Pakistan Economy - News & Updates - Archive

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By Nasir Jamal

LAHORE, May 9: The high cost of bank credit is fast compelling the textile industry to shelve or put-on-hold plans for making further investment in import of machinery for capacity expansion. This would hurt Pakistan’s ambitions to increase its share in the world textile trade which is expected to grow to a whopping $800 billion in 2014 from the existing $350 billion.

“The local agents of foreign suppliers of textile machinery have not received any fresh orders for quite some time. Even large textile groups haven’t placed any new orders because of increasing cost of credit. The situation is retarding capital formation in this sector,” a local representative of a foreign textile machinery supplier told Dawn on Tuesday.

It may be recalled that the country’s textile industry has made an investment of $5 billion for expanding its production capacity in the last five years while the interest rates were as low as three to four per cent. However, more than 200 per cent increase in the credit cost, which consequently increased the financial charges of the mills, has now forced the industry to stop further investment.

A study conducted recently by the Lahore chamber of commerce and industry’s cell on WTO affairs reveals that Pakistan needs investment in new textile machinery in the range of $2 billion a year if it wishes to increase its share in the global textile trade to four per cent ($32 billion in an $800 billion export market) by 2014 from the current 2.7 per cent ($9.4 billion) in $350 billion export market).

The study says that the Indian textile planners are working to boost their share in the world textile trade to nine per cent ($72 billion) in $800 billion export market by 2014 from the current four per cent in $350 billion export market.

As the global textile export market is expected to expand to $800 billion in 2014, Asia’s share is projected to rise to 75 per cent or $600 billion from the existing 54 per cent or $189 billion in current global trade of $350 billion.

“This situation offers an excellent opportunity to the Pakistani textile sector to enhance its share in the global market to between four and five per cent in 2014,” the study contends.

However, this does not appear to be happening because of slowdown in further investments in the sector owing to high cost of bank loans. “There has been a reduction of 6.4 per cent in investment in textile machinery in terms of dollars this year as compared to the corresponding period last year. If inflation is also factored in, the drop in fresh investment in machinery will in the vicinity of 10-12 per cent,” the study says. The scenario in the near future seems even bleaker with nobody placing fresh orders for the import of machinery.

“If Pakistan is to attain its rightful position in the global textile export market, the present trend of continuous reduction in investment in new machinery will have to be reversed,” the study says. “But this negative trend cannot be reversed unless the government offers some incentives on the pattern of India,” the industry sources said.

There is no denying the fact that the Pakistani textile industry is becoming uncompetitive vis-à-vis India and Bangladesh because of their very low credit cost. While effective lending rate in Bangladesh is around seven per cent (five per cent base rate and two per cent bank spread), the effective interest rate in Pakistan is calculated to be 12.70 per cent (9.5 per cent KIBOR and 3.20 per cent bank spread).

“The low interest rates in Bangladesh are encouraging their businessmen to start setting up basic textile (spinning and weaving) units to support their value added knitting and garments sectors despite the fact they do not produce cotton at all,” said a leader of Pakistan Readymade Garments Manufacturers and Exporters Association (Prgmea).

The situation for the textile industry in India is even better than Bangladesh. Although the interest rate in India is eight per cent (six per cent base rate and two per cent bank spread), their effective cost of credit is only three per cent. It is because the Indian government reimburses five percentage points of the normal interest charged by the lending banks and other financial institutions on rupee-term loans back to the industry as an incentive under the Technology Up-gradation Fund Scheme (TUFS). The TUFS also offers an alternate option of five per cent fluctuation (interest and repayment) from the base rate on foreign currency loans,” the textile industry sources said.

The Indian textile industry has made an investment of (Indian) Rs370 billion so far under the TUFS, which is projected to rise to Rs1,400 billion by 2010 with the export growing to $40 billion during the same period. Under the scheme, the Indian government has disbursed only Rs9.163 billion back to the industry.

The increased lending rates in Pakistan have already rendered the knitwear sector, sick. Many units have already closed down because of increased cost. The only way to save the rest of the industry, make it viable and competitive in the export market is to provide loans to the industry on reduced cost through the establishment of a time-bound fund on the lines of India’s Technology Up-gradation Fund Scheme . This will help modernisation of the industry through technology up-gradation making the textile sector competitive in the global export market.

 

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By Farhan Bokhari, Special to Gulf News

This week's meeting of energy ministers from Tajikistan, Kyrgyzstan, Afghanistan and Pakistan, could not have come at a better time for Islamabad's plans to oversee the supply of urgently needed new electricity supplies.

Pakistan hopes that the two central Asian states would supply their surplus electricity via new transmission lines in Afghanistan exclusively by Pakistani consumers.

The plan is chalked out on probable consumption of around four thousand megawatts of additional electricity by pakistan in the coming years. This can be attributed as an outcome of its economic recovery. Afghanistan will also benefit from this new transmission line in form of revenue through transit fees.

The plan is not exactly new. Policy makers in Pakistan for years have been playing around with the idea.

However, this initiative could not take off in the past as the government was concerned of internal security conditions in Afghanistan.

The issue remains unresolved even today. The truth remains that, there is considerable US interest backing this project as Washington is keen to bolster Afghanistan's political and economic outlook.

