Pakistan Economy - News & Updates - Archive

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FAISALABAD (May 15 2006): Dr Salman Shah, Adviser to the Prime Minister on Finance and Revenue has announced that the forthcoming Federal Budget 2006-07 will be business friendly and prosperity oriented, which will not only strengthen the national economy but also further reduced the poverty.

Addressing the Pre-Budget Seminar 2006-07, arranged by the Faisalabad Chamber of Commerce and Industry, he emphasised the need for unity of business community over the "National Issues" and all chambers from Karachi to Khyber should jointly convinced the agitating lobby about the national benefits of construction of dams, which are dire need of our country.

Salman Shah said that the development challenges for Pakistan include sustaining an accelerated economic growth, reducing poverty, providing essential social and economic services and infrastructure to poor, creating job opportunities and improving governance.

Social sector progress in Pakistan during the preceding four years has been considerable. There is still a lot more to accomplish for reducing the gender gaps in literacy and enrolments, providing better health facilities and access to safe drinking water. The process of land distribution to the landless households also needs to be accelerated to shore up efforts in alleviation of rural poverty in Pakistan, he added.

Dr Salman said that the second generation reforms are aimed at strengthening institutions, improving the competitiveness of our industries, building a robust financial system in an environment of global financial restructuring, further strengthening of tax administration, improving our legal, police and judicial system, restructuring our civil services and promoting transparency in economic policy-making and strengthening the country's physical and human infrastructure needed to support high growth trajectory.

We are focused on meeting the twin objectives of achieving and sustaining the high economic growth and ensuring that this growth translates into human development. For this we are committed to the development of the social sectors, in particular health and education", he added.

The Adviser said that the government recognises Pakistan's private sector as the main engine of growth and the primacy source of employment generation. The private sector can produce, distribute and trade more efficiently and at a lower cost than the government, he added.

Salman Shah said that the interest in privatisation programme and the response to incentives given to local and foreign investors in sectors as diverse as tourism, housing, oil and gas, telecommunication, information technology, and textiles is clearly indicative of our interest in broadening the recovery base.

The role of the government will be that of a facilitator and catalyst in creating a conducive environment in which the private sector can play its effective role, he added.

Pakistan Government recognises that public private partnerships for service delivery are not just a necessity but also a compulsion for achieving efficiency and effectiveness.

Pakistan now has a comprehensive public-private partnerships programme in place."

He said, this programme includes the provision of a policy and legislative framework for public-private partnerships; an infrastructure project development facility that will support and build capacity for viable and sustainable infrastructure projects and an infrastructure project financing facility for providing residual financing and targeted subsidies.

Salman Shah mentioned that Pakistan's economy has continued to perform strongly over the last several years with economic growth accelerating to 8.4 percent in 2004-05, its fastest pace in two decades.

The strong economic recovery since 2002-03 accompanied by macroeconomic stability, he said, has been underpinned by prudent macroeconomic policies, wide-ranging structural reforms, fiscal discipline and consistency and continuity in policies.

He said, "we have made substantial progress in not only reviving overall growth but also have been successful in drastically reducing internal and external macro-imbalances, bringing public and external debt ratios to sustainable levels; maintaining market determined interest rates and exchange rates leading to upgraded creditworthiness for Pakistan in international capital markets culminating in the floating of 30 years Pakistan dollar bonds.

This is an unprecedented achievement for a country that just graduated from an IMF PRGF programme in 2004, he remarked.

"Our major achievements include a strong economic recovery supported by a robust performance in industry, agriculture and services; extra-ordinary 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 added.

Dr Salman Shah mentioned that the achievements notwithstanding, the country is also faced with some major challenges that emerge from the strong economic recovery. These relate mostly to the incline in the price levels and widening of trade and current account deficits, he added.

Dr Salman Shah informed the participants that for the first time since the initiation of the PRSP process in 2001-2002, the results of a representative household survey, PSLM 2004-05, on the incidence of poverty, are available.

The survey results estimate that poverty has declined significantly by 6.7 percent point from 32.1 percent in 2001 to 25.4 percent in 2004-05.

The most recent Pakistan labour survey indicates a substantial decrease in the unemployment rate with the creation of 5.5 million new employment opportunities in the last two years, he added.

He said, the policies of privatisation, liberalisation and deregulation have contributed to a marked improvement in productivity and in consumer and investor confidence, leading to strong growth driven by domestic demand and exports. "We have truly laid the foundations of a robust and vibrant market economy driven by a resurgent private sector." The Adviser, however, stressed that "the real issue facing us is to ensure that we can sustain the stability and growth well into the next decade and beyond."

