Pakistan Economy - News & Updates - Archive

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Pak textile sector may be severely hit by US slowdown ​

Friday, November 30, 2007

LAHORE: Pakistan’s textile industry exclusively dependent on exports would be more severely affected than China or India as the uncertainty rises on the international textile market on expected economic slowdown in the United States and Europe.

Textile experts warn that textiles would be the first casualty of the deepening global credit crisis as the first cut that the people world over make in economic slowdown is on clothing. They pointed out that Chinese and Indian textile industries would not suffer much because 70 and 85 per cent of their textile production respectively is consumed domestically.

Some of the impact of slowdown in developed countries they pointed out would be compensated by increased domestic consumption as both these economies are on a high growth path. They said as far as Pakistan is concerned textile industry has only 15 per cent hold on the domestic market while 85 per cent of its production is exported.

This dependence on export orders alone they assert is the main reason for the cyclic crisis that local textile industry undergoes periodically. These experts blamed the lower domestic demand for locally produced textiles to the flawed government policies and regulations.

They said Pakistan failed to develop the blended textile products of cotton and manmade fiber. They said the global use of blended textile is 60 per cent manmade fiber and 40 per cent cotton. In Pakistan the use of manmade fiber has reached only 20 per cent only.

They said manmade fiber is considered as poor man’s choice while 100 per cent cotton clothing is considered the world over as rich man’s product. They said in economic slowdown or recession the use of clothing blended with higher percentage of manmade fiber increases as these last longer and are easy to iron.

They said protect against sovereign guarantee provided to a multinational polyester fiber producer for almost a decade kept manmade fiber rates very high in Pakistan that discouraged its use.

They said even today the import of cotton is duty free but polyester fiber is subjected to 6.5 per cent import duty. The other reason that kept the demand for domestic textiles limited was the under invoicing and smuggling of foreign clothing in the country.

They said the practice of bringing children and men garments in unaccompanied baggage are still rampant. The apparels under this mode are cleared without duty by paying a nominal bribe, they said. The markets are flooded with men’s shirts and trousers made in Thailand or Indonesia, they added.

Only a limited quantity is imported though at highly under-invoiced price the rest is all smuggled through personal baggage, they claimed. Another drawback that the local textile industry faces in domestic markets, they added is the unhindered import of second hand clothing, textile experts added.

They said import of second hand clothing is not allowed in India that has provided its textile industry a huge domestic market.

Moreover they added given lax regulations in Pakistan even new clothing is imported under the garb of second hand or used apparel. This they added deprives the local industry of a substantial share in the domestic market.

They said a sharp fall in the dollar would hurt India only as Pakistani rupee and Chinese Yuan are relatively stable against green back. However the surging oil prices would further dampen the global growth prospects that would be more detrimental for Pakistani textile than India, they asserted.

The decision of European Union to remove quotas on Chinese textile might well spell disaster for exports from low cost textile countries like Pakistan, India, Thailand and Indonesia

Pak textile sector may be severely hit by US slowdown

 

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KSE gains 79 points, poised to cross 14,000 mark ​

Friday, November 30, 2007

KARACHI: As daily developments on the political front gradually remove uncertainty in the country, the on going show continues to entertain equity investors at the Karachi bourse having breached major resistance level of 13,900 points successfully on Thursday.

The KSE 100-share Index managed to post another modest gain of 79 points and closed at 13,964 points. Investment punters in the ever changing political scenario pushed the benchmark above the 14,000 points psychological level shortly in the wee hours of trading.

Active buying across the board, under the lead of cement stocks, helped the 100-Index hit a 14,051 points intra day high in the middle of the first half. The junior 30-Index also recorded a modest rise of 32 points and closed at 16,684 points.

Due to continuous participation of locals in the market, the volumes relatively remained good at 309.736 million shares in the ready market, but were lower than the 325.659 million that changed hand a day earlier.

On the contrary, volume in the futures market surged to 75.106 million shares compared to 58.110 million a day earlier.The overall market capitalisation rose by Rs23 to stand at Rs4.318 trillion.

ìInvestors have high hopes that President Musharraf would either announce lifting of the emergency rule in the county - as strong rumours suggest since Tuesday morning - in his first address on TV after becoming the president or he would at least set a deadline to do so in the near futureî, said Analyst Ahsan Mehanti.