In the long run, such a cooperative venture would result in the consolidation of Afghanistan's outlook. This economic cooperation is bound to give hope for political cooperation as well.

The challenge however is to make certain that this project gives impetus to this plan that has more than one good result.

Change

First of all, it is crucial for security conditions to continue to improve in Afghanistan so that there is no threat to the transmission lines put in place.

This requires the building up of an adequate security apparatus inside the war- torn country so that the infrastructure around the new project is adequately protected.

Secondly, it is important that Afghanistan's ruling regime work towards resolving some of the conflicts which undermine internal politics.

It has been quite some time since the Afghan regime has had a reputation of being in position largely by virtue of its backing from the US.

This in turn has created the impression of Afghanistan remaining a US driven country.

US driven

Consequently, sections of Afghanistan's population rising in dissent against their very own regime is not a surprising outcome.

Stability in Afghanistan has to come with freedom for political participation a necessary step to begin promoting

vital security interests including matters such as the environment necessary to

surround the new power transmission project.

In the long run, the success of the

power transmission project can not be seen in isolation from other important matters. Promoting the need to develop new and stronger business ties between central Asian states, Afghanistan and Pakistan.

The consolidation of such ties must hold the key to diverting the attention of these states more towards promotion of economic interests rather than dogmatic politics.

Last but not least, an important element to the transmission line project should not be ignored as discussions continued in Islamabad this week.

There were reports of Pakistan seeking to build at least one other transmission line which would link Kyrgyzstan to Pakistan via China.

This is a route that can not be ignored, especially as China is emerging as the world's leading economic giant.

 

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Wednesday, May 10, 2006

ISLAMABAD: Abacus International is set to bring the convenience of electronic ticketing (e-ticketing) to travellers and agents in the Pakistan. Beginning today, authorised Abacus-connected travel agencies in Pakistan will be able to issue e-tickets for their customers on board Pakistan International Airlines (PIA).

PIA will save as much as Rs 927 per ticket by adopting e-ticketing over the conventional way of printed and hand-written ticket-issuance. In addition, e-ticketing offers travellers with the ease of convenience and security while offering travel agents a more effective management of their customers’ schedules at the same time.

The roll-out of e-ticketing is an important step in the evolution and development of tourism in the region and will assist us to make significant headway into the Pakistan travel market. “We’re proud to be the exclusive agent for PIA and with the added commitment of our travel partners, Pakistan’s tourism industry is set to continue to grow,” said Low.

“As e-ticketing continues to gain in popularity in Asia, airlines are increasingly seeing the direct benefits that this tool can offer them in terms of reaching out to the modern

traveller, whilst travellers are showing preference for the convenience of paperless travel.”

E-ticketing is a real-time paperless method for airlines and travel agents to issue tickets. Individual ticket information is stored within the airline’s reservation system and can be

retrieved electronically, reducing the amount of paper ticket inventory and hassle in re-issuance of misplaced printed tickets.

PIA senior vice president, marketing, Kamran Hasan said, “Over the past two years, we have been working closely with Abacus to implement e-ticketing, with this partnership representing another milestone for PIA. Switching to the e-ticketing system will strengthen PIA’s presence locally and internationally and we look forward to the positive feedback from agents and travelers alike.”

Travel agents have also welcomed PIA’s move to e-ticketing. “This is a major step forward in our vision of a paperless future,” said Quality International’s General Manager, Zaki Niazi.

 

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Countrywide hot spell enhances water situation in reservoirs



Wednesday May 10, 2006 (0246 PST)

ISLAMABAD: An aerial view of the semi-dried Rawal Dam. Reservoirs in the country are drying up, as temperatures are soaring and there is little chance of significant rain for at least the next few months as predicated by the Met office.
http://www.pakistaniforces.com/forums/http://www.paktribune.com/news/topstories.phphttp://www.paktribune.com/news/print.php?id=143250http://www.paktribune.com/mypaktrib... spell enhances water situation in reservoirs
ISLAMABAD: The current hot spell in the country has proved blessing in disguise for the nation as water situation in reservoirs has improved considerably.


Indus River System Authority (IRSA) has claimed that inflow at the rim station has improved to 241000 Cusecs on May 8, 2006 therefore provinces are expected to receive their indented supplies, which is specified 1,10,000 Cusecs for Punjab, 76000 Cusecs for Sindh, 2700 Cusecs for NWFP and 3400 Cusecs for Balochistan.
Moreover, it is expected that almost 32000 Cusecs water will be stored in Tarbela and Mangla reservoirs. The water situation was also reviewed in a meeting chaired by Mr. Liaquat Ali Jatoi, Federal Minister for Water and Power who urged on the provinces to keep in mind importance of national resource conversation while placing their indents with IRSA.

 

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Wednesday May 10, 2006

RAWALPINDI: Governor Punjab, Lt. Gen. (retd), Khalid Maqbool has underscored the need that agricultural scientist must find more ways, using techniques of biotechnology to develop inexpensive inputs and minimizing yield fluctuation caused by weather aberrations and pest epidemics while our drive for increased production must be based on providing rural based industry ultimately hinged upon development of skilled labour.
He was addressing the 7th Convocation of University of Arid Agriculture, Rawalpindi (UAAR) on Tuesday. Among others Vice Chancellor of the University Prof. Dr. Khalid Mehmud Khan, faculty members, students, parents and elite of the city were present on the occasions.