"This growth and stability will be sustainable if we are successful in achieving the goals of equity, poverty reduction and human development embedded in the MTDF, PRSP and MDGs," he added. He said, in the current fiscal year the government's effort was to consolidate the gains made over the last three years and also to address the challenges of economic recovery.

 

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Accordingly, the real GDP was targeted to grow by 7 percent, supported by a 4.2 percent growth in agriculture, 12 percent growth in manufacturing and a 6.5 percent growth in all other sectors.

Fiscal deficit was targeted at 3.8 percent of GDP, exports and imports were targeted to grow by 16.4 percent and 16.2 percent, respectively and remittances were targeted at $4.3 billion. "We are well on our way in generally achieving our targets with the latest inflation data showing April 2005 to April 2006 CPI down to 6.13 percent", he maintained.

The Adviser said, "Our mid-term targets given in the PRSP 2003 are to be completed in June 2006. To avoid vacuum we evaluated our strategy in 2005 and started working on second generation PRSP II based on a board based consultative process. The first draft of this is in the process of being completed."

Dr Salman Shah said, the government's integrated policy and strategy as espoused by the PRSP is geared towards high growth, infrastructure and private sector development, improvement in service delivery, and good governance aligned with the MDGs.

"The growth strategy rests on seven pillars: water security, energy security, infrastructure development, human capital development, and second-generation reforms."

"We are looking forward to achievement of a sound and stable economic development and achievement of human development." He said, the government is committed to fulfilling its goal of providing quality education for all, ensuring access to safe and effective health services, reduce maternal and infant mortality rate, providing access to water and sanitation and achievement of targets that have been defined in the MDGs, PRSP and MTDF. "We stay committed and responsive to our citizens and to our development partners in maintaining macroeconomic stability, implementation of reforms and in removing the constraints and challenges that we are faced with vis-a-vis capacity, implementation and continuity, he added.

In particular, he reiterated that the human development challenges we face are immense and that Pakistan is slowly but steadily making progress towards achieving its human development goals. Dr Salman Shah said, the government is striving to further broaden the country's tax base in order to provide increased revenue for investment in improved infrastructure, health, and education.

He said that our industry and the manufacturing sector are performing better, construction and service sectors are making substantial contributions, trends in foreign direct investment, investor interest in Pakistan, especially in the areas of oil and gas, telecommunication, financial services and information technology are improving. These positive tends will further strengthen the recovery."

He said that the government is striving to ensure water security, increase the availability of energy resources to help sustain the high growth of economy especially in the fields of industry and agriculture. "Growth and competitiveness is another focus area for the government."

Earlier presenting welcome address, President FCCI, Mian Muhammad Hanif said that our economic policies should be long-term and consistent for better results.

He emphasised on investors to invest in their own homeland.

He also stressed to promote different other industries like soap, ghee and edible oil, foundry and engineering etc.

Muhammad Shaheen Tabassum, Chairman FCCI committee on Budget/Trade Policy proposals said our challenge is thus to evolve a dynamic and vibrant trade policy to support overall economic growth and development of trade and industry. The strategic approach is that the government, while acting as regulator should also be a facilitator to maintain healthy trend in our trade regime. The policy should aim at to bring it at par with deep insight of the policies prevalent with high-speed economies in the area, he added.

Shaheen Tabassum said that the developing countries including Pakistan will have to reorganise their own potential in the import and export sector keeping in view the challenges of globalisation and WTO. These should be through enhanced capacity building, human resource development, diversification, innovation and novelty in industrial base. Technical and legal infrastructure should be developed to meet the current demands of Uruguay Round Agreement such as Technical Barriers to Trade (TBT), Sanitary and Phytosanitary (SPS) Measures, Trade Related Investment Measures (TRIMS) and Intellectual property rights (IPR) laws.

Efforts should be made by the government and the private sector to develop an industrial culture, having capacity to comply with core labour and environment standards, he suggested.

Shaheen Tabassum said that the business community should be helped to get more and more awareness, implications of trade barriers particularly the Non-Tariff Barriers (NTBs). Pakistani commercial counsellors/attachies abroad should provide full feedback on the NTBs and advocate towards exporters' problems in the importing countries. There is an earnest need to hold negotiations with the developed countries, he added.

Commenting over the "Environmental and Social Standards", Shaheen Tabassum said that the fate of our industrial and agriculture products hangs in balance and is highly dependent on implementation of the regulations and adoption of required environmental and social standards. He demanded that collective effluent treatment plant be set up with the government financial support, as it will be difficult for industries owing to mega cost involved.