Now that Musharraf has been sworn in as president of Pakistan for the next five year term, and there was no reason left to prolong army rule in the country, therefore the changing circumstances suggest that the president would restore the 1973 Constitution within a day or two or soon enough, another analyst said.

Therefore, the Cement sector continued to lead the rally. Giant stocks of this sector i.e. Lucky Cement and DG Khan Cement were the top two volume leaders respectively with gains in their share prices notably.

The MCB Bank also came out of its selling pressure and invited renewed buying on board. On the other hand, Pakistan Petroleum, Pakistan State Oil, Bank of Punjab and Engro Chemical also joined the bears camp along with Oil and Gas Development Company and National Bank of Pakistan that were already present in the camp for the last couple of days.

The reported raise in cement prices in the domestic market with hopes of continuing price-hike in the near future amid lucrative cement stock prices in the market altogether invited great investor enthusiasm in this sector, analysts said.

Moreover, oil prices in the international market again surged to US$95 per barrel after taking a short dip at US$90. For this reason, high activity was seen in the exploration and production companies and other energy stocks, but investors remained cautions.

The local leading financial institutions remained active in the market and changed hands in a number of stocks, a broker said and opined that optimism would prevail in the market if all on the political side goes well in accordance with the National Reconciliation Ordinance (NRO) introduced by President Musharraf.

Faisal Shaji of Khoja Capital Management reported moderate interest from foreign fund mangers in the market and saw an upward thrust in the indices that continued in the market in the short-term. The recovery in the SCRA balances confirmed overseas investor’s interest in the local market along with the changing political scenario from negative to stable.

Therefore, the SCRA balances reverted high to US$91.728 million to date with a net inflow of US$42.294 million recorded on Nov 28, according to the SBP website. Positive signs led runners in the broader market, as 225 company’s stocks closed in the positive column against 151 stocks settled in the red region. Therefore, the value of 34 scrips remained unchanged with a total 410 active counters on board.

Highest volumes were witnessed in Lucky Cement at 19.910 million closing at Rs122.25 with a gain of Rs2.50, followed by DG Khan Cement at 19.501 million closing at Rs97.30 with a gain of Rs4.55, Arif Habib Securities at 18.116 million closing at Rs168.35 with a loss of 10 paisa, Pak Oilfields at 15.573 million closing at Rs352.40 with a gain of Rs2.90 and Oil and Gas Development Company at 14.654 million closing at Rs120.85 with a loss of 40 paisa.

KSE gains 79 points, poised to cross 14,000 mark

 

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‘Agri sector should lure investors from Middle East’ ​

Friday, November 30, 2007

LAHORE: Pakistan should further improve the productivity of agriculture sector to tap the international markets and attract direct investment from the Middle East.

These views expressed by the local and international participants of a seminar on Middle East-Pakistan Agriculture and Dairy Investment Forum held at Royal Palm Country Golf Club on Thursday.

Speaking on the occasion, Nestle Middle East SEVP Alexander Cantacuzene said Pakistan had great potential in dairy sector. He said that there was need to develop Pakistan as food basket for the region.

Nestle Milkpak Chairman Syed Yawar Ali in his address said that the prices of agricultural products have doubled in Pakistan. He mentioned that the price of milk powder had reached $4,000 per tonne from $2,000 per tonne.

Similarly rates of other agri products including wheat and rice had also doubled in country, he said adding that 20 per cent further increase in the agri products was forecasted in next year. Talking about the growth of dairy sector, he said that industry had been growing at 20 per cent annually while supply of inputs was growing at only 2 per cent annual rate.

Appreciating the efforts of Pakistan Dairy Development Board, he said that the Board had performed more than the expectations and supporting the industry as well. Representatives of Abraaj Capital Limited of UAE, Al Rabi of Saudi Arabia, Ulker Group, Pinar Group of Turkey and others also spoke on this occasion. Local speakers of the seminar were the representatives of Engro, Tetra Pak, Delaval, Nirala, Makro, BMA Capital and PHDEB.

‘Agri sector should lure investors from Middle East’

 

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Pak leather, agri goods get access in Malaysia ​

Friday, November 30, 2007

ISLAMABAD: Pakistan has secured market access in Malaysia with a huge opportunity of exports for its existing cotton, leather and agricultural based core products by signing “The Malaysian Pakistan Closer Economic Participation Agreement (MPCEPA).”

According to a message received here on Thursday, the agreement has enlarged the scope of the Free Trade Agreement (FTA). The MPCEPA was signed in Kuala Lumpur by Malaysian International Trade and Industry Minister Daruk Seri Rafidah Aziz and High Commissioner of Pakistan Tahir Mahmood Qazi.

