Pakistan Economy - News & Updates - Archive

[BATMAN]

Musharraf vote lifts Pakistani stocks to life high
Musharraf vote lifts Pakistani stocks to life high | Business | Reuters

KARACHI (Reuters) - Pakistani stocks ended at a life high on Monday after President Pervez Musharraf swept a vote for re-election on Saturday even though it is unsure whether the Supreme Court will let the result stand.

The Karachi Stock Exchange (KSE) benchmark 100-share index gained 1.91 percent, or 268.70 points, to 14,368 on turnover of 249.7 million shares.

The KSE-100's previous intra-day life high was at 14,290.43 points on July 13.

The free-float KSE-30 share index meanwhile ended up 2.23 percent at 17,718.51 points.

"The sentiment was positive the whole day today, and the market reacted positively to Musharraf's success in the vote," said Shuja Rizvi, Director of Broking Operations at Capital One equities.

But Rizvi warned of caution ahead.

"The market still has room to grow more, but caution has to be exercised. We would not suggest any new entries at these high levels." he said.

Musharraf must wait at least 10 days for the court to decide whether he was eligible to run while still army chief, but most analysts reckoned it would be hard for the court to annul his sweeping victory.

Investors want to see a continuation of the policies that have produced growth and a strong stock market.

Among the most active companies, TRG Pakistan ended 0.60 rupee at 14.95, Oil and Gas Development Co Ltd gained 1.85 rupees to 125.40, and National Bank of Pakistan ended 3.95 rupees up at 278.85.

 

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Pakistanis overwhelmingly favour international trade: survey ​

WASHINGTON (October 09 2007): An overwhelming majority of Pakistanis are supportive of international trade as they see it good for economic advancement of the country, according to a latest world-wide public opinion survey. The survey by 'Pew Global Attitudes Projects' found that 82 percent Pakistanis favour international trade, 60 percent of the respondents saw people better off in free market economies.

A substantial part of the population also feels that foreign companies operating in the country are having a positive impact. Pakistan has sustained a robust economic growth rate, of around 7 percent in the last few years, with its exports more than doubling in the last eight years.

Last financial year, the South Asian country attracted a record $8 billion investment, signifying a strong investor confidence in the country's economic potential.

The survey finds that publics of the world broadly embrace key tenets of economic globalisation, but fear the disruptions and downsides of participating in the global economy. In rich countries, as well as in poor ones, most people endorse free trade, multinational corporations and free markets.

However, the latest 'Pew' survey of more than 45,000 people finds that they are concerned about inequality, threats to their culture, threats to the environment and threats posed by immigration.

There are signs that enthusiasm for economic globalisation is waning in the West: Americans and Western Europeans are less supportive of international trade and multinational companies than they were five years ago. In contrast, there is near-universal approval of global trade among the publics of rising Asian economic powers.

Nonetheless, since 2002 enthusiasm for trade has declined significantly in the United States, Italy, France and Britain, and views of multinationals are less positive in Western countries where economic growth has been relatively modest in recent years.

There are widely shared concerns about the free flow of people, ideas and resources that globalisation entails. In nearly every country surveyed, people worry about losing their traditional culture and national identities, and they feel their way of life needs protection against foreign influences.

Business Recorder [Pakistan's First Financial Daily]

 

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FDI on the rise in Pakistan: BoI secretary​

KARACHI: Volume of foreign direct investment is rapidly increasing because of attractive returns on investing in Pakistan despite the political and law and order issues, Mushtaq Malik, Secretary Board of Investment (BoI) stated on Monday.

In a meeting with President of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Tanveer Ahmed Sheikh, pointed out that there has been a positive change in the magnitude of the inflow of foreign investment – portfolio and FDI in the country and said that it was notable that the inflow of foreign investment had increased manifold after 9/11.

Secretary BoI extended his cooperation to provide his best support to solve the business sector’s problems in all the areas where his cooperation is required. The meeting also discussed the role and possible benefits of the ROZs (Reconstruction Opportunity Zones) for investment promoting activities.

Mr Sheikh highlighted the issues being faced by the private sector to invest in the country. He highlighted that private sector has fulfilled its commitments to invest in Pakistan but the government, in certain areas, was not successful to fulfill its commitments.

