Pakistan Economy - News & Updates - Archive

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Bears tighten grip on ISE
RECORDER REPORT ISLAMABAD (May 05 2006): Bears continued to show minus signs at the Islamabad Stock Exchange (ISE) where equities failed to show recovery signs amid increase in index. ISE Ten index showed a decrease of 11.38 points as the index moved from 3,297.82 to 3,286.44 points.

The overall turnover amounted to 882,200 shares as compared to previous volume of 846,200 shares. A total of 144 companies participated in buying and selling activity. Majority of stocks (92) landed in minus column, 51 showed healthy signs, whereas one company remained pegged to its previous level.

The volume of PTCL was 502,800 shares as compared to previous turnover of 186,900 shares. The turnover of OGDCL was 266,700 shares as compared to previous volume of 370,800 shares. The volume of FFBQL was 61,500 shares.

 

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Musharraf summons meeting of Sindh leaders today KARACHI: President Musharraf has called a meeting of the government and political leaders of Sindh today (Friday) at the Aiwan-i-Sadr to discuss political affairs of the province.

Chief Minister Sindh , provincial cabinet members, parliament members and leaders of Muslim League and Chaudhry Shujaat will also be present at the meeting.

The meeting would discuss the political situation of the country, upcoming general elections and different issues related to Muslim League and chalk out future strategy especially for Sindh.

 

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Foreign reserves cross $ 13 bln mark: SBP KARACHI: Pakistan's liquid foreign reserve, continuing upward movement, at last crossed the much awaited $ 13 billion mark last week ended on April 29, State Bank of Pakistan announced here Thursday.

The total liquid foreign reserves that were $ 12910.2 million on April 22, rose to $ 13.016 billion on April 29, 2006. Out of this amount, SBP held $ 10,645.3 million and $ 2,370.7 million were with other banks on the said date.

 

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Govt mopped up Rs 55 billion to meet budget deficit: SBP KARACHI: The government of Pakistan mopped up Rs 55 billion during the current fiscal year from the market to fill the yawing budget deficit gap.

According to statistical data released by State Bank of Pakistan (SBP), the government has set Rs 98 billion debt borrowing limit to meet budget deficit of the country during fiscal year of 2005-06.

During the current fiscal year, the Government of Pakistan returned Rs 37 billion borrowed from banks as debt for commodity operation, according to SBP.

During the same period, country’s private sector Rs 339 billion which were up Rs 9 billion from the set target limit for the current fiscal year. Whereas, commercial banks released Rs 353 billion debt.

 

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Pak-Iran parleys on ferry service from May 8 Islamabad: Pakistan and Iran have been scheduled to hold parleys on ferry service between Gwadar and Iranian port ‘Chah Bahar’.

Joint Secretary for Port and Shipping, Hasan Zaidi informed media that Pakistan and Iran would hold two-days meeting starting from 8th May to mull over the proposal of starting the service.

The agreement of Joint Search and Rescue Operation between the two countries would also be expected to take place, he added

 

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Gwadar port operation: DP World asked to furnish future business plans: Ghauri KARACHI: Federal Minister for Ports and Shipping Babar Ghauri said Thursday that before finalizing terms of reference for handing over Gwadar port to an international port operator, the government has asked DP World, a new and dynamic global port operator, to submit its future business plans.

DP World was the second among the global port operators, which were short-listed for operation of Gwadar port, but, the concerned committee had recommend that the port should be handed over to Hutchison port operator, he said while talking to Geo News.

However, he said, the negotiations were underway with DP world on terms of reference as the Hutchison did not take interest in operating Gwadar port.

Gwadar port was ready for transshipments and there was no technical barrier in the way of its operation in next month, he said.

 

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ZIA M KHAN

ISLAMABAD (May 05 2006): A delegation of Dubai-based investment group called on President General Pervez Musharraf on Thursday and conveyed to him its willingness to operate Gwadar Port. A delegation of the Nakheel Group Investment of which Dubai Ports World is a part is nowadays visiting Pakistan.

The meeting was part of the group's efforts to operate and manage the country's multibillion port that is often termed energy and trade corridor for China and Central Asia.

