Pakistan Economy - News & Updates - Archive

[Neo]

Prime Minister studying incentive package for computer industry ​

ISLAMABAD (August 23 2007): Prime Minister Shaukat Aziz is examining an incentive package for computer industry to abolish duties/taxes on the import of call center equipment; withdraw GST on computers and levy 10 percent customs duty on the import of computer value of $600 or less.

Official sources told Business Recorder on Wednesday that the IT ministry has submitted the proposal to the prime minister for approval. The incentives included total waiver of sales tax on computer and reduction in duties and taxes to zero percent on the import of the call center equipment, including power supply. Such apparatus included IP phones, video conferencing equipment, and miscellaneous computer-related equipment, including switches and cables etc.

Moreover, 10 percent duty be imposed on the import of computer of the value of $600 or less to boost local assembly of computers by multinational companies. Officials said the viewpoint of the finance ministry would also be incorporated before taking any final decision on the proposed package.

Sources said a meeting on the incentives to the IT industry was held under the chairmanship of the prime minister on June 30, 2007. The prime minister issued directives to relevant ministries for promotion of the IT industry.

The prime minister had directed that the Pakistan should have an IT industry incentive regime which should be as good as any offered by comparable countries. Secondly, the IT ministry should develop a comparison of IT industry incentives offered by comparable countries. Thirdly, local assembly/manufacture of computers by MNCs like Lenovo should be comparatively incentivised pertaining to imports.

The IT ministry conducted an exercise to make a comparison of tax regimes applicable to regional countries with the local industry. Under the study, tax regimes for the IT industry in other countries are far more favourable than the tax incentives offered by Pakistan. The exemption from sales tax, corporate income tax, and import duty are available to the IT industry of Turkey; Vietnam; Thailand, and Malaysia.

Officials said the Pak IT industry has shown tremendous growth in the past four years with annual growth in exports averaging 50 percent. The companies listed on Nasdaq and the Karachi Stock Exchange (KSE) have acquired venture capital from overseas, and have gone through merger, and acquisitions with international companies.

Out of over 1,000 active IT companies, several are world leaders in their product niches and other provide services to leading corporations of the world. Seven leading multinational companies have located their development centers in Pakistan. Now this growth and expansion is threatened by the imposition of the GST on computers and other taxes and levies on call center equipment.

Keeping in view the circumstances, the IT ministry has proposed withdrawal of GST on computers; exemption of duties/taxes on import of call center equipment and other incentives, officials added.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Pakistan to train other countries in MNP ​

Thursday, August 23, 2007

KARACHI: Pakistan Telecommunication Authority Chairman Maj-Gen (Retd) Shahzada Alam Malik has said that it is an honour for Pakistan to be selected by the International Telecommunication Union (ITU) to provide training to other countries who wish to implement Mobile Number Portability (MNP).

“Pakistan would provide support to those countries.” He said this while addressing the opening session of a three-day workshop on “Implementing MNP” organised by PTA under the aegis of ITU Centre of Excellence Network on Wednesday, a PTA statement said.

He said that the workshop has provided the Pakistani Regulator an excellent opportunity to share its experiences and expertise in the implementation of MNP. It would be willing to send its experts to regional countries to help them implement MNP, he said.

The PTA chairman further said that more than 100,000 cellular mobile subscribers have availed the service of MNP in the country since the service started five months ago. He said that Pakistan is one of the first countries in the region to have provided the services of MNP to its 64 million mobile subscribers.

“The service is aimed at strengthening further healthy competition in the market and to improve the quality of service of the country’s rapidly growing cellular mobile sector. Appreciating the cooperation extended by the country’s mobile companies towards the implementation of MNP in the country,” he added.

On the occasion, the statement said that Member Telecom, Ministry of IT and Telecom, Nooruddin Baqai, observed establishment of ITU’s Centre of Excellence Node in Pakistan was recognition of the country’s sound economic liberalisation policies and the unprecedented growth that has been witnessed in the country’s telecom sector.

“The MNP has empowered the mobile subscribers and they enjoy their right to choose any mobile service provider while retaining their numbers,” he said.