He exemplified the ‘Textile Vision 2005’ programme where industrialists invested their funds in the textile sector according to the targets determined by the planning authorities. The sector imported and installed the machinery and enhanced investment through equity based financing. As a consequence the textile sector increased its production capacity and modernised the facilities. However, MINFAL failed to provide the targeted production of textile raw material cotton. As a result, the textile sector is facing unutilised capacity, which is hampering its profitability.

“The permission for the import of cotton from India through Wagah border is the only immediate solution to fill the gap between the demand and supply of cotton,” he emphasised. Mr Sheikh also highlighted the efforts of the FPCCI in promoting the investment activities in Pakistan. He stressed that integrated efforts are required for the cause of national economy.

Daily Times - Leading News Resource of Pakistan

 

[Neo]

India and Pakistan top FDI recipients in 2006 ​

ISLAMABAD (October 09 2007): India and Pakistan were top recipients of foreign direct investment (FDI) inflows to South Asia, with India getting major share of $17 billion from total $22 billion and Pakistan $4.3 billion FDI in 2006.

"India received more FDI than ever before, and inflow was 153 percent more than in 2005," said 2007 World Investment Report (WIR) of United Nations Conference on Trade and Development (Unctad).

Other important recipients of FDI in the sub-region included Pakistan, Bangladesh, and Sri Lanka. According to the report, the performance of Pakistan in attracting FDI in 2006 had been promising. Strong economic growth and aggressive privatisation programme had led to booming FDI inflows during 2004 and 2006.

After playing a leading role in a number of large merger and acquisition (M&A) deals in Pakistan's privatisation process, West Asian companies announced a series of large green-field projects, the report said.

Inflows to Sri Lanka rose significantly, reaching a record high of $480 million. However, Bangladesh did not realise as an underperformer according to Unctad's Inward FDI Potential and Performance Indices. Bangladesh received $625 million in 2006, which was 10 percent less than in 2005.

Elaborating the Indian position, the report said that rapid economic growth had led to improved investor confidence in the country. According to Indian government, the country's economy was expected to grow by 9.2 percent in 2006-07 fiscal. The sustained growth in income had made the country increasingly attractive to market seeking FDI. Indeed, foreign retailers such as Wal-Mart had started to enter the Indian market.

At the same time, a number of US transnational companies (TNCs) such as General Motors and IBM were rapidly expanding their presence in India. Large Japanese TNCs such as Toyota and Nissan are also doing the same. Private equity firms are also playing a role, said the report.

Global FDI inflows soared in 2006 to reach $1,306 billion--a growth of 38 percent. This marked the third consecutive year of growth, and approached the record level of $1,411 billion reached in 2001.

The rise in global FDI flows was partly driven by increasing corporate profits world-wide and resulting higher stock prices that raised the value of cross-border M&As. The United States regained its position as the leading host country, followed by UK and France. The largest inflows among developing economies went to China, Hong Kong (China) and Singapore, and among the transition economies to the Russian Federation.

The developed-country TNCs remained the leading sources of FDI, accounting for 84 percent of global outflows, while there was a rebound of FDI from the US, almost half of the world outflows originated from European Union (EU) countries. Increased cross-border M&As activity supported the current rise in global FDI in 2006.

According to the report, China and India were beginning to challenge the dominance of the Asia's newly industrialising economies like Hong Kong (China), the Republic of Korea, Singapore, and Taiwan province of China as the main sources of FDI in developing countries.

China's outflows increased by 32 percent to $16 billion in 2006, and its outward FDI stock reached $73 billion, the sixth largest in the developing world. China is establishing the first group of eight overseas economic and trade co-operation zones in Pakistan comprising Mongolia, Thailand, Nigeria, Mauritius, Zambia, Russia, and the Commonwealth of Independent States (CIS).

India's outflows were almost four times higher than those of 2005. Compared to China, where FDI outflows were driven by the international expansion of state-owned enterprises encouraged by proactive government policies, booming outflows from India have been dominated by privately owned conglomerates.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Japan to provide Rs 6.5 billion loan for Sindh uplift schemes ​

KARACHI (October 09 2007): The Japanese government will provide Rs 6.5 billion soft loans to the Sindh government to undertake different uplift schemes, including road and water projects, in the province.

Sources in the Sindh Finance Department told Business Recorder here on Monday that under the Japanese-assisted rural roads construction project, phase-II, the Sindh government would be provided with Rs 3,736.890 million to upgrade road network in the rural areas.