Considering the marker potential of Malaysia and ASEAN, negotiations on a comprehensive FTA began in 2005. In December 2005, both the countries signed “Early Harvest Programme,” which was implemented with effect from January 2006. While negotiations on the MPCEPA were concluded in September this year and signed in the outgoing month. The agreement will come into force from January next year.

The MPCEPA is Pakistan’s first comprehensive agreement on goods, services, investment and economic cooperation with any country of the world. Besides Malaysia’s first such agreement with any of the countries of South Asia, it is also first such agreement between the two members of the Organisation of Islamic Countries (OIC). The agreement will provide Pakistan a firm foothold in the Association of South East Asian Nations (ASEAN).

Pak leather, agri goods get access in Malaysia

 

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Current account deficit shrinks by $518m​

ISLAMABAD, Nov 29: Backed by a slight improvement in trade account, the current account deficit in the first four months of the current fiscal year narrowed by $518 million and stood at $2.996 billion against $3.514 billion last year.

The shrinking trend in the current account has been witnessed for the second consecutive month of the current fiscal year owing to a surge in inflow of remittances, foreign direct investment, particularly the PTCL installment of around $300 million and stagnation in the import bill.

As a result of these developments, the current account deficit in the first four months of the current fiscal year stood at 1.8 per cent of the projected GDP for the year as against 2.4 per cent in the corresponding period of last year.

Analysts said the real barometer of this positive development will be gauged from the second quarter (October-December) figures.

If the trend continued in the second quarter, it is expected that by end June 2008, the current deficit will witness a considerable decline.

The statistics compiled by the finance ministry showed that exports (on fob basis) grew at an average rate of 10.8 per cent during the first four months (July-October) of the current fiscal year, amounting to $5.997 billion against $5.413 billion last year.

This growth in exports was just 4.1 per cent in the same period last year.

Exports grew by 3.3 per cent in the whole year of 2006-07. Export growth of 10.8 per cent in the first four months (July-October) of the current fiscal year is certainly an encouraging trend, which needs to be further improved.

Exports are targeted to grow by 8-10 per cent in the current fiscal year.

Imports, on the other hand, grew at a modest rate of 4.3 per cent, amounting to $9.530 billion against $9.137 billion last year.

However, this growth in import bill was 14.5 per cent in the same period last year.

Imports were up 8.2 per cent in the last year and grew at an average rate of 35 per cent during the previous two years (2004-05 and 2005-06).

Import growth appears to be on the path of moderation and is expected to grow in the range of 6.5 per cent to seven per cent in the current fiscal year.

The tight monetary policy pursued by the State Bank of Pakistan appears to have played a role in moderating import growth.

As a result of developments on exports and imports, the trade deficit reduced by $191 million, from $3.724 billion in the first four months of the last year to $3.533 billion during the first four months this year.

The narrowing of trade deficit is the direct result of improvement in exports on the one hand and a moderate growth in imports on the other.

The trade balance of Pakistan widened in recent years on the back of strong economic growth sustained by domestic demand.

Improvement in the trade balance during the period under consideration is an encouraging development and will have a salutary impact on country’s overall balance of payment.

Invisible balance maintained a surplus of $537 million during the first four months of the current fiscal year as opposed to $210 million in the same period last year.

Private transfers also registered an improvement of 27.4 per cent, rising from $2.899 billion to $3.693 billion during the period under consideration.

Workers’ remittances — a major component of private transfers also grew by over 26.5 per cent to $2.080 billion in the first four months of the current fiscal year as against $1.644 billion last year.

Current account deficit shrinks by $518m -DAWN - Business; November 30, 2007

 

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Portfolio investment stages comeback​

KARACHI, Nov 29: Foreign portfolio investment started flowing back into the country after easing of political uncertainty with positive developments including doffing of army uniform by President Musharraf.

The State Bank’s figures on Thursday showed that the net inflow of foreign investment in the shares market was $42 million on November 28, the day General Musharraf sheds his uniform.The foreign investment started flowing out from the country since the imposition of emergency. The emergency was imposed on November 3 and a major jolt was noted in the Supreme Court when a dozen judges were removed.

“Now it looks that political scenario is clearer than earlier and this is the main reason that the foreign investors have started coming back into the market,” said Mohammad Suhail, director Equity Broking at JS Global Securities.