Pakistan to train other countries in MNP

 

[Neo]

Motorola to help Pak adopt new communication technology ​

Thursday, August 23, 2007

KARACHI: Motorola’s country manager Nadeem Safdar in his keynote presentation at the 7th ITCN Asia 2007, held in Karachi recently, underlined Pakistan’s advances in the telecommunications sector, while discussing, with regulators, telecom operators and enterprise customers present, the benefits and uptake potential for technologies that will support Pakistan’s telecommunication goals.

With a robust regulatory framework, Pakistan is embracing new technologies like WiMAX which are expected to revolutionise communications in the country.

Motorola also showcased its GSM solutions, as the technology remains a cost-effective upgradeable option.

Along with China, India, and Bangladesh, Pakistan enjoys one of the fastest growing telecommunications industries.

We remain committed to enabling Pakistan to retain a competitive regional edge by providing the latest telecommunications solutions and services targeted to operators, government, public safety organisations, enterprises and consumers, that will boost the overall economic development of Pakistan” said Nadeem Safdar.

Motorola to help Pak adopt new communication technology

 

[Neo]

Rains cut industrial production by 50pc​

KARACHI, Aug 22: Except for normal production activities at the SITE Industrial Estate, four other industrial areas of the city suffered 50 to 80 per cent production losses, especially in morning shifts on Wednesday, as workers could not reach factories due to thin public transport and bad condition of roads.

Industries had experienced production losses to the extent of 30 to 70pc on Aug 9 and 10 as a sizable number of workers failed to turn up owing incessant rains.

On Wednesday, around 90pc leading retail and wholesale markets either remained closed or observed a half day. Industries could not send their local shipments to the domestic market for fear of damage to their products from rains.

Apart from low productivity, exporters are already facing problems in meeting deadlines for timely shipments due to thin presence of container goods’ carriers after a ban on their movement.

Chairman, Karachi Wholesale Grocers Association, Anis Majeed, said trading in wholesale food items remained suspended at markets as many people could not reach their shops due to accumulated water on roads.

Some traders, who somehow opened their shops, closed them early.

There was only 10 to 15pc trading activity at the Subzimandi on Superhighway despite satisfactory arrival of trucks from the upcountry on Tuesday night.

Chairman, Falahi Anjuman Wholesale Vegetable Market Haji Shahjehan, said some 400 to 500 trucks arrived on Tuesday night despite rains in the city.

However, only 100-150 trucks offloaded their consignments on Wednesday.

There were only fewer buyers from the city as many failed to enter the market owing to poor road passage inside the wholesale market that had submerged with rainwater.

Many traders either cashed in on the situation by charging higher prices, while others sold items below normal rates.

Chairman, SITE Association of Industry, Imran Shaukat, said production remained normal as 80 per cent workers marked their attendance, while arrival of administration people remained 50 per cent less.

He said situation about power failures and labour attendance remained satisfactory as compared with previous rains. However, export shipments and local supplies from industries almost remained at the bottom due to absence of heavy vehicles.

Chairman, North Karachi Association of Trade and Industry (NKATI), Faraz Mirza, said 80 per cent industries in the areas remained shut, out of a total 2,500 units, while the remaining 20 per cent units recorded only 30 to 40 per cent attendance.

Chairman, Korangi Association of Trade and Industry (KATI), Masood Naqi, said production suffered as 20-25 per cent workers’ failed to reach factories. He said of the 2,500 units around 50 per cent units failed to operate.

Senior Vice Chairman of Landhi Association of Trade and Industry (LATI), Dawood Usman, said as a result of only 50 per cent attendance of workers, production also remained low.

However, other activities, like supplies to local markets, remained very idle.

Chairman, FB Area Association of Trade and Industry (FBATI), Masroor Ahmed Alvi, said production fell by 50 per cent as only 50pc workers turned up.

Rains cut industrial production by 50pc -DAWN - Business; August 23, 2007

 

[Neo]

Market capitalisation seen rising to 60pc of GDP​

ISLAMABAD, Aug 22: Despite the present scary plunge in the local stock market caused by an air of political uncertainty, a multilateral lender sees market capitalisation swelling to 60 per cent of the country’s Gross Domestic Product (GDP) in the next year and a half.