"During the 2007-08 fiscal year, Rs 100 million has been allocated to initiate the construction of roads in remote areas of the province," sources said. Elaborating, the sources said that under the roads construction project a total of 452 kilometres of roads would be constructed in different areas of the province, aimed at improving the communication between the districts.

It may be pointed out that the Sindh government would also carry out a rural road construction project for which the Asian Development Bank would provide loan of Rs 2.16 billion to the provincial government. Moreover, Japan will provide Rs 2.77 billion as a soft loan for Karachi water supply project so as to improve the water supply in the metropolis, besides reducing water scarcity.

The project would further enhance the water supply to meet the water demand of sprawling population of Karachi and to ensure filtration of the water. Japan has shown grave concerns over the reports about the rapid surge in water-borne diseases in the metropolis apparently owing to unavailability of the filter facility for water being supplied to Karachi, sources said.

It further added that installation of large water filters would ensure to supply clean water to Karachiites under this project. "The paper work and planning of both of the projects have almost been completed and work on these new projects will be initiated soon," sources said.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Delays in start-up of uplift projects mar achievement goals: ADB ​

FAISALABAD (October 09 2007): Asian Development Bank has observed that the rating of the technical assistance for "Streamlining procedures to reduce delays in the start-up of development projects" is unsuccessful because of its discontinuity and the TA's main outputs were not achieved.

According to ADB's Project Completion report, the dissemination and training workshops were not conducted nor was there any appetite by the EA to implement the initial proposals.

The TA provided useful inputs to EAD and P&DDs in identifying weaknesses and recommending a basic framework for streamlining post-approval procedures and reducing start-up delays for all development projects, including ADB funded projects. ADB assessment report noted that the issues identified were not new and the government had already cognised of the respective deficiencies and issues.

However, key investment in terms of systematic and sustainable capacity development of officials, training, and the provision of necessary office equipment are vital to affect any change of the prevailing situation.

According to report, project processing and implementation capacity continues to remain weak in Pakistan leading to implementation delays and sub-optimal utilisation of aid resources. Significant start-up delays of development projects adversely affect achievement of project goals, contribute to cost overruns, increase cost of borrowing, and result in poor development results. Asian Development Bank (ADB) financed projects have suffered perpetual start-up delays, in some cases averaging to over 2 years, mainly due to delayed loan effectiveness and the late setting-up/staffing of project management units (PMUs).

Such protracted delays adversely affect project implementation schedules, often resulting in extension requests of the loan closing date. Repeated transfers of the project directors, lack of qualified technical staff, poor accountability, and a complex decision-making process has also seriously affected project implementation.

Due to unfamiliarity with ADB's procurement procedures and lengthy approval formalities within the executing agencies (ESA), contract awards have been inordinately delayed resulting ultimately in delayed project benefits.

Pakistan government had requested ADB in 2004 to provide an advisory technical assistance for streamlining procedures to minimise delays at the start-up stage of development projects from the approval to the award of the first substantive contracts.

It was recognised that measures introduced to address start-up delays in ADB projects under the TA would have broader relevance in terms of addressing similar delays in all other development projects. Total cost of the TA was $570,000, financed on a grant basis by ADB's TASF ($450,000) and the government ($120,000). The TA was well formulated and was relevant to government needs, including well-drafted terms of reference adequately reflecting the assignment.

Commenting over the "Expected Impact, Outcome and Outputs", ADB report mentioned that the TA aimed to reduce excessive delays during the start-up phase of development projects by analysing processes and stakeholders' involvement, proposing recommendations, and initiating measures to minimise such hold-ups with the objective to increase efficiency and effectiveness of development assistance.

The TA also envisaged a critical evaluation of ADB's procedures, including a possible alignment with Government's protocols. The expected outcome of the TA was to strengthen the pre-approval project preparation capacity of the Government by developing a streamlined and monitoring system of internal clearances with all relevant stakeholders thereby saving time and money.

Expected outputs were (i) recommendations and an implementation plan for reducing start-up delays in projects through a comprehensive diagnostic study on the reasons for such delays, (ii) recommendations regarding systemic improvements in the Economic Affairs Division (EAD) and the foreign aid sections of the provincial planning and development departments (P&DDs) to increase their effectiveness in addressing start-up delays in projects, and (iii) capacity building for EAD and P&DDs to enable them to effectively monitor, facilitate, and follow-up with EAs and PMUs.