However, he said it was not a big selling after emergency as the total foreign investment in the stocks was about $4.5 to $5 billion while the total selling during November was $250 million.

Analysts said the imposition of emergency has shaken the confidence of the foreign investors resulting into the selling of shares and forcing them to stay away from further investment.

Analysts said it was also felt that the political uncertainty would not allow the country to launch GDRs of its few top companies into the international market as foreign investors were hesitant to enter into any deal after the emergency creating uncertainty.

Since the beginning of the new fiscal the foreign investors were not enthusiastic as inflows were almost negative during the first three months (July-Sept) of the current year but October received record inflows.

The portfolio investment reached $302 million in October, 2007, which were record high inflows in a single month.

Analysts said that now a series of decisions appeared on the political horizon, which showed that the commitments made by the president were being honoured. They said the elections date was given as per the requirement of the Constitution; Supreme Court legalized the president’s election and now the change of guards in the army.

“Shedding of uniform and lifting of emergency by mid-December would further strengthen the confidence of the investors,” said Mohammad Imran, head of research at First Capital Securities.

The market also believes that the elections would not be boycotted by any major political party. All political parties have filed their nominations for contesting elections.

Some analysts were of the view that the uncertainty would remain looming over investors until a new government settles in Islamabad.

“For the last eight years the economic policies were kept unchanged and no major change was witnessed during the period, which boosted confidence of both the local as well as foreign investors,” said another analyst.

He said the presence of President Musharraf and his political allies assured continuity of the economic policies, which finally paid dividend during the last four years and the average rate of economic growth was 7 per cent.

Since President Musharraf is no more in a position to assert his policies after the election of the new government and new economic team, we should expect some change, he added.

“We can not say what kind of economic change could come but the need for the continuity of economic policies is essential for economic growth, however, it will be clear only after the arrival of the new economic team, till then uncertainty will prevail,” said a banker.

Portfolio investment stages comeback -DAWN - Business; November 30, 2007

 

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PSEB to boost equity base of IT companies​

ISLAMABAD, Nov 29: Pakistan Software Export Board (PSEB) is launching various initiatives to facilitate access to Venture Capital, strengthen the equity base of IT companies and promote world class entrepreneurial culture in the IT industry.

The projects are aimed at raising the fast track development and robust growth of Pakistan’s IT industry.

One such programme, the PSEB’s Entrepreneurship Project, has been initiated to provide consultancy to selected IT companies with the objective of qualifying them for Initial Public Offering.

Currently, out of more than 1,082 IT companies in Pakistan, only two were listed on the Karachi Stock Exchange.

“To get more companies listed, as envisioned under the project, the PSEB will subsidise the consultancy cost by 75 per cent while selected companies will bear the remaining 25 per cent of the consultancy fee,” a spokesman for the PSEB and director international marketing, Aon Ashraf Rana, said on Thursday.

In order to facilitate access to venture capital, the PSEB would facilitate entrepreneurs in getting venture capital funding through vetting business plans and establishing linkages with Angel, VC, private equity, public and multilateral funding organisations.

The PSEB had also launched an apprenticeship programme for creating a pool of skilled resources in Pakistan’s IT industry matching the advanced and specialised international technological requirements.

Under this initiative, IT companies will recruit IT graduates on apprenticeships and later hire them for a period of at least one year.

“This will allow fresh graduates to follow a career path provided by the participating companies, thus strengthening the pool of IT human capital in the country.

Under the programme, 1,058 fresh graduates will be placed as apprentices within Pakistani’s IT industry,” the spokesman said, and added that a multinational IT company, Bearing Point, has already expressed its willingness to recruit about 100 IT apprentices, out of which 46 had already been placed.

Another major project, the IT industry Internship Programme, the director international marketing said, intended to bridge the gap between the IT industry and the academic institutions, and would help mould fresh graduates into professionals.

“Some 3,100 internees from 205 universities and institutes were placed in the local IT/ITes industry and 235 IT departments of public and private sector organisations.

Under its HR capacity building programme, the PSEB provided training to professional staff of 94 leading IT companies in various programmes.

Mr Rana said that the PSEB’s expert advisory programme was in the process of being finalised.

“The major objective of the programme is to facilitate PSEB member companies to hire foreign experts and expatriates.

“The PSEB expects that the international corporate exposure and technical expertise of the experts will assist Pakistan IT companies in addressing gaps in the management of technical teams, and result in achieving fast track growth and capability to compete at a world level.