If there is a political will behind the implementation of the Second Generation Capital Market Reforms, which are around the corner, the Asian Development Bank (ADB) expects increase in market capitalisation from 41.8 per cent of GDP in 2005 to 60 per cent in 2009, an official document reveals.

Pakistan’s GDP had touched the $140 billion-mark last year.

The Karachi Stock Exchange (KSE), which withstood the fierce winds of judicial crisis, threats of suicide bombings and even the May 12 massive killings, had to dip by four per cent on Tuesday following rumours of imposition of martial law or emergency.

This has given further authenticity to a belief almost commonly being held by the managers of international financial institutions that what matter a lot for the Pakistani equity markets are not simply the law and order situation or any violation of human rights or constitution, but continuity of economic reforms and political commitment to ensure their implementation or simply a strong government with a central authority.

The ADB, which is providing $400m for the capital market reforms, also projects increase in the volume of outstanding capital bonds from 0.5 per cent of GDP in 2005 to three per cent in 2009 while taking into account the new political set up and its economic policies.

And, during the same period, the bank expects increase in the number of companies listed on the equity market to 700 from 526, issuance of equity capital from 12 issues to 50 and corporate bonds from 10 to 50.

For a more efficient and balanced financial sector, the ABD expects increase in the longest available bond maturity from seven years to 12 years, a sign of lenders’ trust in the government’s policies.

Under the reform process, for which the government has made its commitment with the ADB before making an official request for funds, the Karachi, Lahore and Islamabad stock exchanges would also disclose plans for self-regulation within the next 10 months. This may provide a safeguard to small investors.

The bank is of the view that liquidity in the KSE could be attained by a few possible measures including more listing of companies on the stock market and introduction of new products by the SECP like the Voluntary Pension Scheme (VPS) and Real Estate Investment Trusts (REITs).

Through an improved financial sector intermediation, the ADB forecasts an increase in money supply to 65 per cent of GDP by 2012 from 44 per cent of GDP as recorded in 2005.

In this period, the country’s savings rate is expected to increase to 19 per cent of GDP from the present 16 per cent.

Similarly, savings mobilised by non-bank financial institutions (NBFIs) is expected to go up to four per cent of GDP in the next six years from the level of 0.5 per cent.

Such progress would be recorded in the government’s economic statistics and country reports of the International Monitory Fund (IMF), the ADB has stated.

The reform process’s hallmark is the restructuring of the SECP and its conversion into the Financial Services Commission of Pakistan (FSCP).

The ADB also sees development of domestic and institutional investment with a hefty increase in assets managed by private mutual funds from Rs17bn level in 2005 to Rs55bn in the next fiscal year. An increase is also expected in the paid-up capital of the NBFCs.

Funds accumulated under the voluntary private pension schemes are also expected to hover around one per cent of GDP by 2009.

Market capitalisation seen rising to 60pc of GDP -DAWN - Business; August 23, 2007

 

[Neo]

Core inflation drops to 5.2pc​

ISLAMABAD, Aug 22: Core inflation (non-food, non-energy) exhibited declining trend as it stood at 5.2 per cent in the first month of current fiscal year (July 2007) as against 7 per cent in the corresponding month of last year.

Tight monetary policy pursued by the central bank is mainly responsible for this decline in core inflation, said an official report of the finance ministry released on Wednesday.

The annual core inflation during the year 2006-07 was 5.6 per cent as against 8.6 per cent in the previous year mainly because of the central bank tight monetary policy.

The first month of the current fiscal year has started with a positive note as the overall CPI-based inflation declined to 6.4 per cent in July, 2007 as against 7.6 per cent in the corresponding month of last year (July 2006).When viewed in the long term perspective; this month’s inflation is the lowest in the last four years.

The decline in overall inflation in July, 2007 is largely attributed to a sharp reduction in non-food inflation, which declined from 7.8 per cent in July, 2006 to 4.9 per cent in July, 2007.

Food inflation, on the other hand, has shown a marked increase as it was 7.4 per cent in July, 2006, which has increased to 8.5 per cent in July, 2007. However, as compared with previous month (June 2007) food inflation has declined considerably to 8.5 per cent as against 9.7 per cent in the previous month.