The first phase of Pakistan's largest deep-sea port at Gwadar along with the coastal belt of Balochistan is about to complete within the next few months.

Prime Minister Shaukat Aziz has time and again been saying that the government would like some international operators to run Gwadar Port after its completion.

"We have told the President (Musharraf) that we want both operational and managerial control of the port," Dubai Ports World Chairman Sultan Ahmed bin Sulayem told media.

"Pakistan's economy is growing...we want to participate in the development of the country and it is the best time to be here (in Pakistan)," Sultan said.

About the modus operandi of the deal the group wanted to have with the Government of Pakistan, he said, there was nothing specific at the moment.

"We have just started negotiations. Talks are at the initial stage and will take some time to mature," Sultan said, but another member of his delegation added the group would like to operate Gwadar under a deal at least for 50-60 years.

Planning Commission Deputy Chairman Akram Sheikh said the government would prefer a Built, Operate and Transfer (BOT) basis for the second phase of Gwadar Port.

Sultan said the group also wanted to invest in various other sectors in Pakistan, including real estate, transportation and logistics.

Minister of State for Privatisation and Investment Umar Ahmed Ghuman said the government would sign an umbrella memorandum of understanding (MoU) with the group for the investment it wanted to make in Pakistan.

The group also includes representatives from Dubai Islamic Bank Limited, the UAE and Jebel Ali Free Zone.

 

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KARACHI (May 05 2006): The performance of cement companies during the last nine months of the current fiscal year was highly commendable as their earnings in this period recorded an increase of Rs 4.1 billion because of demand for cement.

Cementing exceptional local demand with better profitability owing to improved margins, the cement sector seems to be the flavour of the month these days. The recently announced nine-month results of the cement sector show astonishingly improved gross margins with healthy profitability following the volumetric boost in sales. Some 19 companies have been picked up, representing 91 percent of the sector out of the 21 listed companies leaving Pakistan Cement (formerly Chakwal Cement) and Mustehkam Cement.

Khurram Shehzad, research analyst from Investcapital Securities, said the cement sector's bottom line grew by a whopping 83 percent during 9MFY06 YoY. In absolute terms, total profit of the cement sample totalled Rs 9 billion compared to Rs 4.9 billion in 9MFY05.

Leading the profitability track, the share of DG Khan Cement alone was 19 percent in the total profitability of this sector, with Lucky following with 15 percent. Maple Leaf and Fauji Cement came next each taking up around 9 percent of the total profitability.

THE REASON BEHIND THIS REMARKABLE GROWTH IN PROFITS WAS TWO-FOLD: Volumetric growth in sales with increased ex-factory and thus improved retention prices - 20 percent and 25 percent respectively. Also, relatively lower cost of sales led to unprecedented increase in gross margins, which in turn contributed well enough to the companies' bottom line.

Dispatches of our sample companies have increased from 9.70 million tons in 9MFY05 to 11.29 million tons in 9MFY06, showing a demand growth of around 16 percent. This made up 84 percent of the total industry dispatches; here the total industry demand grew by 14 percent during the same period.

Yet again the top three producers were DG Khan Cement, Lucky Cement and Maple Leaf Cement. However, this was not the only reason behind this drastic growth in profitability.

Gross margins of the cement sector ascended to 38 percent in 9MFY06 compared to 30 percent in 9MFY05. This was due to a burgeoning of retention prices as compared to the increase in COGS.

Average retention price per ton increased by 25 percent from Rs 2,920 per ton to Rs 3,660 per ton. On the other hand, COGS per ton increased by 11 percent from Rs 2,044 per ton to Rs 2,276 per ton.

The report said that financial charges have increased by 72 percent in 9MFY06 for dual reasons; high financial leverage for aggressive expansions taken by the companies and soaring interest rates in the economy.

Moreover, operating expenses were used effectively that reflect in the improved net margins, from 17 percent in 9MFY05 to 22 percent in 9MFY06.

Going forward, the brokerage expect gross margin to come down significantly from current levels, since the cement import scenario is still bleak and local ex-factory prices are still hovering around Rs 290-300 level. Expansions of the cement manufacturers are in full swing and most of major capacities are expected to come online by next year.