PSEB to boost equity base of IT companies -DAWN - Business; November 30, 2007

 

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PSEB to boost equity base of IT companies​

ISLAMABAD, Nov 29: Pakistan Software Export Board (PSEB) is launching various initiatives to facilitate access to Venture Capital, strengthen the equity base of IT companies and promote world class entrepreneurial culture in the IT industry.

The projects are aimed at raising the fast track development and robust growth of Pakistan’s IT industry.

One such programme, the PSEB’s Entrepreneurship Project, has been initiated to provide consultancy to selected IT companies with the objective of qualifying them for Initial Public Offering.

Currently, out of more than 1,082 IT companies in Pakistan, only two were listed on the Karachi Stock Exchange.

“To get more companies listed, as envisioned under the project, the PSEB will subsidise the consultancy cost by 75 per cent while selected companies will bear the remaining 25 per cent of the consultancy fee,” a spokesman for the PSEB and director international marketing, Aon Ashraf Rana, said on Thursday.

In order to facilitate access to venture capital, the PSEB would facilitate entrepreneurs in getting venture capital funding through vetting business plans and establishing linkages with Angel, VC, private equity, public and multilateral funding organisations.

The PSEB had also launched an apprenticeship programme for creating a pool of skilled resources in Pakistan’s IT industry matching the advanced and specialised international technological requirements.

Under this initiative, IT companies will recruit IT graduates on apprenticeships and later hire them for a period of at least one year.

“This will allow fresh graduates to follow a career path provided by the participating companies, thus strengthening the pool of IT human capital in the country.

Under the programme, 1,058 fresh graduates will be placed as apprentices within Pakistani’s IT industry,” the spokesman said, and added that a multinational IT company, Bearing Point, has already expressed its willingness to recruit about 100 IT apprentices, out of which 46 had already been placed.

Another major project, the IT industry Internship Programme, the director international marketing said, intended to bridge the gap between the IT industry and the academic institutions, and would help mould fresh graduates into professionals.

“Some 3,100 internees from 205 universities and institutes were placed in the local IT/ITes industry and 235 IT departments of public and private sector organisations.

Under its HR capacity building programme, the PSEB provided training to professional staff of 94 leading IT companies in various programmes.

Mr Rana said that the PSEB’s expert advisory programme was in the process of being finalised.

“The major objective of the programme is to facilitate PSEB member companies to hire foreign experts and expatriates.

“The PSEB expects that the international corporate exposure and technical expertise of the experts will assist Pakistan IT companies in addressing gaps in the management of technical teams, and result in achieving fast track growth and capability to compete at a world level.

PSEB to boost equity base of IT companies -DAWN - Business; November 30, 2007

 

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ADB report outlines Pakistan’s water woes​

ISLAMABAD, Nov 29: Pakistan has reached the water scarcity threshold of 1,000 cubic metres per person a year and has been ranked among the worst performers in Asia in terms of water use, capacity and quality although water has been on President Musharraf’s priority agenda for eight years.

“In terms of water resource availability, the per capita total actual renewable water resources value reduced from 2,961 cubic metre a year in 2000 to 1,420 cubic metre in 2005… and just a little over 1,000 cubic metre per year in 2006-07, fractionally over the scarcity threshold,” according to “Asia Water Development Outlook 2007” report of the Asian Development Bank.

Released on Thursday, the report describes access to water and the water resource in Pakistan as ‘good’ and ‘fair’, respectively, and ranks the country at the 17th position among 23 developing countries in the index of drinking water adequacy (IDWA).

The report said Pakistan was already in the water stress league, the water stress threshold being defined as renewable water resources below 1,700 cubic metres per person per year “and will shortly be in the water scarcity league”.

It is said the water use value in Pakistan was ‘zero’ – meaning very poor in efficiency. It noted that this value should improve from zero to 40 as soon as possible. “Increasing the domestic per capita consumption IDWA use component value could be achieved through increasing the number of people connected to piped networks, but this raises the question of water availability and system capacity”.The report said that in Karachi and several other major cities, water demand already exceeded production capacity by a considerable margin.

The ADB advised Pakistan to increase its water sector spending to a minimum of one per cent of GDP from the current 0.25 per cent. “In Pakistan, military spending is 47 times the expenditure in the water sector. It is a small price to pay for improved quality of life, millions of young lives saved, increased productivity and generating an economic return to boost prosperity.”