During 2006-07, average inflation stood at 7.8 per cent as compared to 7.9 per cent last year. Core inflation declined significantly to 5.6 per cent as compared to 8.6 per cent and non-food inflation averaged 6 per cent during 2006-07 as against an average of 8.6 per cent in the same period last year.

Food inflation on the other hand witnessed increase during the said period. It was 10.3 per cent in 2006-07 as against 6.9 per cent in the same period last year. It is clear that last year’s inflation was driven by higher food inflation as opposed to previous year where the major culprit was non-food inflation.

Last year’s (2006-07) food inflation has been fuelled by a combination of global trends in the prices of several commodities and the local supply demand driven factors.

Globally, higher prices of edible oil (palm oil and soybean) and dependency on their imports transmitted higher international prices to domestic market price.

Shortfall in domestic production of pulses, rice, chillies, other vegetable items (onion, tomato, etc.) and fruits also contributed to the rise in domestic food prices.

There are a few key food items, which are widely consumed and whose prices remained high during the year and, therefore, contributed to the pick-up in food inflation. These items include: rice, masur and gram pulses, milk powder, vegetable ghee, and cooking oil, red chillies, onions and tomato.

On the other hand, the prices of some essential food items were lower in 2006-07 as compared with last year.

These items include moong pulse, sugar, chicken, potato etc. The next year (2007-08) inflation target has been set at 6.5 per cent and the current inflation figures suggest that this target will most probably be met, added the report.

Core inflation drops to 5.2pc -DAWN - Business; August 23, 2007

 

[Neo]

Large-scale manufacturing slows down​

ISLAMABAD, Aug 22: Pakistan’s large-scale manufacturing sector grew by 8.41 per cent in the fiscal year 2006-07 as against the target of 13 per cent set for the same period, said Federal Bureau of Statistics (FBS) on Wednesday.

The capacity constraints and slower demands have badly affected the industrial production during the last couple of years and resultantly the exports proceeds also remained much behind the targets during the period.

The ministry of industries and production directly collects information on 35 items, oil companies advisory committee (OCAC) 11 items and provincial bureau of statistics provide data for 54 items.

The product wise production showed that sugar production increased by more than 19.13 per cent to 3.525 million tons compared with 2.959 million tons last year. The production of cigarettes has increased by 2.87 per cent, while cotton yarn and cloth production grew by 11.75 per cent and 6.75 per cent, respectively.

In the food sector, the vegetable ghee production increased by 2.26 per cent, cooking oil 7.04 per cent, wheat 6.96 per cent, starch and its products 7.48 per cent, beverages 33.95 per cent during the period under review over the last year.

In the automobile sector, the LCVs production has increased by 18.74 per cent, jeeps and cars 0.42 per cent, buses 20.36 per cent, motor cycles 11.65 per cent during the year 2006-07 as against the same period of last year. However, the production of trucks dropped by 2.39 per cent.

Similarly, tractor production has increased by 10.46 per cent, diesel engines 37.12 per cent during the period under review. The production of cycle tyres up 0.37 per cent, cycle tubes 2.12 per cent, motor tyres 18.27 per cent and motor tubes 43.46 per cent.

The production of paper & board has dropped by 2.21 per cent, petroleum products 1.76 per cent.

The cement production during the year 2006-07 has increased by 22.49 per cent and the production of glass sheets, up by 98.89 per cent during the period under review over the last year.

The iron and steel production during the period under review up by 10.69 per cent, coke 79.01 per cent, pig iron 31.36 per cent, billets 8.79 per cent and HR sheets 5.46 per cent during the period under review over the last year.

Among the electrical production, refrigerators recorded a growth of 7.25 per cent, deep freezer 4.34 per cent, air-conditioners 23.24 per cent; electric tubes 8.51 per cent, electric fans 5.11 per cent, electric motors 4.97 per cent. However, TV sets production declined by 35.85 per cent, electric meters 17.51 per cent during the period under review over the last year.

Large-scale manufacturing slows down -DAWN - Business; August 23, 2007

 

[Neo]

Defence exports rise to $40m: POF chief​

ISLAMABAD, Aug 23: Pakistan’s defence exports increased to more than $40 million in 2006-07 and France, Germany, South Korea, Turkey and other countries have offered joint ventures to manufacture and market small arms and ammunition.