The Governor said that agriculture is very extensive low input industry in Pakistan having thinly spread marginal outputs. The new technologies must ensure that the demand for skilled labor increases faster than its supply and that food supply increases faster than its demand, making it a competitive entrepreneur. He further said that we have excellent opportunities today to achieve the goal of food, health, literacy and work for all in rural areas, provided we take advantage of power of both grass roots-level democratic institutions and the tools of information age. He said that a poor is poor because he is poor, he does not have assets, land or skills, hence he work as unskilled labour. Asset building and technological information and organization empowerment are therefore essential to add value to the time and work of the poor, adding that other universities must follow UAAR in this respect.

The Governor stated that the recipe for poverty alleviation proposed by international organization is micro-enterprises supported by micro-credit. In this regard, the effort of UAAR in introducing micro-credit scheme as a non-banking organization has proved a great success and is acknowledged. This micro-credit has to go and grow further. There is no level playing field between skilled micro-entrepreneurship compared to just lending the money which yields low investment and high risk. For greater achievement in micro-credit scheme, as you so well know, the skill enhancement programme and making it self-sustaining is a key to success, he added.

Recounting the achievements of the Punjab Government, the Governor informed that in Punjab the admissions in the universities has risen from 32000 to one lakh and the Ph.D. degree holders from 641 to 3000. Similarly, the Governor stated that the budget for higher education ha been enhanced from Rs. 1.8 billion to Rs. 9 billions while the number of computers in the universities has gone up from 666 to 13000 at present. The credit for farmers has increased from Rs. 30 billion to 100 billion. The Governor further informed that UAAR is to open its two sub campuses at Talagung and Koshab which is the manifestation of the Government to give more importance to agriculture sector by producing more agricultural scientists from the universities.

Lt. Gen (retd), Khalid Maqbool stated that we have created an interactive environment among the educational institutions and being Chancellor he is personally interfacing with all the universities and the Higher Education Commission on regular basis. He further stated that we have taken all the stakeholders on board with a view to improve the quality of our education. The Governor said that he has strong faith in quality and hoped that our system will not only provide us with a deeper knowledge base but it will also be a source of greater employability and acceptability at international level. He congratulated the graduate students, proud parents and their teachers for this eve of success.

 

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RAWALPINDI, May 9: President General Pervez Musharraf on Tuesday promised that ‘feasible’ parts of Federally Administered Tribal Areas (Fata) would be made hub of economic activities. Chairing a meeting on matters relating to Fata here, he said economic zones would be built in the region at a cost of Rs10 billion.

“Elements opposing development schemes will not be tolerated. We are determined to banish terrorism and militancy from our soil so that people of the tribal area can lead a prosperous life,” the president said, adding that more uplift projects would be initiated in the region.

Prime Minister Shaukat Aziz, NWFP Governor Khalilur Rehman and Interior Minister Aftab Ahmad Khan Sherpao also attended the meeting.

Head of Fata Task Force Sahibzada Imtiaz briefed the meeting about political and administrative reorganisation of Fata. He identified feasible locations for building economic zones there. The prime minister promised sanction of required resources for construction of economic zones.

“The process of reforms in country will go on and these will bring economic prosperity,” President Musharraf remarked.

He said that development funds had been disbursed among Fata legislators on equal basis, adding that provision of gas, electricity, health, education and infrastructure would help trigger an era of progress and development in the region.

“People of Fata want progress of their neglected region. However, unfortunately, some elements are suppressing tribal (people) forcefully. The government will sternly deal with elements obstructing development projects,” he warned.

He said the action to flush out foreign terrorists in South Waziristan Agency would continue.

INEXPENSIVE JUSTICE: Later, addressing a dinner hosted at the Aiwan-i-Sadr to mark the Supreme Court’s golden jubilee celebrations, Gen Musharraf said the government was committed to providing inexpensive and timely justice to people at the grass-roots level and assured that judiciary and legal fraternity would be facilitated in the discharge of this responsibility.

“Ultimately, improvement in governance and socio-economic development means people having access to justice which is easy, quick and inexpensive,” he emphasised.

The president said the government had taken a number of steps to strengthen the institution of judiciary and provide the people with access to justice, including introduction of independent prosecution service and review of civil and criminal laws. He hoped these steps would help avert delay and remove procedural impediments in the way of speedy justice.

He also counted initiatives taken in recent years such as enactment of consumer protection laws, setting up of consumer courts, capacity building of judiciary and lawyers, encouragement of women to join judicial and legal profession and automation plan to facilitate communication.

 

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From SHAIQ HUSSAIN

ISLAMABAD - With inauguration of Gwadar seaport scheduled for early June, top Saudi and Kuwaiti firms have started intensified lobbying for the construction of two billion dollars mega oil refinery near the port.
Pakistan’s economic managers approved the setting up of oil refinery in Balochistan, last month. This mega project will be built in Hub district adjacent to the Gwadar seaport.

