Miti - ministry of trade and industries- is too well known and is very powerful. The ministry looks after the interest of both trade and industry and avoids conflicts between them.

As for the commerce minister’s charge that the government gives priority to revenue collection which hurts exports is only partly valid. Cheap yarn as a result of tax concessions results in cloth abroad which competes with Pakistani fabrics and the government argues that more concessions given to the textile industry results in larger demand which has no end.

Any way, the cost of production of textiles as of any other product has to be lowered and the sale price made more competitive in a highly competitive textile world.

It is because there is not enough work for him as minister of industries and production that Jehangir Tareen has appended to his designation the title of minister for new initiatives as well, but we have yet to see any spectacular new initiative coming from his ministry. We need such new initiatives in the industrial sphere with its too many ministers doing too little or more of the same over and over again.

Whatever happened to the one village, one industry project copied from Thailand with a great deal of bravado. We have yet to see something coming out of that.

Too many cooks spoil the broth and too many ministers seem to stifle the export trade and produce a mole hill out of a mountain of verbiage.

It is time the prime minister takes a look at the economic portfolios and reassigns them more productively instead of letting the ministers block each other or let the other ministers do their job which he is not doing.

Do we need to clutter the seeds of power with too many ministers and call some of the ministers to be made ministers without portfolio while others are permitted to deliver what they promise.

http://www.dawn.com/2007/06/04/ebr19.htm

 

[Neo]

June 04, 2007
Industry-specific incentives

Pakistan's manufacturing and industrial sector suffers from various structural problems causing slow growth of output and exports, low level of investment and high concentration of manufacturing industries.

And like in the past, this time too the government is examining a number of proposals submitted by various official agencies and trade bodies for providing some relief to the industry in the budget 2007-08.

The Board of Investment (BoI) and the Federation of Chamber of Commerce and Industry (FPCCI) have separately prepared their recommendations. And the Central Board of Revenue (CBR) is believed to have agreed to offer certain concessions to make the industry competitive in the international market.

"The government is considering some industry specific concessions in the coming budget", said the Secretary General Revenue Division and the Chairman of CBR, Abdullah Yousuf.

He told Dawn that some of the problems faced by the industry have been identified to help improve the sector. Technical inefficiencies have to be overcome and the poor quality of products needed to be improved. Asked to indicate the specific concessions being considered, he said that it would not be appropriate for him to talk about them before the budget.

"We are very much aware of the problems of our industry and we will try to resolve them in the budget", he said adding that the government wanted the industry to grow at a faster rate to become competitive. All possible measures have been proposed by various bodies including the CBR to help our industry", the chairman CBR added.

The government was trying to create a right environment to help the industry. For making exports competitive, various recommendations have been formulated which are being considered by the government. He said 3.3 per cent growth in exports is surely a matter of concern and that the issue needed to be taken very seriously by the government as well as the exporters.

Mr Yousuf said that one of the factors that contributed to the low growth of exports was the competition from the Chinese and Indian products. "The government can offer fresh concessions and other possible fiscal and non-fiscal incentives to help increase our exports.

"Now we are examining what kinds of exemptions or incentives could be offered, especially on raw material, plants and machinery", he said, adding that poor quality of products and absence of proper research and development activities lead to slow growth rate of productivity, making the country's products uncompetitive in the international market. Diversification of products is another important issue which needs to be taken into account by the businessmen and the entrepreneurs, he said.

A senior official of the Planning Commission said that issues concerning the weak performance of industry and low level of exports have been discussed during the last few important meetings. Some of their problems will be addressed in the budget, he said, adding, in a world of aggressive competition it is not enough to keep generating growth exclusively from factors accumulation. Empirically, between 20-25 percent of growth has emanated from productivity gains in various countries.

The entire process for increasing productivity needs to be based upon the realisation that most people who actually do work are hardly educated and lack training. The objective is to promote higher value manufacturing while maintaining traditional edge in low technology and resource based industries. For this to happen, we must not only make policies, but also implement them effectively.

The wide range of activities and skills available, even when they are limited or circumscribed or scattered, lead us to believe that it is possible to achieve these objectives.