Commenting over the "Delivery of Inputs and Conduct of Activities", ADB report stated that initial inputs envisaged under this TA were to be provided during 18 months and included 54 person-months of consulting services (3 international and 51 domestic), 6 workshops at federal and provincial levels, formulation and operationalisation of a Management Information System (MIS) to track and monitor the status of development projects at the start-up stage, hands-on-training for selected key staff of EAD and P&DDs, and provision of equipment for EAD and P&DDs. To monitor the progress, a high level overseeing body was set up in EA, with Secretary EAD as the chair.

ADB report disclosed that the overall performance of the consultants was poor. Due to frequent changes of staff in charge, both in ADB and in EAD, there was a lack of continuity in the management and implementation of the TA. This situation was further aggravated when the selected Team Leader, who performed reasonably well, resigned shortly after submitting the diagnostic report. The selection process of the new Team Leader was stalled due to an insufficient response of interested parties and a lack of consensus between ADB and EAD on the selection of the best candidate.

The two institutional and capacity development specialists who were contracted after the team leader's departure continued their work and maintained some degree of continuity and momentum in absence of any team leader.

The EA appreciated the initial findings of the consultants as documented in inception and diagnostic reports, which highlighted major reasons for delays both caused by ADB and by the Government. The TA identified and documented the current Government systems and procedures used in ADB assisted projects - from project concept approval to loan effectiveness and contract awards - and compared its possible synergy and relevance with ADB's internal procedures. The TA suggested measures to curtail the processing times and streamlining institutional bottlenecks and made recommendations regarding a modification in protocols, increased capacity building, and systems' automation.

The key outputs of the TA were not achieved due to lack of ownership by the EA and a subsequent request for a major change in scope to avoid overlaps with other TAs of ADB and other donors, particularly in the wake of generous assistance to the Government following the October 2005 earthquake.

According to report, the timing and sequencing of the TA impeded its efficacy as there was an overlap with several other concurrent initiatives though it must be recognised that a one-time effort through a TA cannot achieve sustainable capacity development and a change in the mindset. There has to be a sustained, long-term programme by the Government that carries forward the work identified under the TA. The development of the proposed MIS needs specific expertise, and extra time, budget and, most importantly, training of relevant staff. The Government's commitment and regular monitoring of such efforts is essential for achievement of development impact and outcomes.

The key reasons for start-up delays are systemic and a TA may only highlight causal or contributing factors, that cannot per se be addressed through capacity building of a single agency or EA. Systemic re-engineering of Government functions would require a different incentive system for project staff and massive revisions in procedures and rules of business. On the same vein, changes to ADB's own procedures are beyond the scope of any TA. In conclusion, TAs cannot be a panacea for deep-rooted inefficiencies afflicting the public sector.

ADB pointed out that instead of addressing the project start-up delays through one-off TA(s) interventions, the critical systemic issues related to such hold-ups should be dealt with by (i) monthly portfolio reviews with EAD as practised by PRM since more than a year, (ii) harmonised project processing and implementation procedures of ADB and the Government, (iii) pragmatic project readiness filters including advanced procurement actions and setting-up of project implementation units at project fact-finding stage, and (iv) realistic project design and implementation arrangements with minimal loan effectiveness conditions. These efforts should be complemented through targeted and sustainable capacity development initiatives.

Business Recorder [Pakistan's First Financial Daily]

 

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Rs 1.5 billion drugs smuggled into Pakistan annually ​

KARACHI (October 09 2007): With the menace of smuggled drugs touching the alarming Rs 1.5 billion figure, the federal government has failed to curb selling and smuggling of the medicines, market sources told Business Recorder on Monday.

"Medicines are being smuggled from India, China, Iran, Turkey, Malaysia and Singapore, which is putting a negative impact on the businesses of local pharmaceutical companies," they said. Despite several requests by local companies for brisk action against the people involved in the sale of smuggled medicines the government has not done anything to cleanse the markets of such medicines and stop their smuggling into the country.

A Sindh government official said that lengthy legal procedures were the major reason which discourage the government to work against the heinous mafia involve in its peddling. "We acknowledge that medicines are being smuggled from different countries. But it is the prime responsibility of the federal government to stop such activities," said Dr Abdul Majid, Sindh Public Health Secretary.

He said that legal procedure is so lengthy and time-consuming which helps the culprits escape punishment and, in exceptional cases, they get punishment from courts for their severe crimes. "That is why there is a great need of change in drugs law," he added.