“Gwadar seaport is expected to be inaugurated early next month but it has already become the hub of great economic activity with leading Saudi and Kuwaiti firms contending for the construction of mega oil refinery there,” said the official sources here.

The sources said the Saudi and Kuwaiti firms would participate in the bidding through international competitive bidding on Build On and Operate (BOO) basis. Top Saudi leaders including King Abdullah had talked to Pakistani leadership as for their profound interest in Gwadar Port whereas Kuwaiti amir, who will reach Pakistan on May 19 on a three-day visit, would also discuss the matter in detail with President Pervez Musharraf, the sources said.
He said the refinery to be commissioned by 2010 would have a refining capacity of 13 million tons of petroleum products, which would be higher than the country’s total existing capacity of 12.8 million tons.

Apart from keen interest shown by the Saudi and Kuwaiti firms in oil refinery, several companies from Dubai and China have also conveyed their keenness to Pakistani government in the operating rights of the Gwadar port, according to the official sources.

The sources said a Dubai-based firm is actively pursuing its dialogue with the government in this regard as it considers itself most suitable because of its understanding of operating the world’s busy ports. However, he declined to name the firm.

On the other hand, China, the major financial contributor in the construction of Gwadar Port, was also keen that some Chinese company should have the rights of operating the new port, he added.

The sources said that many companies have submitted their bids for operations rights and the biding would be held in a free, fair and transparent manner.

To a question, the official said that Gwadar Port would begin handling commercial vessels in June. He added that the terminal facilities for container, general cargo and bulk cargo handling have already been established there.

The inauguration of Gwadar Port was delayed in the past due to precarious law and order in Balochistan but this time around the government was determined to go for it.

 

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By Ihtasham ul Haque

ISLAMABAD, May 9: Budget planners have urged the government to offer increased wages and distribute land among deserving people from the next financial year to alleviate poverty. Sources said that planners also called for promoting small-scale enterprises and human development to effectively tackle poverty.

The Planning Commission outlined a number of new measures to ensure better income distribution and improved employment generation.

During various meetings recently chaired by President Pervez Musharraf and Prime Minister Shaukat Aziz, poverty had been one of the major topics of discussion, with both the leaders conceding that the issue had not been effectively tackled over the past six years.

They termed poverty and growing price hike a “serious challenges” and said it warranted a comprehensive strategy to achieve the desired results.

According to the Planning Commission, poverty was fast becoming an urban phenomena and needed to be checked to avoid pressure on national economy.

“With increasing urbanisation expected in the coming decades, the number of poor in urban areas, mainly the unemployed and those engaged in the informal sector, will grow faster and thus turn poverty into an urban (phenomenon),” says its new study.

Generally, it said, poverty was a result of many factors, including lack of productive resources to generate material wealth, illiteracy, prevalence of diseases, natural calamities such as floods, drought and man-made calamities.

The commission was of the view that poverty alleviation should be one of the major goals in the next 25 years. Experiences of various countries showed that poverty below 10 per cent “becomes a challenge and pockets of poverty remain because of social and cultural rigidities which can be reduced through integrated programmes”.

“The trend of worsening income distribution ought to be reversed and the Vision 2030 should, therefore, aim to further improve (the situation).”

The share in the national income of poorest 20 per cent of the population ranged from six to 8.5 per cent in the past 50 years which needed to be increased to around eight to 10 per cent.

At the international level, an unequal economic and political partnership, as reflected in unfavourable terms of trade and other transactions for developing countries is also a major cause of poverty in developing countries.

Some cases of poverty are not direct, for example, traditions and norms which hinder effective utilisation and participation in income generating activities.

The study said that various poverty related targets need to be debated and made consistent with overall growth and investment, including social sector spending) targets to be finalised.

Alleviation of poverty by 2030 was the major gaol and experiences of various countries showed that poverty should be reduced through targeted programmes, it added.

The commission has termed it an “imperative” to manage more productive employment for nearly 30 million illiterate youth and bring them into the economic loop.

 

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By Khaleeq Kiani

ISLAMABAD, May 9: The United States on Tuesday supported a proposed accord under which Pakistan will buy 4,000 megawatts of electricity from Tajikistan and Kygyzystan, using the Kabul route for the $500-800 million transmission line.

Officials of the USAID and the US embassy in Islamabad said the US State Department had already allocated funds and staff to promote electricity sales from the central Asian states to Pakistan and Afghanistan because the project would generate jobs and investment opportunities for people and companies and promote peace and stability in the region.

“This kind of project (is a) good way for helping us achieve policy goals, to help Pakistan achieve its energy goals. I think it is a win-win situation for everyone involved,” said Christian DeAngelis, deputy economic counsellor of the US embassy in Islamabad.

He said the project “fits very well with the US foreign policy, which is to help build regional integration particularly between South and Central Asia”.

International financial institutions, including the World Bank, Asian Development Bank, Islamic Development Bank, Japan Bank for International Cooperation, International Finance Corporation and USAID also expressed their “strong desire to support” the project either through direct financing or guarantees and other risk management instruments, including insurance coverage.

The participants of the two-day Central Asia-South Asia (Casa) electricity trade constituted a working group comprising the four member states and the IFIs to institutionalise progress on political, legal, technical and financial aspects of the 765-kilometre transmission line from Central Asian States to Pakistan via Afghanistan.