On the other hand, India has contemplated to stamp a ban on its cement export. As far as demand is concerned, we expect full-year demand growth of around 13-14 percent, which will take cement sales to 18.5-18.6 million tons for FY06.

An analyst from Al Habib Capital Markets said that in order to meet the demand for cement, its manufacturers have entered into the aggressive phase of expansions. For this purpose, manufacturers have acquired heavy debts for financing these projects, which is resulting in higher financial charges in addition to rising interest rates.

"In future, when industry's capacity utilisation will be low with the downward trend of prices, we expect that rise in financial charges will hurt the bottom line growth", he added.

 

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BEIJING (May 05 2006): Pakistan and China will initiate talks next week in Islamabad to prepare a five-year plan of economic Co-operation, particularly in the fields of trade, energy, road construction, urban development, telecommunication and agriculture.

The delegation led by Chinese Assistant Commerce Minister Fu Ziying duo on Monday. During the first round of talks, the two sides will exchange their respective proposals and decide parameters of economic collaboration in the economic sector during the next five years.

Official sources told APP here Thursday that it was decided during the recent visit of President's Pervez Musharraf to Beijing that the two countries will work out a five-plan, giving clear-cut direction to their bilateral Co-operation in the economic sector. It was hoped that a long-term plan would promote consistency in the economic Co-operation and help to increase trade volume, bringing it in conformity with their excellent diplomatic ties.

According to the sources, the two sides will identify new areas of Co-operation and lay down business and investment targets for the next five years. The proposed plan will also help to sort out and remove certain difficulties and anomalies, being faced by the business communities in bringing their mutually beneficial economic partnership to a higher level.

The two sides also decided to expedite the process of on-going negotiations for signing of Free Trade Agreement (FTA) by the end of this year. They also agreed to set up a joint investment company (JIC) this year, with an initial capital of about $500 million.

Such steps are aimed at pushing forward China's participation in the economic development of Pakistan on a regular and long-term basis. The officials of their relevant departments are also expected to meet soon to discuss and finalise legal and financial framework of the company.

Pakistan has already worked out similar arrangements with other countries for financing development projects. Such as establishment of Saudi-Pak Investment Company, Pak-Kuwait Investment Company, Pak-Libya Investment Company, Pak-Oman Investment Company.

 

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FAISALABAD (May 05 2006): Punjab Chief Minister Chaudhry Pervaiz Elahi has said that development projects worth Rs 5 billion have been completed in Faisalabad while other uplift schemes of rupees four billion are under completion.

During the inspection of under construction development work in industrial city, the chief minister announced construction of a ring road in Faisalabad at a cost of Rs 6 billion.

He said district government system was running successfully under the leadership and guidance of President General Pervez Musharraf and it had proved to be an excellent source of solution of people's problems at local level.

Punjab Acting Governor, Muhammad Afzal Sahi, Federal Textile Minister Mushtaq Ali Cheema, Provincial Minister for Communications & Works and General Secretary Muslim League Punjab, Chaudhry Zaheer-ud-Din, District Nazim Rana Zahid Tauseef, President Muslim League Faisalabad and MNA Asim Nazir were also present on the occasion.

Addressing nazims and councillors, he announced that union council showing best performance would be given Rs 6 million each for development schemes. The chief minister further said that a target of 3 million tonnes of wheat procurement had been fixed this year and would be purchased from cultivators. He said that wheat would be procured from small farmers on priority basis so that they could get due return for their labour.

He said that master plan for Faisalabad costing Rs 30 million would be revived. He said that a sum of Rs 260 million would be spent on the improvement of Millat Road while Rs 240 million would be utilised on service road on both sides of RB Canal.

He also announced remodelling of Sargodha Road at a cost of Rs 200 million for widening it from four lanes to five lanes.

Muhammad Afzal Sahi said that changes of fundamental nature had been made in the irrigation network in the province and now due to better management, water was available to farmers at the tale end.

Federal Textile Minister Mushtaq Ali Cheema, Provincial Minister for C&W, Chaudhry Zaheer-ud-Din, District Nazim Rana Zahid Tauseef and PML Faisalabad President, MNA Asim Nazir also spoke on the occasion.