He said that Sindh government was playing its due role in eliminating the trend of drugs smuggling, and added that the government was deliberating to evolve a policy to end this menace as soon as possible. Sources said that sale of smuggled and substandard medicines are on the rise, as they are easily available at cheaper rates throughout the country.

"About Rs 600 million transactions of smuggled and substandard medicines are done at Karachi pharmaceutical market annually, while Rs 400 million transaction done in the other parts of the country including Rawalpindi, Lahore, Quetta and Peshawar," they said.

People prefer to purchase smuggled medicines because they are low priced as compared to the locally manufactured medicines, whereas their quality is always substandard, which could be lethal for patience, said a chemist.

He said that a large quantity of such medicines was being smuggled from China, and added that "the prices of such medicines are lower as compared to local made medicines."

The World Health Organisation (WHO) has set a list of essential drugs, while the Federal Health Department has also made a list of 'National Essential Drugs' in which 478 basic medicines are included.

Such medicines are also beyond the reach of common man due to their high prices, while the government has failed to provide such live-saving drugs to public on affordable rates. According to market sources, the officially banned medicines, such as Viagra capsule, are now easily available in the market with alternative brand and medicine names and containing the same manufacturing formula.

The government strictly imposed a ban on the use of anti-biotic injection Meylon on December 11, 2006, while an injection Apicilline was also banned by authorities on March 2006, but both medicines are available in the market.

Timejack injection, which has been banned by the government in the wake of its increasing use by the drug addicts, is now also available in market at higher price--Rs 680--than its original Rs 180. Sources alleged that chemists were behind the artificial shortage of life-saving medicines in the market, which are used in emergency cases.

Business Recorder [Pakistan's First Financial Daily]

 

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Shell starts offshore drilling ​

KARACHI (October 09 2007): Shell has started much awaited offshore drilling in Indus Block this week. "With pre-drill resource potential of 300mmbbl oil, Shell drilling in Anne-1 well in Pakistan's ultra-deep offshore region commenced this week", an analyst at KASB Securities said in its recent report.

Oil and Gas Development Company (OGDC) and Pakistan Petroleum Limited (PPL) carry 30 percent and 20 percent stake respectively. The exploration potential in Pakistan's offshore is believed to be high, but the reserve potential is yet to be established, as the offshore region is relatively under-explored.

A total of 15 offshore wells have been completed with no commercial discoveries to date. High exploration potential has attracted many big names, eg ENI, BP, Petrobras, Shell.

Under the production sharing agreement (PSA) of offshore package in Petroleum Policy 2001, the government's share in profit and royalty payments are back-loaded (increases in later years), allowing a rapid recovery of investment. Furthermore, the cost recovery has a maximum allowable limit of 85 percent, including royalty payment.

"We estimate potential impact of Rs 6.4 to Rs 8.9 per share on OGDC upside by five percent to seven percent and Rs 27 to Rs 37 per share on PPL upside by eight percent to 13 percent in the success case", Mohammad Fawad Khan a research analyst at KASB Securities said, and added: "However, we note that this is the theoretical value of any discovery. We would not be surprised to see the market factor in greater value in anticipation of further discoveries in what would be a new petroleum province".

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

KSE index hits highest ever 14,367-level ​

KARACHI (October 09 2007): The KSE-100 index on Monday hit the highest ever level of 14,366.99 points with net gain of 267.69 points on the back of strong foreign investors' interest coupled with local institutions' support due to easing of political situation after presidential elections in the country.

On the other hand, the KSE-30 index surged by 386.91 points to close at 17,718.51 points' level. The market started on a strong positive note with 238 points positive and the bulls gradually strengthened their position till the end of the session where the index closed at its intra-day high level.

The analysts and market participants were expecting a bull run after the completion of presidential elections process and smooth re-election of General Pervez Musharraf as President of Pakistan. They were of the view that the present economic reform policies, privatisation process and the inflow of foreign investment in the country would continue after re-election of Pervez Musharraf.

The market witnessed healthy trading activity as the ready market volume increased to 343.530 million shares as compared to 290.047 million shares traded on Friday. The futures market turnover surged to 71.795 million shares against 67.605 million shares previously. The overall market capitalisation significantly increased by Rs 79 billion to close at Rs 4.397 trillion.