The inclusion of US energy firm, AES Corporation, and Russian giant Rao-UES in the working group and future technical meetings was opposed by Pakistan and Afghanistan on the ground that the project should be carried out in a transparent manner and on international competitive basis and their involvement could give them an edge over other competing investors.

The security situation in Afghanistan and its financial capability to pay for the imported electricity was, however, the cause of common concern for all stakeholders, including the IFIs and private sector companies.

Afghan deputy minister for administration Jalil Shams, however, put the responsibility of security on participating countries by saying that a special security force could be put in place as part of the project to protect the transmission line and that Pakistan and Tajikistan would have their own interest to ensure peace and stability in Afghanistan.

In fact, he said, Kabul should be worried whether it would be paid the transit fee, adding that its bills for utilising imported electricity could be deducted from the transit fee.

Raghuveer Sharma, the World Bank’s team leader for South Asia, on the other hand proposed that a part of financial assistance pledged by the international community for Afghanistan could be set aside in the trust fund of the World Bank to pay for Kabul’s electricity consumption.

The power plants in Tajikistan and Kyrgyzstan from where the electricity is to be supplied are still to become a reality. When asked about the status of these plants, federal minister Liaquat Ali Jatoi said Tajikistan was waiting for funds but added: “Let me assure you the project would be implemented as soon as possible”.

A joint draft report prepared by the participants said that under the first phase of the trade 1,000-MW of electricity would be imported by Pakistan from Tajikistan via Kabul and Jalalabad.

Robyn McGuckin of the USAID said the agency had a regional programme “set up by the State Department with precisely the mandate of promoting regional energy trade”.

 

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ISLAMABAD (May 11 2006): Prime Minister Shaukat Aziz on Wednesday said Pakistan "is all set to become" a leading regional economic hub with a specific role as trade and energy corridor for China and Central Asian countries.

He listed reforms, continuity in policies, opening up of different sectors to private sector and location advantage as driving forces, which helped Pakistan turn into a successful economy from selective default state during last few years.

He was addressing Pakistan Development Forum 2006 as chief guest here on Wednesday. The forum was attended by almost all multinational donors and Pakistan's bilateral trade partners.

The prime minister said that PDF provides the government an opportunity to exchange ideas and experiences and share successes and challenges, retool thinking and sharpen the policies to take the country forward. He said that as Pakistan moved into the third millennium, PDF 2006 would lead it to a greater understanding of ways and means to expedite its pace for development and sustainable growth.

He recalled that last year Pakistan had faced one of the worst disasters of its history. He said that the earthquake of October 8, 2005 wreaked widespread devastation and enormous loss of life and property with extensive damage to economic assets, infrastructure and social service delivery.

Hundreds of schools, hospitals, government offices, roads and bridges were destroyed and more than 73000 people lost their lives. Over 120,000 were injured and nearly three million went shelterless, hundreds of post-earthquake tremors multiplied the shock and trauma.

The Prime Minister said that people took the catastrophe with grace and forbearance and demonstrated tremendous courage and resilience. The galvanised nation stepped forward and reflected the highest values of caring and sharing and provided help to their fellow citizens.

He said the government's 12-point national strategy for relief and reconstruction, compassion and generosity of the people of Pakistan, both at home and abroad, and invaluable support of countries across the globe, international community as well as development partners, especially the multinationals helped in smooth transition from relief to reconstruction, which has already begun.

He said that Pakistan commends and appreciates donors' steadfast support in measuring up to the challenges unfolded by the earthquake. He said the government was committed for permanent rehabilitation of the affected people and to provide them opportunities to live a happy life. He said what the donors and Pakistan did before can make the difference for the future.

He said that before turning to the forum, it was important to recall the government strive for progress and development that began some seven years ago.

He said some that seven years back, Pakistan's economy was fragile; balance of payments were highly vulnerable to external shocks; debt situation had worsened; foreign exchange reserves were not sufficient to finance even a few weeks of imports, and Pakistan's financial sovereignty and international rating agencies downgraded Pakistan to a selective default level.

He said that Pakistan worked extremely hard over the past seven years to implement deep and wide ranging reforms covering all elements of statecraft, unparalleled in any developing country, and achieved national renewal. He said that Pakistan's unwavering resolve to reform is manifested in Poverty Reduction Strategy Paper, Medium Term Development Framework (MTDF) and Vision 2030 for moving towards knowledge-based economy.

The Prime Minister said that Pakistan was engaged in painstaking effort to secure economic stability; strengthen democratic institutions; empower vulnerable segments of the society; engender development and decision-making process; stem rising tide for extremism and ensure better standards of living to the people to realise the Quaid Azam's vision of Pakistan as a prosperous, moderate, democratic, Islamic state.

He said persistent reforms and greater self-reliance had made Pakistan a fast growing economy in Asia, after China. He added that Pakistan's economic philosophy, based on deregulation, liberalisation, and privatisation; consistency, continuity and transparency of the policies and dynamism of the private sector had set Pakistan on a high growth trajectory. He said that stable fiscal and financial environment with price stability was raising investors' confidence.