Mian Muhammad Latif, Chairman, FIEDMC, Mian Muhammad Idress former President FCCI and Chief Executive Sitara Chemicals, Mian Javed Iqbal, Sitara Energy, Suleman Zahid Jamil, Rashid Jan Mohammad and General Abdul Qayyum (Retd), Deputy Chief CPLC also addressed the pre-budget seminar.

 

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LAHORE (May 15 2006): Punjab Chief Minister Chaudhry Pervaiz Elahi has said that a comprehensive programme was being chalked out for urban development and to remove backwardness from the province.

Presiding over a high-level meeting at CM House here on Sunday, he said that a revolutionary programme was being implemented to enhance financial resources of the common man.

The Chief Minister said mega projects were being completed with a fast pace, adding that federal, provincial and district governments were effectively implementing the reform agenda, ensuring tangible results in various sectors. The mega projects would further strengthen the economy of the province, he added.

Pervaiz Elahi added that livestock sector could play a crucial role in poverty alleviation, strengthening rural economy and improving livelihood of the people, adding that government had taken special measures in that regard. Now, people are being provided loans for purchasing and keeping buffaloes, cows, sheep and goat, he said and asserted that that programme would be further expanded to improve rural economy.

Pervaiz Elahi said that effective planning was being made for the promotion of technical education, so that masses could find maximum job opportunities.

He said that health sector was also very much in focus and hefty grants had been allocated to ensure better and modern facilities to the patients. He added that availability of medicines and paramedical staff at healthcare units has been ensured. Government has planned establishment of a cancer hospital at Lahore, while trauma centres and burn units are being established throughout the province, he maintained. He said that agri marketing sector was being strengthened for better marketing of agri products and to ensure due prices of produces to the growers.

 

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ISLAMABAD (May 15 2006): A US organisation, 'Family Entertainment', will invest $130 million in Pakistan, its senior vice president Zafar Tahir said. Talking to a private TV channel, he said that entertainment parks would be established in Lahore and Islamabad. A family entertainment complex will be set up at Karachi beach, he said.

A total investment of $80 million would be made in Defence Housing Society Karachi.

 

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MIRPUR (May 15 2006): An integrated plan of Rs 500 billion is being evolved by the government to spread the network of motorways in various parts of the country. This was stated by Federal Communication Minister Shamim Siddique while taking to APP after attending convention of AJK MQM workers held here on Saturday.

The minister said the network of motorways will be completed by 2015 under the broad-based phased programme.

The motorways will be constructed by the National Highway Authority (NHA), the minister said. The mega project included M-4 (Faisalabad to Multan) M-5 (Multan to Dera Ghazi Khan), M-6, M-7, M-8 and M-9, respectively.

The minister said the project will also cover the onward areas from DG Khan to Ratto Dhero, Hyderabad, Karachi and Balochistan.

 

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FAISALABAD (May 15 2006): Tourism industry is being developed on modern scientific lines to earn foreign exchange and promote the soft image of Pakistan abroad.

This was stated by Major Shah Nawaz Badar Secretary Tourism Punjab, while addressing the first convocation of the Institute of Tourism and Hotel Management (ITHM), at University of Agriculture.

He said that tourism has emerged as a major global industry of 20th century. Realising its importance, government was fully concentrating on its promotion, he said and added that Punjab has a large number of historic and recreational sites and we must exploit this potential to earn precious foreign exchange.

He said that tourism corporation was working in collaboration with private sector to provide trained and skilled manpower in this important sector of national economy.

Irfan Ali, Managing Director, Punjab Tourism Development Corporation said that experiment of public and private co-operation for the promotion of tourism has yield best results and now government was considering opening new institutes in other cities like Faisalabad with the co-operation of private sector.

He said that government was also contemplating to start degree courses in tourism and hotel management by seeking affiliation from foreign universities.

Earlier, programme director Ms. Qurrat-ul-Ain presented address of welcome.

 

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ISLAMABAD (May 14 2006): Work on the basin study would be completed in 28 months which will help to attract both foreign and domestic investment in oil and gas exploration.

In a presentation at the Ministry of Petroleum and Natural Resources here on Saturday, Director General Petroleum Concession, Naeem Malik briefed the meeting that government is providing conducive environment to the investors for enhancing the exploration and production activities with the objective to add new oil and gas reserves.

He further informed that all these efforts would not only reduce foreign exchange burden but also ensure security of energy supply. Since July last, 25 licenses were awarded for oil and gas exploration and eight to ten more licenses would be awarded by the end of next month, the DG added.

With aggressive oil and gas exploration and production activities, Naeem Malik hoped that present daily indigenous production of four billion cubic feet of gas and 68,500 barrels of oil would be increased in the days ahead.