“The industry is also meeting domestic requirements of sophisticated arms and ammunition,” the chairman of the Pakistan Ordnance Factories, Wah, Lt-Gen Syed Sabahat Husain said.

He said the POF’s aggressive marketing efforts had helped it to enhance defence exports in 2006-07 and now it aimed to get more orders.

He said some other countries, including Malaysia and Argentina, had also decided to offer joint ventures.

He said the POF signed a cooperation agreement with Poongsan of South Korea for co-production and co-marketing of complete rounds of 155mm base-burn dual-purpose improved conventional munition (BB-DPICM) by the POF. According to the agreement, the first lot would be delivered to the GHQ in 2007-08.

The POF’s share of work would gradually increase to 50 per cent, starting from 10 per cent. “On our request, the procurement of complete rounds planned by the Pakistan Army was diverted to the POF. The POF renegotiated the price of the ammunition with M/s Poongsan on C&F basis, which resulted in a saving of $2.726 million,” Gen Husain said.Pakistan, he said, would be getting technology transferred through the joint venture. The joint venture, he said, would provide new market access to Pakistan.

He said the POF and MKEK of Turkey had agreed to share expertise in joint R&D projects to meet requirements of both Pakistani and Turkish armies. Pakistan Army, he said, was interested in extending the range of its existing stock of 122mm multiple-barrel rocket launchers from 20kms to 40kms. POF has short listed Edepro of Serbia in this regard. Modalities of the joint venture will be finalised subject to successful trials and acceptance by Pakistan Army.

“Also, Nexter of France has agreed to join hands for co-production and co-marketing of 155mm hollow base/base bleed LU211 artillery,” he said adding that trials were expected in September 2007.

He said the POF was planning to build CNG cylinders in cooperation with an Argentine company.

He also said that POF was planning to outsource some of its work to the private sector to concentrate on its core businesses. The outsourcing to the private sector, he pointed out, would be in the downstream industry.

He said that POF had been tasked by the Ministry of Defence Production to prepare feasibility for manufacturing third generation ammunition.

POF has developed an indigenous version of 9mm pistols and is negotiating with international firms, including FN Herstal of Belgium for co-production and co-marketing.

POF was also exploring the possibility of joint venture with Hiehl of Germany for smart and advanced ammunition.

Nitrocheme, one of the top manufacturers of the modular charge system for artillery ammunition, has also agreed to cooperate with POF.

POF is engaged with Rocketsan of Turkey to produce 122mm extended range rockets subject to successful trials and acceptance by Pakistan Army.

Lanx of US has offered to co-produce protective suits for the army by utilising POF facilities.

Defence exports rise to $40m: POF chief -DAWN - Top Stories; August 24, 2007

 

[Neo]

Domestic debt rises to $42.6 billion ​

Friday, August 24, 2007

ISLAMABAD: Pakistan’s total outstanding domestic debt rose to Rs2.599 trillion ($42.6 billion) by May-end 2007, from Rs2.299 trillion ($37.68 billion) at the end of fiscal year 2005-06.

During 11 months (July-May 2006-07), the government borrowed about Rs302.34 billion or $5 billion (13.1 per cent) more at the end of June 2006, the State Bank of Pakistan (SBP) said.

The interesting feature of the provisional data released by the bank was that the increase in domestic debt during July-May 2006-07 was mostly due to rise in the stocks of floating debt. The un-funded and permanent debt also jacked up the total debt to a sizeable amount.

During the 11 months, the floating debt increased by Rs208.90 billion, un-funded debt by Rs51.63 billion and permanent debt by Rs41.80 billion.

The permanent domestic debt comprising medium and long-term market loans, federal government loans, special government loans, federal instruments and prize bonds, stands at Rs539.43 billion, which totalled Rs499.77 billion at the end of fiscal 2005-06.

The floating domestic debt, mainly comprising short-term debt instruments and market treasury bills, maintaining a rising trend, was recorded at Rs940.23 billion at the end of June 2006. And, during the following 11 months, it went up to Rs1.15 trillion. Un-funded domestic debt comprising National Saving Schemes (NSS) stand at Rs910.8 billion. It grew by Rs51.64 billion from Rs859.16 billion at the end June 2006.