The bank said that lack of planning capacity and strong management, as well as frequent disagreements with provincial governments over water allocation have contributed to major water resource problems. “These issues are compounded by application of excessive irrigation water, causing increased salinity and water-logging.” As a result, 36 per cent of groundwater resources are now highly saline and untreated effluent discharges from municipalities and industrial areas make the quality of water resources increasingly critical.

“The number of tube-wells has increased significantly but despite the unsustainable mining of groundwater, additional wells continue to be installed to meet rural, urban and agricultural needs.”

The irrigation system urgently needs rehabilitation and stronger institutional arrangements, the groundwater resource depletion is unsustainable, the coverage, quality and reliability of urban water supply are grossly inadequate, especially in the light of the burgeoning urban population; and urban waste-water treatment is virtually non-existent (only one per cent) with the drainage network collecting agriculture waste along with mostly untreated municipal and industrial effluent and discharging it into the rivers. Salinity in rivers is an increasing problem.

The report said that water supply systems are characterised by limited hours of supply, low pressure, intermittent water supply, high levels of non-revenue -- for example 60 per cent in Islamabad. “In the first half of 2006, major outbreaks of waterborne disease epidemics swept Faisalabad, Karachi, Lahore and Peshawar as a result of sewage and industrial waste leaking into drinking water through damaged pipes, necessitating a major emergency public investment programme to finance more than 6,000 filtration plants.”

In Karachi and Lahore, 40 per cent of the water supply is unfiltered and 60 per cent of effluents are untreated. In Lahore, there is no sewage treatment and only three out of 100 industries chemically treat their waste-water. In Karachi, the sewerage system is in disrepair and there are no sewage treatment facilities, with even the two largest industrial estates in the country having no effluent treatment plants.

The report said some of Pakistan was heavily constrained by water availability with the situation deteriorating annually. The country needs to pursue conservation aggressively, particularly in the irrigation sector, which is characterised by low productivity relative to other countries. “Deteriorating water quality is a further major concern, necessitating the dramatic increase in the treatment of municipal and industrial waste-water as well as modifying agricultural practices.”

Very low tariffs, compounded by poor collection and billing practices, mean low cost recovery and the resulting bad state of repair of most water and sanitation systems. Tariff reform is vital not only to ensure sustainability but also to highlight the true value of water and service provision.

It said lack of inadequate and management coordination among water-user organisations, lack of consensus between provinces and high level of poverty were some of the causes of water-related problems in the country.

ADB report outlines Pakistan’s water woes -DAWN - Top Stories; November 30, 2007

 

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Ufone to invest $150m in network expansion​

KARACHI: Ufone has announced to invest US$ 150 million in network expansion, which will add up more than 1000 additional cities towns and highways in its footprint.

It is estimated that by the end of June 2008 the company will be covering more than 4500 cities, towns, villages and all major highways in the country, a press release said here Thursday.

The contract has been awarded to Huawei Technologies, which is one of the most rapidly growing telecom vendors globally and awarding another contract to Huawei shows the company’s confidence in professionalism and state of the art technology. Huawei is the vendor of choice in latest 3G Telecommunications Networks, 31 of the world’s top 50 operators worldwide are using their technical infrastructure.

Walid Irshaid, President and CEO of PTCL while speaking at contract awarding ceremony said that an expansion contract of this magnitude indicates Ufone’s aggressive strategy towards market growth and expansion, in the wake of tremendous growth and potential of Pakistan’s cellular market.

The previous Network Roll-out phase of $550 million was the single largest expansion plan in the history of Pakistan and this region. That record-breaking execution by Huawei is near completion now and this new contract shows Etisalat’s commitment to the Pakistani market and will also boost investors’ confidence towards Pakistan.

The project was approved by the Board of Directors to invest in infrastructure and to provide best quality network and facilities its customers. In addition to the major investment commitment, Etisalat brings its extensive experience of Telecom Industry to Pakistan to ensure that THE company has the best network in the country.

Yi Xiang CEO Huawei Pakistan stated that Huawei is fully committed to Pakistan telecom industry as well as implementing this new network expansion contract in the fastest and most seamless fashion.

Daily Times - Leading News Resource of Pakistan

 

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Water resources: Pakistan must spend one percent of GDP: ADB ​

ISLAMABAD (November 30 2007): The Asian Development Bank (ADB) on Thursday said that Pakistan needed to spend at least 1 percent of the GDP on water resources to avert crisis like situation in future. The Bank deplored that military spending in Pakistan is 47 times higher than the spending in water sector, which is currently only 0.25 percent of the GDP.