Trading took place in 360 scrips, out of which 228 scrips closed in positive column and 99 in negative, while the value of 33 scrips remained unchanged. TRG Pakistan was the star performer of the day with 43.481 million shares and the scrip surged by Rs 0.60 to close at Rs 14.95 followed by Oil and Gas Development Company (OGDC), which increased by Rs 1.85 to close at Rs 125.40 with a total volume of 27.735 million shares.

Healthy buying was also witnessed in Pakistan Petroleum Limited (PPL), which gained Rs 8.35 to close at Rs 285.60 with 25.330 million shares. The banking sector remained active as National Bank of Pakistan (NBP), Askari Bank, Bank Al Falah, NIB Bank and Bank of Pakistan (BoP) surged by Rs 3.95, rupees five, Rs 2.95, Rs 1.05 and Rs 3.70 to close at Rs 278.85, Rs 105.25, Rs 62.10, Rs 22.45 and Rs 108.70 respectively.

Fauji Fertiliser Bin Qasim increased by Rs 0.30 to close at Rs 46.20, while Arif Habib Sec gained Rs 7.20 to close at Rs 152.10. Colgate Palmolive and Pak Reinsurance were the highest gainers, with Rs 22 and Rs 20.10 gains to close at Rs 477 and Rs 422.35 respectively, while Nestle Pakistan and Lakson Tobacco were the highest losers. They lost Rs 45 and Rs 20.10 to close at Rs 14.80 and Rs 556 respectively.

Ahsan Mehanti at Shehzad Chamdia Securities said that the market celebrated Pervez Musharraf's success in the presidential elections. The great interest of foreign investors was witnessed at the share market as the SCRA balances reached record high level for this fiscal year at 101.16m dollars. The strong institutional support and foreign buying were witnessed on easing political situation in the country.

Kamran Naqvi at Atlas Capital Markets said that it was a historic day for the KSE as it closed at highest ever level. As expected, the market welcomed Pervez Musharraf's re-election with a grand opening of 238 points positive, he said, adding the much-needed clarity on political front was the main reason behind the bullish sentiment.

The investors' confidence was evident from across the board buying in oil, cement, fertiliser and banking sector. Rumours of foreign buying in oil and banking sector generated healthy volumes in these sectors and MCB Bank and AKBL closed at their upper circuits.

Business Recorder [Pakistan's First Financial Daily]

 

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Govt owes over Rs995bn to banks ​

Tuesday, October 09, 2007

KARACHI: Government borrowing from banks touched Rs995.225 billion during August 2007 as compared to Rs861.066 billion in the same period of last fiscal year.

The latest figures of the State Bank of Pakistan showed that the government borrowed around Rs364.575 billion from the central bank in August 2007 including Rs464.532 billion investment by the SBP in government securities, Rs8.827 billion direct loans to the government and Rs7.971 billion under the head of ‘others’.

The government deposits with the central bank amounted to Rs116.75 billion. The government acquired around Rs630.650 billion from scheduled banks during the aforesaid month as compared to borrowing of around Rs418.197 billion from scheduled banks in the same month of year 2006.

The break-up showed that scheduled banks invested around Rs917.264 billion in government securities, while they lent Rs99.290 billion directly to the government in August 2007 as compared to this the banks had provided direct loans of Rs114.284 billion to the government in August 2006.

Banks credit to the private sector also recorded a substantial increase to Rs2,575.236 billion in August 2007 as compared to the same month of last year, when it stood at Rs2,227.550 billion.

However, in June 2007 banks had disbursed around Rs2,619.351 billion credit to the private sector, which was Rs44.115 billion higher than loans disbursed by banks to the private sector in August 2007.

The State Bank provided Rs16.048 billion loans to the non-government sector, which was slightly below than Rs16.089 billion in August 2006. In addition, scheduled banks lent Rs25,559.188 billion to Public Sector Enterprises (PSEs), Non-bank Finance Companies (NBFCs), investment in securities and shares of private sector, besides loans to the private sector including agriculture, fishing and fish farming, manufacturing, chemicals, ship-breaking, commerce and trade and personal loans.

Govt owes over Rs995bn to banks

 

[Neo]

Govt fails to boost industrial investment​

KARACHI, Oct 8: Federation of Pakistan Chambers of Commerce and Industry President Tanvir Ahmad Sheikh has blamed government for failing to play its part to supplement the efforts of private sector in boosting industrial investment.