Addressing the meeting, Federal Minister for Petroleum and Natural Resources, Amanullah Khan Jadoon said that Petroleum Policy 2006 would attract huge investment in the onshore and offshore oil and gas exploration in the country.

The minister underscored the need to mobilise all means for enhancing oil and gas production to cater for the energy requirements of the country. Jadoon also directed to expedite the basin study to attract investors with a view to find out the prospects of oil and gas in the country.

Additional Secretary Petroleum, Shaukat Hayat Durrani and senior officials of the ministry also attended the meeting.

 

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THE United States is set to achieve its major policy objective of encouraging exports of electricity and gas from the Central Asia to South Asia through Afghanistan.

With the prospect of peace returning to Afghanistan sooner or later, the US is eying oil and gas reserves of the Caspian Sea region with considerable interest.

While contributing to the reconstruction of Afghanistan, the US is also seeking to create safer and cheaper routes to exploit the Caspian sea wealth to its own advantage. And Pakistan is to serve as the main bridgehead.

The World Bank has started persuading Pakistan to import 4,000-mw electricity from Tajikistan and Kyrgyzstan through war-ravaged Afghanistan, to attract maximum international financial support: perhaps as an alternate both to nuclear energy and a gas pipeline from Iran.

Besides, the regional energy network, is to provide substantial finances to Karzai Administration for reconstruction through the transit trade fees to be paid by energy end-users. It is also to create Pakistan’s stakes in central Asian countries and to go an extra-mile to ensure peace and stability in Afghanistan.

At the very outset of this move, AES Corporation of the US has been involved in the project along with Russian giant Rao-UES. The two firms are likely to set up a joint venture to pursue the $1billion project based on inside information. The two firms enjoy good working relationship in many parts of the world.

AES has recently opened its offices in Dushanbe. It has a couple of power plants in Pakistan and Kazakhstan and generates about 30 per cent of electricity in Asia on a whole.

Similarly, the US firm UNOCAL engaged Taliban government in Afghanistan to lay Turkmenistan to Pakistan gas pipeline via Afghanistan in the early 1990s. It put together a consortium of companies and even signed a gas sales agreement with Islamabad but later left the consortium, expressing concerns over security situation.

Richard Darman, the former director of the Office of Management and Budget in President George H. W. Bush senior government, is now the chairman of the AES Corporation. He also remained associated with Washington based Carlyle Group as senior advisor on whose board of directors Bush Senior and former British Prime Minister John Major remained members for a long time.

The officials representing the USAid and the US embassy in Islamabad said early this week that the US State Department had already allocated funds and staff to promote electricity sales from central Asian states to Pakistan and Afghanistan as the project would ensure jobs and investments for its people and companies and bring peace and stability in the region.

“This kind of project goes a long way for helping us achieve policy goals, to help Pakistan achieve its energy goals and I think it is a win-win situation for everyone involved”, said Deputy Economic Counsellor of the US embassy in Islamabad, Christian DeAngelis.

He said the project “fits very well with US foreign policy which is to help build regional integration particularly between South and Central Asia”. According to Robyn McGuckin of the USAid, the Agency has a regional programme “set-up by the State Department with precisely the mandate of promoting regional energy trade.” “We stand ready to assist directly,” she told the energy ministers from the four countries.

The USAID draws revenues from the US tax-payers to promote the objectives of democracy and peace. It has, in collaboration with the US Energy Agency (USEA), already launched an aggressive campaign “South Asia Regional Initiatives (SARI)” to promote regional energy cooperation.

A lot of funds have already been invested through this initiative to bring closer the energy sector regulators, officials and media persons in the South Asian region including Pakistan and get support for the initiative.

Under active persuasion of the US agencies, the energy ministers from Tajikistan, Kyrgyzstan, Afghanistan and Pakistan and lenders like the World Bank, Asian Development Bank, Islamic Development Bank, Japan Bank for International Cooperation and International Finance Corporation agreed last week to lay a 650- km power transmission line through Kabul.

They also constituted the Central Asia-South Asia (CASA) working group on electricity to institutionalise further progress on political, legal, technical and financial aspects of the transmission line from Central Asian States to Pakistan and Afghanistan. The World Bank had been authorised to hire a consultant for the project to identify various studies and prepare project structure for implementation.

The international financial institutions and the USAID also expressed their strong desire to support the project through either through direct financing or guarantees and other risk management instruments including insurance coverage.

Pakistan had proposed that Iran be invited to participate in the conference given its importance in the energy resources but was opposed. Some of the influential IFIs are convincing Pakistan that it may attract western criticism for pursuing a major gas import project with Iran and lack financial support in a risky investment owing to US opposition.