The cost of achieving the water sector MDGs has been estimated at $10 billion/year, a seemingly large sum but one that only equates to 5 days' worth of global military spending and less than half of what rich countries spend on mineral water, said the report.

The report also said that Pakistan must focus on tariffs reform, increased wastewater treatment capacity, greater water conservation, and effective implementation of the National Water Policy. To avoid a crisis in water security, developing countries in Asia will have to rethink how they manage their vital water resources, said that report titled the Asian Water Development Outlook (AWDO), authored by a team of experts led by Professor Asit Biswas, the 2006 Stockholm Water Prize Laureate.

The report says that government leaders in the region can protect their nations' water resources, but they will need to concentrate on some key areas to ensure water security for their population, and the region as a whole.

"We can confidently predict," Biswas says, "that Asian developing member countries, (DMCs) should not experience, or expect, a crisis in the future because of physical scarcity of water; there is now enough knowledge, technology and expertise available in Asia to solve all its existing and future water problems. If some Asian DMCs face a water crisis in the future, it will not be because of physical scarcity of water, but because of inadequate or inappropriate water governance."

For 2006-2010, the ADB expects to sharply increase its investments in the water sector through its Water Financing Programme, which directs funds, reforms and capacity development programmes at rural communities, cities and river basins.

It is expected that such investments will be well over $2 billion annually, representing approximately 25 percent of overall ADB lending over a three-year moving average period, and two fold ADB's investments in water compared to 1999.

In Pakistan, the water and power ministry through Wapda manages water resources. However, lack of sector planning capacity and strong management, as well as frequent disagreements among the federal and the four provinces over the allocation of water have contributed to water resource problem. Some 36 percent of groundwater resources are classified as highly saline.

Very low tariffs, compounded by poor collection and billing practices, mean low cost recovery and the resulting bad state of repair of most water and sanitation systems.

The report calls for increased autonomy of water and sanitation agencies. It has been proposed to establish apex body to implement the water sector strategy as well as policies developed by proposed National Water Council.

Financial unsustainability is very common almost in all water organisations. The tariffs should be rationalised at a level that could at least meet the operation and maintenance (O&M) cost. The report also strongly advocated of outsourcing the O&M, billing and revenue collection.

Pakistan has long history of developing and managing water resources infrastructure and has largest contiguous irrigation in the world. It is, however, nearly at the water scarcity threshold of 1,000 cubic meter/person/year.

Business Recorder [Pakistan's First Financial Daily]

 

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Turkish investment to cross $600 million: Consul General ​

KARACHI (November 30 2007): Turkish Consul General Erdern Mutaf has said that Turkish foreign direct investment (FDI) in Pakistan will cross 600 million dollars in the near future. Addressing members of Karachi Chamber of Commerce and Industry (KCCI) on Thursday, he said that during the last one year, the total Turkish investment in different projects Sindh province had reached 350 million dollars.

Giving details of the major Turkish investment in Sindh, he said that Zorlu Group was establishing wind power plants at Jhimphir, with the initial capacity to produce 50 MW. The installed capacity of this project was expected to reach 300 MW in near future, he added.

He said a Turkish company, Alfapen, entered into joint venture with a Pakistan company in PVC sector for producing UPVC products. Another Turkish confectionery company, having 7.7 billion dollars turnover in 2006, entered into a joint venture with a local company to produce biscuits and cakes in Karachi. The plant will start production by January 15,2008, he added.

The Consul General pointed out that total Turkish investment in Pakistan reached around 1.7 billion dollars between 1993 and 2006. He said that Turkey attached special importance to further improve the trade relations with Pakistan, which would, no doubt, contribute considerably to the excellent relations in every field between the two countries.

Erdern Mutaf said bilateral trade volume increased considerably from 130 million dollars in 2001 to almost 600 million dollars in 2006. However, the current level still did not reflect the potential of both the countries. He said the target was to reach one billion dollars in near future as it was pointed out by Turkish Prime Minister Erdogan some times ago, and added the re-opening of Trade Office in Karachi after eight years was clear sign of Turkish resolve in this respect.

He invited Pakistan companies to take part in exhibitions held in Turkey.