 

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ISLAMABAD (May 05 2006): A Singapore has agreed to help develop the master plan and design concept for the Korangi Creek Industrial Park (KCIP) project. An agreement was signed between National Industrial Parks Development and Management Company (NIP) and Jurong Consultants (Pte). Limited on April 26 in Singapore, according to a press release issued here on Wednesday.

Jurong over the past 35 years has gained considerable experience in the master planning, engineering design and development of industrial parks. They helped complete projects in China, Philippines, India, Vietnam, Indonesia, Malaysia, Thailand, UAE and Yemen.

A team of architects, engineers and planning specialists from Jurong is expected to visit the project site and conduct discussions on design parameters for the KCIP during the second week of the current month. This will provide an excellent opportunity for transfer of technology to the local specialists for development of industrial parks all over the country.

 

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FAISALABAD (May 05 2006): Punjab Chief Minister Chaudhry Pervaiz Elahi has said the concept of public-private sector partnership and community participation is being given a practical shape in the establishment of industrialisation in Faisalabad, which will play a key role in overcoming joblessness and promoting economic growth.

Addressing the leading industrialists, business tycoons and members of the Faisalabad Chamber of Commerce and Industry (FCCI) at Circuit House, he underlined the role of business community in strengthening national economy. The government will also ensure conducive climate through its prudent and pragmatic policies, he said.

The chief minister said the Punjab government will provide land and funding for the establishment of a state-of-the-art training institute at Faisalabad, adding it will also provide Property Rights to the small powerloom owners.

He said that an Expo Trade Centre will be established in Faisalabad with the co-operation of the federal government.

FCCI President Mian Muhammad Hanif, in his address of welcome, said the oldest industry of Faisalabad which is still surviving is the powerloom industry which is on the verge of collapse due to high inputs costs, multiplicity and other problems.

This industry is scattered over most of the city and millions of people are earning their livelihood in this SME sector, he added.

He said the owners of powerlooms are under threat of abandoning their industry while most of them do not have ownership of the land which they occupied.

The FCCI chief demanded that the legal ownership rights of the land should be granted so that they can earn their livelihood with peace of mind and satisfaction. At present, he said this situation was created in Kausarabad, Lakkar Mandi, Marzi Pura, Faizabad, Kanak Basti and Saeedabad (Chak No 124RB).

During the meeting with the industrialists, Chaudhry Pervez Ellahi has also agreed to provide land and funds for the Skilled Workers Training Institute, Faisalabad, to meet the challenges of new world trade order.

Responding to a proposal of Rana Arif Tauseef, chairman, Pakistan Textile Exporters Association (PTEA), he said that a state-of-the-art training institute will be established in Faisalabad to cater to the future needs of skilled manpower.

The chief minister appreciated the proposal of PTEA chief Rana Arif Tauseef that his organisation was trying to establish an institute to provide training to the highly skilled industrial workers in addition to providing marketing staff capable of facing the challenges of world trade order. Arif Tauseef said that a number of new and highly sophisticated units have already been installed. However, the industrialists were facing problems in getting skilled manpower.

He said that more units are in the pipeline, which would be set up in value-addition city and M-3 industrial city.

Chaudhry Pervaiz Elahi unveiled the plaque of foundation-stone of the Faisalabad Cardiology Centre, and expressed his satisfaction over the development work.

Federal Textile Industry Minister Mushtaq Ali Cheema, Health Secretary Muhammad Javed Malik and Communication and Work Secretary Ahmad Yar were also present on the occasion.

The chief minister said the Faisalabad Cardiology Centre is being constructed over 15 acres of land at a cost of Rs 1 billion, adding that all modern health facilities and latest equipment would be made available at the Cardiology Centre.

Chaudhry Pervaiz Elahi also appreciated the performance of the Faisalabad police and announced a cash award of Rs 5 million. He also announced Gallantry Award for District Police Officer (DPO) Captain Muhammad Amin Wiance (Retd) in recognition of his services.