The US has organised a similar conference in Istanbul next month to promote the idea of regional energy cooperation among the Asian countries.

The World Bank is not ready, however, to support another regional energy cooperation project i.e. Iran to Pakistan or Iran to India gas pipeline. “We don’t have an official position on the (IPI gas) pipeline”, Vladislav Vucetic, the World Bank’s lead energy specialist for South Asia Energy and Infrastructure.

Given the availability of vast but yet to be developed hydro energy resources in Tajikistan and Kyrgyzstan and rising demand in Pakistan and India, which may adopt the concept at a later stage, the international financial support would be forthcoming.. The United States had declined to provide any support to Pakistan for nuclear energy and opposed gas import from Iran but had promised to assist Islamabad in alternate sources of energy to meet its growing energy needs.

An alternate energy supply chain from central Asian region would also be seen as a positive move to encourage land-locked central Asian states to start trade through Pakistani ports as Islamabad presents its under-construction Gwadar Port as trans-shipment and energy port. This, on one hand, could provide energy corridor to India through Pakistan and make Afghanistan as transit trade and energy corridor to central Asian states, on the other.

Pakistan, on the other hand, has failed so far to tap over 40,000-mw of its own hydro resources due to bureaucratic and political wrangling and is now looking at importing hydropower from central Asia.

It has virtually blocked development of hydro power projects by insisting tariffs which were economically never viable and in violation of its own power policies that forced many companies to wind up their offices even before starting business.

Instead of promoting hydro power projects in a planned and phased manner, it waited and waited until power shut downs and load shedding re-emerged after about a decade. Now, once again, it has been forced to develop additional power generation capacity in an emergency situation through costly oil based projects.

The average power tariff for gas based projects has now increased to eight cents, fuel oil to 10 cents and diesel projects to 13 cents against 4.7 cents of hydro power.

Wapda has stopped setting up hydro projects on its own due to lack of finances and there has been no hydro project in the last 10 years. The government has now partially revived the 1994 power policy, with an upfront tariff for new thermal independent power producers (IPPs) ranging between 5.9 and 13.8 cents per unit to develop up to 1400-mw electricity on emergent basis.

The 1994 power policy remained under criticism for over a decade mainly because of an upfront tariff that led to installation of thermal power projects in excess of required capacity and higher consumer tariffs. The 1994 policy was based on 7-8 per cent economic growth rate which could not be sustained in the subsequent years. The upfront tariff now is based again on 7-8 per cent GDP growth.

While the government plans to tap all possible energy resources including nuclear, coal, hydro, oil and gas and wind under the energy security plan, it is time it should look back and hold accountable those who blocked tapping of natural resources over the last decade.

 

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Monday, May 15th, 2006

Islamabad, May 15 (DPA) The US has asked Pakistan to abandon the seven billion dollar gas pipeline planned to Pakistan and India ahead of next week’s visit by a high-level Iranian delegation, a newspaper reported Monday.

‘The US has asked Pakistan to distance itself from the pipeline, but the leadership is adamant in its refusal to the constant US demands,’ The Nation quoted a senior government official as saying.

Iran and Pakistan have said the project would forge ahead despite US reservations. Pakistan said the project is vital to meet the country’s growing energy needs.

The US appeal came before Iranian Foreign Minister Manouchehr Mottaki was slated to arrive May 24 in Islamabad for consultations with Pakistani leaders on key issues including the international standoff over Tehran’s nuclear programme and the pipeline.

A day later, Iranian First Vice President Parviz Dawoudi is also set to arrive.

Meanwhile, the joint working group of Iran, Pakistan and India was also scheduled to meet in the Pakistani capital May 22 to 24 for technical discussions on the proposed 2,670 km pipeline from Iran’s southern Pars field.

Those discussions are to be followed by ministerial-level talks next month in Tehran.

Pakistani officials said the project should take three to four years to complete after the three countries strike a final deal.

 

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ATHENS (May 16 2006): Pakistan and Greece on Monday agreed on enhanced co-operation in defence and security, combating terrorism, increasing trade and investment and to revive the Joint Economic Commission between the two countries for stronger economic ties.

The agreement came at a meeting here at the Prime Minister House between Prime Minister Shaukat Aziz and his Greek counterpart, Kostas Karamanlis, covering a wide-range of issues including measures to enhance co-operation in the fight against terrorism.

"It (terrorism) is a scourge we must fight together," Prime Minister Shaukat said at a joint press stakeout after his hour-long meeting with his Greek counterpart.