However, it reveals that the net mobilisation under all instruments of the NSS were once again negative during the period but not as high as was recorded in the corresponding period of last fiscal.

The saving instruments i.e. Bahbood Saving Certificates, Pension Benefit Accounts and Mahana Amdani accounts increased while deposits in Postal Life Insurance stood unchanged.

It is worth mentioning that the government in June 2005-06 on account of rising cost of living raised the rate of profit on Special Saving Certificates/Accounts, Regular Income Certificates, Defence Saving Certificates, Pensioner’s Benefit Accounts, Bahbood Savings Certificates, Savings Account and Prize Bonds from 8.6 per cent, 8.88 per cent, 9.46 per cent, 11.04 per cent, 5.00 per cent and 5.00 per cent to 9.17 per cent, 9.24 per cent, 10.0 per cent, 11.52 per cent, 6.00 per cent and 6.50 per cent, respectively, however its effect would be felt in the coming months.

As a result of prudent government decision, net investment in NSS is gradually increasing. Of these three most popular instruments of the NSS i.e. 10-year Defence Saving Certificates (DSCs), five-year Regular Income Certificates (RICs) and three-year Special Saving Certificates (SSCs) net withdrawals were only Rs21.8 billion in 11 months of FY 2006-07.

It reveals that erstwhile popular instruments; DSCs, SSCs, and RICsówere comparatively attractive for investors during the period under review.

There were also fresh inflows in savings accounts; special savings accounts and general provident (GP) fund during the period under study these were Rs5.2 billion, Rs5.66 billion and Rs554.9 million respectively.

Besides, Bahbood Saving Certificates and Pensioners Benefit Accounts attracted net fresh investment of Rs44.9 billion and Rs10.86 billion respectively while no investment was witnessed in Postal Life Insurance.

Domestic debt rises to $42.6 billion

 

[Neo]

IT industry earnings touch $116m: SBP ​

Friday, August 24, 2007

ISLAMABAD: The IT industry’s export revenue as reported by the State Bank of Pakistan (SBP) reached $116 million in financial year 2006-07, crossing the target of $108 million set for the year.

This indicates an increase of 61.18 per cent in IT exports when compared to the previous year’s export revenues of $72 million, says an official announcement on Thursday.

The SBP, in its statement for the year 2006-07, has estimated the country’s IT services export revenue at US$116 million, which indicates a consistent annual growth, a spokesman of Pakistan Software Export Board (PSEB) said.

BPO and call centers have made a significant contribution increasing exports due to adequate telecom facilities and trained manpower available in the country. Considering that the 15 per cent GST imposed on computer hardware in the federal budget 2006-07 has not yet been removed, this rise in IT exports is commendable.

The current IT exports annual growth rate is still understated as only 5 per cent of the country’s registered companies file their export data with SBP.

PSEB is making vigorous efforts to ensure that the export figures of all IT companies are reported to SBP.

The State Bank of Pakistan utilised the BPM-5 Reporting System to account IT exports revenue, which also restricted the export revenue figure to $116 million in 2006-07. The Reserve Bank of India, on the other hand, follows the BPM-6 Reporting System, which raises its exports to billions of US dollars.

BPM-6 includes sales to multinationals, earnings of overseas officials and salaries of non-immigrant overseas workers to export revenue.

Utilising the BPM-6 Reporting System, Pakistan IT Industry’s exports are estimated at $1.4 billion while the total industry size is estimated at US$2.8 billion.

With over 1042 IT companies registered with PSEB, the country’s IT exports grew by an average of 50 per cent in each of the last four years. PSEB has been facilitating the country’s IT industry through its programmes in Human Capital, Office Space, Marketing, Company Capability Development, Telecom Bandwidth, Industry Finance, Public Policy, Strategy and Research, and Facilitation.

The Government of Pakistan has also introduced an incentives package for the IT sector including tax exemptions until 2016, 100 per cent foreign equity and earnings repatriation, and low-rent facilities for IT companies.