 

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ISLAMABAD (May 05 2006): Oil and Gas Development Company Limited (OGDCL) has struck a new discovery of oil and gas at Sono, 25 kilometres near Hyderabad. OGDCL officials said the daily output of oil from the new discovery would be 1,500 barrels per day. According to an initial estimates it is the largest discovery by the OGDCL so far, private news channel reported.

It was also informed that per day gas exploration from the discovery would be known after further investigations. OGDCL is the largest company, given the target of drilling 57 wells in 2005 by the government. Earlier, oil and gas reserves were discovered near Tando Allahyar however, in Sono area this was the first breakthrough.

 

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Dubai: Dubai World, a holding company whose subsidiaries include Nakheel, Istithmar, Jebel Ali Free Zone and DP World, said yesterday it was ready to undertake large infrastructure projects in Pakistan.

It plans to develop real estate and industrial projects in Karachi, Lahore and Islamabad, Dubai World Chairman Sultan Ahmad Bin Sulayem told Gulf News yesterday.

"These projects could be similar to what we are doing here," he said, adding the planned investments in Pakistan were part of an overseas expansion drive.

"Under DP World's acquisition of P&O, we also acquired Port Qasim in Pakistan. We are interested in countries where we have ports," Bin Sulayem said.

Several areas of cooperation were discussed during talks between Pakistan President General Pervez Musharraf and Bin Sulayem in Islamabad yesterday.

Pakistan Minister of State for Privatisation and Investment Umar Ahmad Ghumman said that Pakistan is looking forward to cooperating with Dubai Ports World and Nakheel to benefit from their experience.

He said an MoU would be signed between the Pakistan government, DP World and Nakheel, adding that Musharraf plans to invite His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, to attend the signing.

Dubai World's plans could include building industrial parks, free zones, development and operation of public sector infrastructure projects, oil and gas related projects, and management of airports and ports, the company said in a statement.

DP World is also bidding to acquire Pakistan's strategic port of Gwadar.

Ghumman said the Pakistani government is planning to increase the depth of the port, while building a new city, oil refineries, a pipe line, and a road network to connect the port to China and Central Asia.

However, Pakistan's Dawn newspaper reported recently that the Dubai port firm had set conditions for managing Gwadar Port that were "so harsh and in favour of the operator that it would tantamount to handing over the county's most strategically located port on a silver platter."

Bin Sulayem said his talks with Musharraf did not cover specific details of projects. "We are doing a full study of opportunities in Pakistan and hope to release the precise details later."

Nakheel will explore investments in the residential, commercial and leisure real estate sectors in several urban centres in the country.

Ghumman said this comes as part of the government's plan to build five cities to deal with the country's booming population.

Pakistan's Board of Investment was instrumental in facilitating the "extensive ground work, which culminated in the two parties agreeing to the framework under which Dubai World plans to undertake investments in Pakistan," the statement said.

Projects: From parks to port

Dubai World's plans could include building industrial parks, free zones, development and operation of public sector infrastructure projects, oil and gas related projects, and management of airports and ports, the company said in a statement.

DP World is also bidding to acquire Pakistan's strategic port of Gwadar on the Arabian Sea.

 

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ISLAMABAD, May 4: Minister for Petroleum and Natural Resources Amanullah Khan Jadoon on Thursday said the government was providing a competitive environment and level-playing field to investors in downstream petroleum sector.

He was talking to the Chief Executive Officer of Total Petroleum company of France, Emmanuel Laurenty who called on him here.

During the meeting both sides discussed investment prospects in the petroleum sector.

The minister said that as a result of deregulation, liberalisation and investor-friendly policies introduced by the government, the downstream petroleum industry had witnessed a tremendous growth in the last few years.

“The government would encourage and facilitate investors in the upstream and downstream oil and gas sectors for mutual advantage.

Jadoon said that escalating oil prices in the international market were not only effecting the growth of economy of the developing countries but was also a great upset for the promotion of downstream petroleum industry.

He said the French Total company, which has modern techniques in LNG field could also participate in Pakistan’s LNG projects for the mutual benefit.

The CEO of Total Petroleum briefed the minister about his Company’s activities in the downstream oil sector.

He said Total was playing its due role for boosting the oil industry in Pakistan for the mutual advantage. His company could cooperate with Pakistan in LNG projects.