"We have agreed to share our knowledge in this regard," he said, elaborating on the areas of co-operation they identified during the talks. He said he also pointed to the need of addressing the root-causes that lead to such extreme acts.

He called for clear distinction between the acts of terrorism and its false linking with Islam. He said there was need for greater understanding among the people of all faiths so as to have greater inter-faith, inter-civilisation and inter-cultural harmony.

Aziz described the talks with his Greek counterparts as "productive and substantive", and said that the two countries had agreed on reviving the Joint Economic Commission to boost business ties between their private sectors for increasing bilateral trade and closer people-to-people contacts.

He said that the two countries enjoy a multi-faceted relationship and in his meetings with the Greek President and the Prime Minister there was mutual understanding to improve these ties further.

He said that Pakistan has very close links with the European Union and wants to further enhance these ties. He said his visit to Greece was also in this connection as it was an important member of the grouping.

Aziz said Pakistan has sought technical assistance from Greece in areas of agriculture, agro-business, olive production, fisheries and shipping.

He said that during the meeting the two sides discussed the situation in the region and Pakistan's relations with Afghanistan, Iran and India.

The Greek Prime Minister noted Pakistan's strategic role in the region and the efforts for achieving peace and stability.

He said that Pakistan desired a peaceful solution of the Kashmir dispute with India through dialogue. He also apprised him of the Composite dialogue process going on with India and the confidence-building measures the two countries have embarked upon to improve their ties.

About Afghanistan, he said that Pakistan believes in a strong and stable Afghanistan. He, however, stressed that all countries involved needed to have a clear-cut exit strategy in collaboration with all neighbours.

He said both Pakistan and Greece were committed to peace and would continue to cooperate in this regard.

About the over 50,000 Pakistanis living in Greece he said they were economic migrants and were appreciative of the opportunities being provided by Greece and said they were serving as a bridge between the two countries.

The Greek Prime Minister said that both countries had vowed to boost their trade and investment ties, besides increasing co-operation in tourism. He said his country would also cooperate with Pakistan in the growth of the Kalash tribe in the country's northern areas, which is said to have come from Greece.

The Greek Prime Minister said he apprised Prime Minister Aziz about his country's position on Balkans and the Cyprus issues. Prime Minister Aziz said Pakistan desired that the issue should be resolved peacefully through negotiations.

Prime Minister Shaukat Aziz also invited his Greek counterpart to visit Pakistan at his earliest, and the invitation was accepted.

He also extended an invitation on behalf of President Pervez Musharraf to the Greek President, who also accepted it.

Prime Minister Aziz thanked the Greek government for its assistance in the aftermath of the October 8 earthquake. Earlier, the two Prime Ministers witnessed the signing of an agreement to boost tourism between the two countries.

OUR CORESPONDENT ADDS: Prime Minister Shaukat Aziz commenced his official visit, the first by a Pakistani leader, to Greece by calling on Karolos Papoulias, President of the Hellenic Republic.

The PM, while briefing the media travelling with him, said that he mentioned to the President that the cultural ties between the two countries went back to 750 BC.

The PM in this regard drew on the research of Zain Ul Wahab, Curator of Chakdara Museum, who is accompanying him. Both leaders agreed that the potential for tourism between the two countries, as a result, is immense. The Greek President highly appreciated the way Pakistan is handling the massive challenges that it is faced with.

Shaukat Aziz then went on to lay a wreath at the Memorial of the Unknown Soldier and inspected a guard of honour in 'Constitution Square'. It was only after this that the substantive part of the visit started at Maximos Mansion, which is Greek Prime Minister Kostas Karamanlis's office.

First was a tête-à-tête between just the two Prime Ministers, and later they were joined by their delegations.

The talks, which went on for nearly an hour and a half, were followed by the signing of an agreement on co-operation in the field of tourism.

Later, the two addressed a joint press conference, at which no questions were entertained.

 

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ISLAMABAD (updated on: May 16, 2006, 21:17 PST): The Government of Pakistan signed a Loan agreement with World Bank here on Tuesday to the tune of US$65 million as additional financing for the Rehabilitation of Highways in the country.

The agreement was inked by the Secretary Economic Affairs Division (EAD) Khalid Saeed on behalf of the government while Country Director of World Bank John Wall signed the agreement on behalf of his organisation.

The Project Agreement for the execution of the loan was signed by Maj. General Farrukh Javed, Chairman National Highways Authority and John W. Wall, Country Director World Bank.

According to details, the Project for the Rehabilitation of Highways was launched in 2004 with an initial amount of US$ 200 million provided by World Bank with an objective to help NHA in national highways network conservation and NHA policy support in institutional development.