He said that today Pakistan was fast emerging choice for the investors. He said the government was expecting highest ever foreign direct investment (FDI) despite devastating October 8 earthquake and the oil price surge. He said Pakistan was anticipating 6 to 8 percent growth for the next five to seven years.

The Prime Minister said the government's policies' focal point was massive social sector uplift to improve living standard of underprivileged class.

He said Pakistan's all social and economic indicators were showing positive trend, and poverty was on the decline from 32.1 percent to 25.4 percent, gross primary enrolment increased to 86 percent, immunisation of children moved to 83 percent, water supply coverage expanded to 39 percent and per capita income was expected to move up to $800 by end-June.

He said the critical lessons Pakistan learnt in the journey of success were overriding importance of holistic home-grown reforms and good governance.

He said that the extraordinary potential of the people and their efforts for a better tomorrow were matchless. He said that Pakistan's fully market-oriented economy was showing results as the government witnessed a major transformation during the last few years.

He said change was taking place all around and it was not only in physical structures such as infrastructure, logistics, supply chain, housing and the use of information and communication technology but also in the outlook, thought process, entrepreneurial regime and increasing professionalism.

He said that sobering array of challenges that confront Pakistan would sustain acceleration in growth within a band of 6 to 8 percent over 5 to 10 years, supply of assured and reasonably priced energy, adequate water resources and their distributional management, food security, bridging the skill gap, higher productivity and job creation.

He said the government's social challenges included more schools children, access to clean drinking water, sanitation and better health services, mainstreaming gender as equal partner in the development, and improving quality of life.

He said Pakistan realises that current century was not merely a chronological change but a new era of technological advancement. He said the scientific and technological process was profoundly influencing economics, politics, culture and the way of life and ushering the new paradigm that differ it from others by transitioning towards knowledge-based economies requiring global skills for the work force.

He said Pakistanis were not deterred by the enormity of the task, rather moving ahead step-by-step, brick-by-brick and were well on the way to meet the challenges upfront. He said Pakistan had moved beyond statements of intent on many fronts for leveraging locational advantage. He said Pakistan was located at confluence of three vital regions--South Asia, Central Asia, and West Asia --providing shortest access to the sea to the landlocked Central Asian countries and Western China.

He said it was uniquely positioned to bridgehead multiple corridors of co-operation between all three regions for energy, trade, transportation and tourism.

He added that Pakistan was developing Gwadar not only as a transhipment port but also as an energy port by establishing mega refineries and laying gas pipelines and pursuing multi-directional plan including harnessing alternative energy sources to ensure secure and reliable supplies for meeting Pakistan's growing energy needs.

He said Pakistan was undertaking construction of new water reservoirs to sustain high agriculture growth, ensure water supply for drinking and commercial use, generate hydropower and prepare ourselves for the challenges of global warming.

 

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Ground breaking of Diamer Basha Dam is the first step and work on other dams will commence soon. He said Pakistan would seek donors' assistance for mega water projects to achieve water security.

The Prime Minister noted that Pakistan was working on developing new technologies to increase productivity of land, sustainable use of genetic resources, production diversification and good agriculture practices to ensure sufficient food supplies for the people.

He said rapid movement of goods across north-south corridor at reasonable freight was essential for accelerated economic growth and to make the country more competitive in the international markets as well as providing access to Central Asia. infrastructure upgradation establishing state-of-the-art end-to-end supply chain and providing modern logistics along this corridor facilitating port-to-premises delivery are already underway improving our competitiveness.

He said the government has increased investment manifold in human capital, the most valuable asset, to equip them with global skills and to provide them appropriate education and healthcare. He said women were getting due place and importance in political and economic decision-making.

He said in the past the governments were judged on what they owned and how much they spent rather than the services they delivered, but today paradigm has changed and the government recognises the private sector as the main engine of growth and primary source of employment generation, and the government's role is restricted to formulation of policies and facilitate private sector.

He said it was government conviction that public-private sector partnerships were a cornerstone in delivering public services and for healthy competition all sectors of the economy were being opened up for investment and trade. He said the partnership was a success story as considerable progress has been made in key areas such as oil and gas, power generation. steel production, telecommunication, banking, information technology, micro finance.

He said Pakistan was gearing up its efforts to maximise contribution to infrastructure development and other avenues and now it was for the private sector to exploit the opportunities. He said the government understands that small and medium enterprises in the private sector were pivotal to push up growth, create employment and poverty alleviation.

The Prime Minister added that unleashing local growth capital can create a pool of resources for local entrepreneurs to set up small business and diversify the economic base. He aid micro finance, the new pillar of development, is yet another instrument to unleash the ideas and energies of local entrepreneurs with a potential to grow, to forge linkages with other business to drive the national economy forward.

Shaukat said development was a national responsibility which was being carried out with dignity and transparency. He said the government recognises the contributions of the civil society and NGOs in development.

He said: "Together we can rise by unleashing the potential of the private sector. Together we can build a smarter, peaceful, more vibrant and progressive Pakistan. It is our belief that Pakistan of today and tomorrow is not the Pakistan of yesterday. Pakistan of tomorrow will be the land of the hope and opportunities."