IT industry earnings touch $116m: SBP

 

[haviZsultan]

Pakistan's growth is 'second fastest'

By Our Correspondent Dawn, 8 June 2005

WASHINGTON, June 7: The world’s second fastest growing economy after China is no longer India. It’s Pakistan, says a commentary on Pakistan’s budget by US financial wire service Bloomberg. Another financial news service, Forbes, commented that Pakistan had seen a swift economic turnaround after the Sept 11, 2001, attacks in the United States when it threw its support behind Washington in the war on terror, and in return America and many other countries gave it financial assistance or rescheduled and wrote off its loans.

Forbes said Prime Minister Shaukat Aziz played a key role in “reviving a near-bankrupt economy”.

In a commentary titled ‘Pakistan’s economy posts historic gains,’ the Voice of America said it was quite a turnaround for a country that five years ago nearly defaulted on a series of international loans and now was one of Asia’s five fastest growing economies.

The country’s agriculture and service sectors grew by over seven per cent in the past year and its large-scale manufacturing sector was up 15.4 per cent, it pointed out.

Other commentators noted that the budget had been widely welcomed as pro-business, helping the Karachi Stock Exchange enjoy a three per cent rise in Tuesday trading.

The budget cut a number of business taxes, in addition to dedicating more money for defence and social and development spending, they said. The cuts included a one per cent rebate on the tax firms must pay when listing on the stock exchange and exemptions from capital gains tax for investment in agriculture-related sectors. The government also announced an increase in the tax-free allowance on profits from stock investment to Rs150,000 from Rs100,000. There was also no mention of any increase in capital value tax on share transactions, which some investors had feared.

Pakistan’s economy was strong, growing at 8.4 per cent this fiscal year, they said.

Some development analysts, however, criticized the budget saying it did not do enough for ordinary people.

Referring to figures released over the weekend, commentators noted that the $110 billion economy was estimated to have grown by 8.4 per cent in the current fiscal year, compared with 9.5 per cent expansion in China’s gross domestic product last year while India recorded 6.9 per cent GDP growth in the 12 months with ended on March 31.

The growth target for the next fiscal year, as set out in the budget, was eight per cent, the same as Beijing’s goal.

“That may be a trifle over optimistic. Pakistan isn’t yet ready to sustain eight per cent growth year after year — not until it can push up its savings rate, which is languishing at 14 per cent of the GDP,” observed Bloomberg.

It noted that inflation was at an eight-year high of 11 per cent, a clear indication of an economy overheating from too much consumption.

“Still, another year of strong growth is eminently achievable in Pakistan, provided the central bank can manoeuvre deftly to suppress inflationary expectations, even as the government goes ahead and steps up investments in public works,” it said.

 

[haviZsultan]

When we were the second fastest we got no attention. When india is the second fastest they have a hell of a lot of attention! All we ever get is negative media... however this is old but some people still say we are the 2nd fastest growing economy... There is no arguing that we are the 3rd fastest growing economy although we get no attention (exept when someone blows himself apart!)

 

[Contrarian]

Sorry mate, this report is absolute crap. India IS the second fastest with our growth rates crossing 9% while Pakistan's are going to drop to around 7% this year.

And FYI, If there is a competition between the second and third places, its between India and Vietnam, not Pakistan.

 

[Bushroda]

First of all, China isn't the fastest growing economy. China is the fastest growing major economy. I don't think at $128 billion Pakistan can be considered as a major economy in the world. But still, median growth rates arn't picked up by just one or two year performance. It is calculated over a long period of time. India's median growth rate has averaged at 7% for the past decade. Since 1991, the average growth rate has been 6.5%. Since 1980 it has been 6%. This makes India the second fastest growing economy along with Vietnam.

BTW, check the date of the article
8th June 2005

 

[haviZsultan]

Sorry mate, this report is absolute crap. India IS the second fastest with our growth rates crossing 9% while Pakistan's are going to drop to around 7% this year.

And FYI, If there is a competition between the second and third places, its between India and Vietnam, not Pakistan.

Read! Read before you start crying! Its for 2005! My point is just that how you guys get so much attention when you have the second-fastest GDP growth rate while we are ignored! The report proves that we once were the second fastest not that we are the second fastest!