According to the agreement the objective of the additional financing for the Highways rehabilitation Project was to assist the Government with sustainable delivery of a productive and efficient national highway network in order to lower transportation costs.

This objective will be achieved by implementing the Project for Rehabilitation of Highways under the said loan in:

(i) phased rehabilitation and safety and capacity improvement of about 550 kilometers of highway;

(ii) resurfacing and pavement strengthening of an additional 306 kilometers of highways; (iii) safety improvement works at about 20 selected locations;

(iv) relocation of utility lines;

(v) planting of trees and (vi) resettlement program to compensate, resettle and/or rehabilitate persons affected by the project.

The signing ceremony was attended by Additional Secretary, EAD and officials from EAD, World Bank and NHA.

Speaking on the occasion Khalid Saeed thanked the world bank for its continuous support in providing the loans for infrastructure upgradation programme of the country.

He said the World Bank is providing an additional loan of US$65 million to Pakistan for the ongoing project of highway rehabilitation for which the bank has earlier provided a loan of US$200 million for the project.

Saeed said the loan would help Pakistan in improving condition of roads and upgrading the highway infrastructure.

Khalid Saeed said that government is placing a lot of emphasis on the improvement the infrastructure in the country and that remains one of our top priorities.

"This project is very much in line with the national priorities", he added.

The Country Director World Bank John Wall assured Pakistan of the support of the bank for the improvement of the road infrastructure for the benefit of the people.

He added the project would help Pakistan in improving the road infrastructure for reducing the transportation costs for its product to become competitive in world markets.

Chairman NHA Maj General Farrukh said this agreement would help the completion of our ongoing road improvement projects.

"We will resurface and rehabilitate the 856 KM GT road", he added.

The Chairman said that 550 km road will be resurfaced while 306 km road will be rehabilitated.

He said the under the earlier loan agreement signed between Pakistan and Bank was US $ 200 million while US$61 million was the combined effort of Government of Pakistan and NHA.

He added that when NHA started the work on the project was started we faced paucity of funds and we again requested the World Bank to fund particularly for two projects of using modern technology (Cold recycling) and Islamabad to Kharian and Okara to Sahiwal.

"We asked the Bank that we will require another US$65 million for the completion of these projects and today's loan agreement signing is part of this project", he remarked.

He expressed the hope that NHA would able to timely complete the road improvement project.

 

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ISLAMABAD (updated on: May 16, 2006, 22:37 PST): Minister for Commerce Humayun Akhtar told the Upper House on Tuesday that Pakistan's exports to India registered 207 per cent increase during last fiscal year.

In written reply to a question from Professor Muhammad Ibrahim Khan he said that out of total bilateral trade of $ 476.047 million in 2003-04 Pakistan's exports stood at $ 93.680 million while imports were worth $ 382.367 million.

He said that during last fiscal total trade with India stood at 835.6 million. Pakistan exports remained worth $ 288.134 million while imports from India stood at $547.458 million.

While responding to supplementary questions he said that although New Delhi has given Pakistan Most Favoured Nation (MFN) status, some non-tariff barriers are hindering Pakistan exports to India. He said that Pakistan will take up the issue of non-tariff barriers. He made it clear that without substantial progress in political talks, Pakistan will not grant MFN to India.

He made it clear that at present there was no fear of Indian goods flooding Pakistani markets as the government has allowed import of only 760 items from India.

 

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KARACHI (May 16 2006): The Ministry of Finance is considering a proposal to slash high taxes on airline tickets to enable the Pakistan International Airlines (PIA) maintain the fares at reasonable limits, an official source told Business Recorder here on Monday.

The Ministry of Defence has forwarded the proposal in view of the negative impact of increasing fuel prices and intermittent raise in airline fares covering domestic and international sectors.

For some time, the domestic fares have remained stable in view of tough competition among the private sector airlines and PIA. The international tariff was reviewed upwards by PIA late last week on the plea of meeting the cost of ever-increasing fuel prices. The actual burden in fact falls on the ticket-holder and it is he who, per force, co-shares the cost.

If the government taxes are reduced, the impact of increase in fuel prices may also be less and travelling public saved from the agony of paying unbearable fares.

Aviation experts suggest that PIA could contain its losses to a considerable extent, if it were to follow International Air Transport Association's (IATA's) Fuel Action programme.

IATA has launched a Fuel Action Campaign (FAC) to supplement its existing fuel activities to assist airlines combat the severe impact of rising fuel prices.

IATA believes: "While we cannot influence the commodity price of oil, we can take measures to reduce the amount of fuel consumed, simplify business practices, reduce duties, fees and taxes and improve market conditions." IATA is working with industry partners world-wide to reduce the industry's fuel requirements and associated environmental emissions.