In his opening remarks, Dr Salman Shah said that Pakistan had truly laid the foundation for a robust and vibrant market economy, driven by a resurgent private sector, besides establishing and strengthening institutions required for a competitive and free market economy. The Adviser added that in the current fiscal year the government consolidated gains made over the last three years, and addressed challenges of economic recovery.

Accordingly, he added, the real GDP was targeted to grow by 7.0 percent, supported by 4.2 percent growth in agriculture, 12.0 percent growth in manufacturing and 6.5 percent growth in all other sectors. Salman said that the government's integrated policy and strategy was geared towards high growth, infrastructure and private sector development, improvement in service delivery, and good governance aligned with the MDGs.

He said the government was looking forward to achievement of a sound and stable economic and human development. He said that "we are also committed to fulfilling our goal" of providing quality education for all, ensuring access to safe and effective health services, reducing maternal and infant mortality rate, providing access to water and sanitation and achievement of the targets that were defined in the MDGs, PRSP and MTDF.

He said that major achievements included a strong economic recovery supported by a robust performance in industry, agriculture and services, extraordinary strengthening of domestic demand, reduction in fiscal deficit, a high double-digit growth in exports and imports, increased workers' remittances, stability in exchange rate, foreign exchange reserves, a sharp reduction in the public and external debt burden, accelerated privatisation programme, capital market strengthening and improved social and human development indicators.

He said the government had made considerable progress in rebuilding the lives of the quake affectees and was grateful to the development partners and others "who stood by us in this time of crisis". The emergency phase of the quake relief effort was changing to reconstruction and rehabilitation.

The Adviser said that the government was striving to further broaden the country's tax base in order to provide increased revenue for investment in infrastructure, health, and education. "Our industry and the manufacturing sector are performing better; construction and service sectors are making substantial contributions; and trend in foreign direct investment is quite positive in Pakistan, especially in the areas of oil and gas, telecommunications, financial services and information technology.

 

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ISLAMABAD (May 11 2006): Pakistan has witnessed $4.38 billion current account deficit during the third quarter of FY 2005-06 against $1.16 billion during the same period of the last fiscal year, depicting an increase of 277 percent or $3.22 billion, the State Bank of Pakistan (SBP) reported on Wednesday.

Owing to higher than expected trade deficit, the Finance Ministry after revising the current account deficit target set it at $5.137 billion (4.2 percent of the GDP) against budgeted target of $2.7 billion (2.19 percent of the GDP) for the current year. Notable point is that some two months ago the Finance Ministry revised the target at $5.137 billion. And now after a short span of time, the ministry on Wednesday at the Public Accounts Committee (PAC) meeting openly admitted that the deficit by the end of June would go beyond $7 billion mark, which indicates that the external pressure on the economy is mounting to an alarming level.

Economic managers on the other hand were not much perturbed, saying that Pakistan has sufficient resources in terms of foreign direct investment (FDI) inflow, privatisation proceeds, foreign donors aid and other heads to finance the soaring current account deficit. Provisional data released by the SBP showed that the trade deficit (in goods) jumped to $6.232 billion during July-March 2006 from just $3.326 billion during the same period of the last fiscal year. The trade deficit figures have been determined by using free-on-board value of imports and exports.

During the first nine months of FY 2006, goods imports stood at $18.24 billion, whereas exports amounted to $12.01 billion, thus, leaving a trade imbalance of $6.232 billion. During the same period of the last fiscal year, imports had valued $14.023 billion and exports stood at $10.697 billion, depicting a trade deficit of $3.326 billion.

The import bill during the period under review shot up not only because of higher prices of petroleum products, but also because of high import of food items, machinery and automobiles.

The services account also witnessed a large imbalance of $3.374 billion as inflows under this account stood at $2.71 billion, whereas outflows amounted to $6.084 billion.

Imbalance in services account was also witnessed at $2.417 billion during the period under review as compared to the same period of the last fiscal year, as inflows under this account stood at $2.465 billion and outflows at $4.88 billion.

The factors responsible for this huge deficit included higher outflows on account of transportation, travel, insurance, construction services, royalties and licence fees.

The combine imbalances in the trade and services were so large ($9.606 billion) in July-March 2006 that the current account turned negative despite a strong build-up in the current transfers.

Net current transfers during the period rose to $7.187 billion, from $6.362 billion in the corresponding period of the last fiscal year.

The data also revealed that the current transfers during the third quarter of this fiscal went up as Pakistan received $3.228 billion in workers' remittances during the period July-March 2006, up from $3.05 billion in the same period a year ago.

A big increase in foreign currency deposits held by the resident deposit holders also boosted current transfers. However, it declined to $198 million during the period under review as compared to $426 million in the corresponding period of the last fiscal year primarily because of stable rupee.

The rupee kept its value stable against the US dollar during the period providing less incentive to those willing to maintain foreign currency deposits.

 

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ISLAMABAD (May 11 2006): Prime Minister Shaukat Aziz has expressed satisfaction over the overall economic situation in the country and growing strength of the economy during the current fiscal year.

The prime minister was chairing the Fiscal Monetary Board meeting at the Prime Minister House here on Wednesday. The Board was informed that economy is likely to grow in the range of 6.5 percent to 7 percent during 2005-06.

It was also informed that the declining trend in inflation is likely to continue in May with inflation expected to be around 6 percent on year-on-year basis. The average inflation for the year is likely to be slightly less than 8 percent.