It is necessary to move out of the low skills equilibrium which traps both individuals and employers in a low expectations and low productivity environment. A focused policy thrust, supported by adequate resources, will be sought for raising the threshold levels of technology and skills which will lead to better productivity and better quality.

Pakistan has to make important strategic choices to ensure sustainable growth in the manufacturing sector in a rapidly changing, and international competitive environment. This requires massive structural changes rather than marginal change, a shift in production paradigm to technology and knowledge-based industrialisation, with a focus on the quantitative and qualitative growth of an integrated and competitive industry in the private sector.

"The inefficiencies of import substitution must give way to an export led strategy, and to diversification away from traditional industries and services", he said.

http://www.dawn.com/2007/06/04/ebr13.htm

 

[Neo]

Growth with equity

HAVING achieved an average economic growth rate of seven per cent over four successive years, the government is now targeting a 7.2 per cent GDP growth for fiscal year 2007-08. The track record raises hope that Pakistan has not only the potential but also the wherewithal to join the league of Asian countries with decades-long sustained growth — a trend that is becoming more global. But one cannot be sure that the growth strategy now being pursued, resulting in the worsening of major macroeconomic indicators, can really protect the economy from the long-term risks of a possible slowdown. As is evident from a significant gap this year between budgetary targets and the revised provisional estimates, particularly the receding growth of industrial production and exports, the future course of development seems to remain uncertain. Industrial growth is down to 6.8 per cent against the budget estimate of 11 per cent and large-scale manufacturing has recorded a growth of 8.8 per cent, falling significantly short of the 13 per cent target. Similarly, export earnings are now pitched at $17.2 billion this year against the original projection of $19.8 billion. Despite the rise in home remittances and foreign investment — which together account for about $11-12 billion — the record current account deficit is expected to rise to $7.1 billion, mainly because of a very high trade deficit of $9.9 billion.

The current account deficit can be financed in the short run from international capital inflows but, as rightly pointed by the State Bank of Pakistan, global capital “can be volatile and sensitive to a host of domestic and global factors (both economic [and] political)”. Before the economy suffers a setback, it is imperative to boost exports of merchandise beginning with the next budget, focusing on manufacturing and by taking steps to increase the dismally low rate of domestic savings. The savings rate has been eroded by persistent high inflation, currently estimated at 7.6 per cent as against the budgeted target of 6.5 per cent. With increasing interest rates and decreasing purchasing power, consumer financing by banks has dropped by a huge 42 per cent in nine months during the current fiscal year. The share of consumers, along with exports, in GDP growth is falling. But a positive development this year has been a robust growth in direct taxes, a trend that, if sustained, can ultimately help lessen the heavy burden of indirect taxes on poor consumers.

Going by the official pronouncements, next year’s budget holds out some promise for the common man. As indicated by the secretary-general of finance, the salaried class and the common people will get relief though increases in their pay and pensions. The long-delayed plans for low-income housing are to be initiated. The size of small loans, which have so far not gone towards the uplift of the poorest of the poor, will be increased. How much these provisions will benefit the common people will be known only after the budget has been announced. Unlike the past two to three years, the economic growth this year is more broad-based coming from all three sectors — industry, agriculture and services. It is a positive trend. But the worsening macroeconomic indicators and structural imbalances pose a daunting challenge to the policymakers. It is time to address issues relating to the fundamentals of the economy to manage sustainable growth with equity.

http://www.dawn.com/2007/06/04/ed.htm#1

 

[Neo]

OMV announces new gas discovery in Pakistan
4-June-2007

VIENNA (Thomson Financial) - OMV AG said its unit OMV (Pakistan) Exploration has discovered gas in its Tajjal 1 exploration well in Pakistan's northern Sindh province.

Preliminary test results show a flow capacity of 3,400 barrels of oil equivalent per day (boe/d), OMV said.

Operating in Pakistan since 1991, OMV (Pakistan) Exploration Ltd is a wholly owned unit of Austria's OMV and provides 16 pct of the country's gas needs.

peter.klopf@thomson.com pkl/vs COPYRIGHT Copyright AFX News Limited 2007. All rights reserved.

The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.

http://www.sharewatch.com/story.php?storynumber=425979

 

[Neo]

Wow! This is already the fifth discovery in less than six weeks.