“Industrialists invested their funds in textile sector according to the targets determined in the “Textile Vision 2005,” he bluntly told Mr Mushtaq Malik, the Secretary of Board of Investment (BoI) during a meeting and reminded that it was the government that failed to provide textile industry with required quantity of cotton.

A press release issued by the FPCCI on Monday quoted the FPCCI president as saying that the government’s inability to grow targeted quantity of cotton had kept textile industry starved and under utilisation of production capacities had seriously impaired its profitability.

Tanvir’s prescription was to allow import of Indian cotton via Wagah to meet the growing demand of cotton of domestic textile industry.

He informed the BoI Secretary that a FPCCI delegation would attend the forthcoming ECO meeting at Istanbul and would make a presentation on investment opportunities in Pakistan.

The BoI Secretary informed that inflow of foreign investment swelled to $1.9 billion from $350 million five years ago in face of serious political issues and challenges of law and order in the country. It was because of the sound economic policies and stability.

Govt fails to boost industrial investment -DAWN - Business; October 09, 2007

 

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Oil and gas production up by 6.3 percent​

KARACHI: The exploration and production companies have paced up their engines to meet the country’s rising energy demand as oil and gas production during the first two months of the current fiscal year stood at 688 kbpeod (thousand barrels of oil equivalent per day), depicting a year-on-year growth of 6.3 percent.

Oil production, alone with a growth of 11.1 percent, stood at 72.3 kbpd (thousand barrels per day). Similarly, gas production with a growth of 5.6 percent rose to 3.8 bcfd (billion cubic feet per day) versus 3.6 bcfd in the same period last year.

Oil and gas production by the Oil and Gas Development Company (OGDC) increased to 193.1 kbpeod in July-Aug 2007 with a growth of 21.2 percent against the corresponding period of last year. Oil production rose by 19.1 percent to 47.0 kbpd (thousand barrel per day) mainly on the back of increased production from Mela, Chanda, Bobi and Tando Alam oil fields. Production from Mela in the month of Aug 2007 stood at 4,797 bpd, which slightly declined to 4,655 bpd in the last week of September 2007.

In the first two month of FY08, oil and gas production by Pakistan Petroleum Limited (PPL) stood at 159.4 kbpd registering a growth of 3.8 percent.

The combined oil and gas production by Pakistan Oil Fields (POL) Jul-Aug 2007 stood at 13.2 kbpeod versus 13.6 kbpeod in Jul 2006 posting a decline of 3.1 percent. Oil production of the company declined by 10.0 percent to 5.8 kbpd compared to 6.4 kbpd in the corresponding period last year. This decline is mainly due to lower oil production from Pindori field.

Daily Times - Leading News Resource of Pakistan

 

[Neo]

Pakistan lacks effective implementation capacity: ADB​

ISLAMABAD: Project processing and implementation capacity continues to remain weak in Pakistan leading to implementation delays and sub-optimal utilisation of aid resources, according to a technical assistance completion report on ‘streamlining procedures to reduce delays in the Start-up of development projects’ released by Asian development Bank (ADB).

According to the report, significant start-up delays of development projects adversely affect achievement of project goals, contribute to cost overruns, increase cost of borrowing and result in poor development results in Pakistan.

ADB financed projects have suffered perpetual start-up delays, in some cases averaging to over 2 years, mainly due to delayed loan effectiveness and the late setting-up of project management units (PMUs). Such protracted delays adversely affect project implementation schedules, often resulting in extension requests of the loan closing date. Repeated transfers of project directors, lack of qualified technical staff, poor accountability, and a complex decision-making process have also seriously affected project implementation.

Due to unfamiliarity with ADB’s procurement procedures and lengthy approval formalities within the executing agencies (EAs), contract awards have been inordinately delayed resulting ultimately in delayed project benefits.

The Government of Pakistan requested ADB in 2004 to provide an advisory technical assistance for streamlining procedures to minimise delays at the start-up stage of development projects from approval to the award of the first substantive contracts.

The TA aimed to reduce excessive delays during the start-up phase of development projects by analysing processes and stakeholders’ involvement, proposing recommendations, and initiating measures to minimise such hold-ups, with the objective to increase efficiency and effectiveness of development assistance. The expected outcome of the TA was to strengthen the pre-approval project preparation capacity of the government by developing a streamlined and monitorable system of internal clearances with all relevant stakeholders thereby saving time and money.