In addition, it is working with individual airlines to ensure that they have a robust internal "fuel conservation programme" in place. "Opening of new more direct routes, realignment of inefficient routes and improved ground traffic flows can reduce industry costs by 2.5 billion dollars per year," it estimates.

Further airlines individual efforts to improve their own operating efficiencies can yield significant savings. Each percent improvement in fuel efficiency across the industry can lower fuel costs by 700 million dollars per year.

Greater priority is being given to ongoing initiatives to increase competition among fuel suppliers at local levels and to challenge unreasonable and potentially illegal duties, fees and taxes where they exist.

To simplify the business, IATA is working with airlines and industry partners to establish and adopt industry data standards, make fuel management technology more effective, affordable and easier to deploy, and take advantage of shared services where permissible.

To help airlines better control fuel costs, it is also working with leading global banks to expand credit and reduce costs associated with hedging activities.

 

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KARACHI (May 16 2006): Uzbekistan has offered Pakistan's textile manufacturers 2.5 million surplus cotton bales at 20 percent subsidised rates over Liverpool cotton rates, sources told Business Recorder here on Monday. They said that a delegation of industrialists would leave for Uzbekistan shortly to negotiate the offer, eliminating some intricacies.

"We may face hurdles in opening LCs," said a leading industrialist, and added that "there is no direct link between banks of the two countries".

He said that the Uzbek government has asked for 15 percent down payment, and this issue would also come under discussion in the meeting.

He said that an official of Uzbek textile ministry had recently approached some leading textile exporters here to get Uzbek cotton at subsidised rates.

"We will offload our stocks at Bandar Abbas (Iran) and are considering to acquire a warehouse at Export Processing Zone (EPZ) in Karachi, where we will bring the commodity from Bandar Abbas," the Uzbek official told industrialists during a meeting recently.

However, the industrialists who are interested to avail this opportunity would suggest to the Uzbek officials to bring this commodity directly to Multan or any other warehouse near Lahore, since there is no duty on importing cotton.

"Some 300 units are situated in Punjab against 80 in Sindh. So, the industrialists are trying to get the Uzbek cotton to Punjab directly," sources said.

"If the Uzbek cotton is brought to EPZ warehouse, then the transportation cost from Karachi to Punjab would cost Rs 50 per maund," sources said, adding that if the consignments reached Pakistan through Bandar Abbas, then the estimated time of arrival could be two months.

"Therefore, we would suggest to them to acquire a warehouse in the Punjab region and would offer them our support to resolve this issue in the forthcoming meeting," industry sources said.

Leading exporters are of the view that locally produced cotton contains moisture rate of around 9 percent to 12 percent, while the Uzbek cotton has the moisture rate of 5 percent, maximum.

"Due to less moisture rate and modern ginning process, their (Uzbek) crop size and quality is of world class and contains very little trash, as compared to our country's crop," an exporter commented.

Since cotton arrivals for the current season could be delayed due to inadequate water supply, some industrialists are considering Uzbekistan's offer seriously.

 

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ISLAMABAD (May 16 2006): The government is pursuing a seven-point strategy to sustain the high economic growth rate and increasing the competitiveness of national economy, Adviser to Prime Minister on Finance Dr Salman Shah said on Monday.

Addressing a TCI regional conference on "Competitiveness and Economic Growth in Asia" held here, he said the strategy being pursued included human resource development, energy independence, maximum utilisation of water resources, development of infrastructure in rural areas, world class road and railway network, second generation reforms and reinforcement of bright future of the country among the people.

Dr Salman said the country has gone through massive economic growth last year and we are setting sights on another year of strong growth.

He said it is also a gigantic task to maintain the high growth rate for which the government is taking concrete steps keeping in view the present opportunities and challenges in the global market place.

Salman said the government is giving top priority to improve the competitiveness and the second-generation reforms aim at achieving this target generating more opportunities of the Pakistani products in the world market. He said the CSF has been jointly established by the government and USAID to enhance public-private partnership in the country.

Dr Salman Shah said various educational institutional will be engaged to develop knowledge-driven economy which will help generate industry clusters in the country. US Ambassador to Pakistan Ryan C. Crocker said it is quite encouraging that Pakistan is going to have another year of massive growth rate despite devastating October 8 earthquake.

He said exports in the country are up with poverty gradually going downward and economic indicators showing positive signs. Crocker said the US will provide more than US $1.5 billion to Pakistan in the next five years to help improve competitiveness in the fields of education, health and governance.

He said assistance has also been provided in improving the competitiveness in different spheres, which include dairy, gems, jewellery and marble granite.