The Board reviewed recent development in external sector at length and expressed satisfaction, but at the same time asked the concerned authorities to remain vigilant.

In particular, the Board was informed that during the first nine months (July-March) of the current fiscal year, trade deficit stood at $8.62 billion as against $4.26 billion in the same period of the last year.

The trade deficit increased by $3.36 billion in the first nine months of the year. The Board was informed that 41.5 percent contribution to the rise in trade deficit came from the petroleum group followed by 21.5 percent from Machinery group, and 11.9 percent from Iron, steel and scrap.

Almost 75 percent contribution to the rise in trade deficit came from these three groups. Consumer durable, including road motor vehicles accounted for only 9.2 percent to the rise in trade deficit this year.

The Board was informed that the government has continued to maintain fiscal discipline, a press release issued here said.

The overall fiscal deficit during the first nine months (July-March) of the current fiscal year remained at 3 percent of the GDP.

The Board highly appreciated the successful floatation of 10- and 30-year Bond worth $800 million at highly competitive areas. This shows the confidence of the international investors on the current and future prospects of Pakistan's economy.

Commerce Minister, Adviser to Prime Minister on Finance, Secretary General, Ministry of Finance, Governor of the State Bank of Pakistan, Deputy Chairman, Planning Commission, Principle Secretary to the Prime Minister, Secretary, Finance and Economic Adviser, Ministry of Finance attended the meeting.

 

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ISLAMABAD (May 11 2006): Pakistan's GDP and other national accounts from now onwards will be released on quarterly basis in accordance with the International Monetary Fund (IMF)'s General Data Dissemination System and Special Data Dissemination Standard.

State Bank of Pakistan (SBP) Statistics Department's joint director, Dr Ishaque Ahmad Ansari said on Wednesday while talking to a private TV channel.

He said that the work was underway for the release of gross domestic product (GDP) on quarterly basis, which would help provide country's economic picture in a better way.

Foreign investment in Pakistan was fast picking up since SBP went on collecting and presenting economic data in accordance with the IMF standards, he added.

He said that presently the compilers of data and its users were not working in co-ordination. However, SBP was now endeavouring for establishing a liaison between the data compilers and data users, he added.

He said the SBP was releasing data as per special data dissemination standard and this was for the first time that a data reserve template had been made.

 

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RAWALPINDI (May 11 2006): President General Pervez Musharraf on Wednesday emphasised on fast track facilitation of foreign investment and early removal of impediments in the way of higher levels of international investment to ensure Pakistan's rapid industrial development.

"We must set a shortest timeframe between an investor's expression of interest and the government's response in terms of facilitation for commencement of the project", he said at a meeting here.

Prime Minister Shaukat Aziz and senior government functionaries attended the meeting, which reviewed the progress on decisions taken at a similar meeting held on February 16, as part of the government's efforts to evolve an enabling environment for investors.

"Pakistan offers a lot to international investors not only in respect of meeting local requirements but also as the country destined to serve as a trade corridor and an industrial base for export to regional countries including Central Asia, South Asia, the Gulf, and China".

He noted with satisfaction that foreign direct investment (FDI) this year would touch $3 billion, but underscored that regular follow-ups on implementation of the policies was imperative to set the pace for industrial development.

"We must make the most of the growing international confidence in our economic growth and policies. A sustained inflow of investment will help Pakistan maintain its higher growth as well as stem poverty through massive employment generation," he stated.

"While, we will continue to strive for higher growth in the agrarian sector, we must go for fast track industrialisation", he said, identifying communication, transportation, telecommunication, construction, information technology, energy exploration and supply etc, as some of the most promising sectors for investment.

Prime Minister Shaukat Aziz said the government has offered level playing field to local and foreign entrepreneurs and has also ensured legal protection to their business.

He said the upward trend in the volume of FDI speaks of growing international confidence in Pakistan's business climate and consistency and continuity of its economic and fiscal policies.

Later, Minister for Investment Umar Ahmed Ghumman, told newsmen that during the meeting the President said that in view of the tremendous interest being shown by foreign entrepreneurs it was imperative that all related government departments geared up and strived for a prompt response.

"The President was clear in his message that response should be efficient, effective and constructive so that foreign entrepreneurs do not face any delay".

He said that a mechanism was being evolved for timely facilitation of foreign investors so that Pakistan not only should meet its growing requirements but also serve as a gateway between the Gulf countries and Western parts of China and the region.

Ghumman said that the Board of Investment is responsible for attracting more investment into the country, and added that top entrepreneurs from Gulf countries, including Dubai Ports World, would shortly be visiting Pakistan.

Pakistan, he said, "is looking forward to enhance oil refining capacity" by setting up refining facilities in Gwadar. "There would be oil and gas pipelines, a network of communications, to make Pakistan and energy corridor, and today's meeting reflects Pakistan's commitment to facilitating investors at the highest level."

The meeting was attended by Minster for Industries and Special Initiatives Jahangir Khan Tareen, Minister of State for Investment Umar Ahmed Ghumman, Deputy Chairman Planning Commission, Chairman Central Board of Revenue Abdullah Yousaf and other senior officials.