Expected outputs were (i) recommendations and an implementation plan for reducing start-up delays in projects through a comprehensive diagnostic study on the reasons for such delays (ii) recommendations regarding systemic improvements in the Economic Affairs Division (EAD) and the foreign aid sections of the provincial planning and development departments (P&DDs) to increase their effectiveness in addressing start-up delays in projects and (iii) capacity building for EAD and P&DDs to enable them to effectively monitor, facilitate, and follow-up with EAs and PMUs.

The EA appreciated the initial findings of the consultants as documented in inception and diagnostic reports, which highlighted major reasons for delays both caused by ADB and by the Government. The TA identified and documented the current Government systems and procedures used in ADB assisted projects - from project concept approval to loan effectiveness and contract awards - and compared its possible synergy and relevance with ADB’s internal procedures. The TA suggested measures to curtail the processing times and streamlining institutional bottlenecks and made recommendations regarding a modification in protocols, increased capacity building, and systems’ automation.

The TA provided useful inputs to EAD and P&DDs in identifying weaknesses and recommending a basic framework for streamlining post-approval procedures and reducing start-up delays for all development projects, including for ADB funded projects. It may be noted that the issues identified were not new and the Government already was in cognisance of the respective deficiencies and issues. However, key investments in terms of systematic and sustainable capacity development of officials, training, and the provision of necessary office equipment are vital to affect any change of the prevailing situation.

The development of the proposed MIS needs specific expertise, and extra time, budget and, most importantly, training of relevant staff. The Government’s commitment and regular monitoring of such efforts is essential for achievement of development impact and outcomes.

The key reasons for start-up delays are systemic and a TA may only highlight causal or contributing factors, which cannot per se be addressed through capacity building of a single agency or EA. Systemic re-engineering of Government functions would require a different incentive system for project staff and massive revisions in procedures and rules of business. On the same vein, changes to ADB’s own procedures are beyond the scope of any TA. In conclusion, TAs cannot be a panacea for deep-rooted inefficiencies afflicting the public sector.

In its recommendations ADB report said that it is important to note that instead of addressing the project start-up delays through one-off TA(s) interventions, the critical systemic issues related to such hold-ups should be dealt with by (i) monthly portfolio reviews with EAD as practiced by PRM since more than a year, (ii) harmonised project processing and implementation procedures of ADB and the Government, (iii) pragmatic project readiness filters including advanced procurement actions and setting-up of project implementation units at project fact-finding stage, and (iv) realistic project design and implementation arrangements with minimal loan effectiveness conditions. These efforts should be complemented through targeted and sustainable capacity development initiatives.

Daily Times - Leading News Resource of Pakistan

 

[Neo]

Thread closed down due exceeding format, please continue the updates here:

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Neo

 

[Neo]

July-September trade deficit at $3.6 billion ​

ISLAMABAD (October 10 2007): The trade deficit has amounted to $3.6 billion during the first quarter (July-September) of the current fiscal year, 13.53 percent higher than $3.17 billion of last fiscal year.

According to foreign trade provisional data released by Federal Bureau of Statistics (FBS) on Tuesday, during the first quarter of this fiscal year, the country's exports fetched $4.456 billion, while imports cost $8.06 billion, against $4.25 billion exports and $7.42 billion imports of same period of last year.

The data shows that during the period under review, Pakistan economy pulled in 8.51 percent more imports than last year, while exports rose only by 4.77 percent.

It has been observed that each month imports growth exceeds exports, which results in widening of the trade gap. However, the country's imports declined by 0.46 percent, to $2.73 billion, in September 2007 from $2.75 billion of August 2007, comparing to the same month's imports with the corresponding September 2006 ($2.44 billion), up by 12 percent.

During September, goods worth $1.49 billion were exported, recording an increase of 5.69 percent against exports of $1.41 billion in September 2006. However, comparing exports of September 2007 with the previous month, the bulletin shows an increase of only 1.09 percent as against exports of the previous month, which stood at $1.47 billion.

Independent economists say that though trade deficit is considered as a good omen for a growing economy (as our economic managers think), in Pakistan's case it is very large and requires immediate attention.

It is pertinent to note that during 2006-07, the government had targeted imports at $28 billion and exports $18.6 billion with trade deficit of $9.4 billion, but at the end of the year, it surpassed the deficit target to reach $13.53 billion. During 2006-07, Pakistan also missed its export target by a wide margin of $1.59 billion, and breached the import target by $2.54 billion.

Business Recorder [Pakistan's First Financial Daily]