Welcoming the guests, Senior Vice President of KCCI Iftikhar Ahmed Shaikh said that Pakistan had the potential to target Turkish market in areas such as vegetable and fruits, pharmaceutical products, raw hides and skins. Turkey imported these items in large quantity, but share of Pakistan in these segments in negligible, he added.

He said that Turkey could take advantage of Gwadar port to establish production base in Pakistan and tap the huge untapped market of south and Central Asia.

He said that Pakistan and Turkey could also join hands to manufacture textile products in Pakistan in textile and garment cities being established with modern infrastructure at Karachi.

He also emphasised the need of frequent exchange of delegations and data based information on trade and marketing and holding single country exhibitions. Iftikhar Shaikh invited the Turkish business community to participate in KCCI exhibition schedule to be held in June-July 2008.

Business Recorder [Pakistan's First Financial Daily]

 

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ASIA G3 BOND OUTLOOK: Pakistan Bonds May Get Beaten Down More ​

By Ditas Lopez, Of DOW JONES NEWSWIRES

SINGAPORE -(Dow Jones)- Political uncertainty in Pakistan, even with a return to constitutional rule, will continue to weigh on its U.S. dollar bonds, which have sold off heavily on concern about deepening tensions in the world's sixth- most populous country.

Still less is it likely that the country could tap the market again soon.

Talk is circling in the market that Pakistan has sent request for proposals from banks to meet the funding needs of state-owned utilities for next year. But given the still unstable global credit market and the country's unresolved political woes, the prospect for that issue looks dim.

Yields on Pakistan's overseas bonds and the cost of insuring against default or restructuring of them have increased sharply in the wake of the South Asian country's latest crisis, which flared when President Pervez Musharraf declared a state of emergency on Nov. 3.

The political situation recently has shown signs of coming off the boil, with Musharraf stepping down as army chief Wednesday to hand over control of the military to his deputy before being sworn in Thursday for another term as president. He intends to lift the widely criticized state of emergency on Dec. 16, in preparation for parliamentary elections set for Jan. 8.

But analysts say investors remain on edge.

"Clearly, there's going to be several months of political uncertainty," said Dilip Parameswaran, head of Asia Capital Markets Research at French bank Calyon in Hong Kong.

There are big question marks hanging over Pakistan's outlook. Among them: the conduct and outcome of the elections and the implications of the looming change from an authoritarian administration, which over the years has focused on the economy, to an elected government.

Pakistan's U.S. dollar sovereign bonds due 2017 rose to 86.250 late Thursday from 84.400 mid-week but they were still down from 100 when they were issued on June 1. The yield eased to 9.066% from 9.394% the day before but was still much higher than 6.875% when the bond was issued and from 8.3% just before Musharraf shocked investors with his declaration of the state of emergency.

Pakistan's five-year credit default swaps have widened to 440-540 basis points from around 400 basis points three months ago.

Deepening worries over potential losses financial institutions face from the U.S. subprime mortgage crisis and the damage the crisis could do to liquidity and growth have pushed spreads of U.S. dollar bonds from Asia wider in recent weeks.

But subprime jitters aside, Pakistan's domestic woes are serious enough to keepinvestors from bottom fishing its credit, analysts say. Prices of Pakistan's bonds are trading lower than fellow high-yield sovereign issues from the Philippines and Indonesia.

Pakistan's five-year CDS could swell to as wide as 850 basis points under the "most pessimistic" scenario, said Yang-Myung Hong, a credit analyst at Lehman Brothers in Hong Kong. That was the level Ecuador's CDS hit at the height of a political crisis in that South American country in September - the highest for any country, he said.

"That's sort of saying you're really in a bad situation and the market is in bad situation," Hong said. He added, however, that a stabilization in the spreads is possible over the near term if the political tensions ease.

Favorable Economic Prospects

A shift to constitutional rule would be a move in the right direction but it wouldn't solve all the problems that concern bond investors.

By itself, an alteration in the political system, is "not an argument" for a ratings change. Rather it is the ability of the government to restore investor confidence through continued policy reforms that matters, said Dilip Shahani, head of research at HSBC in Hong Kong.

Shahani cited the case of China, which, despite being dominated by the Chinese Communist Party, enjoys strong investment and growth.

Some analysts warn that the news flow out of Pakistan could become more worrisome in the run-up to the elections, which were threatened early this month when Musharraf suspended the constitution, imposed strict conditions on media broadcasting, fired several justices and ordered the detention of thousands of political opponents.

"Expect political noise to intensify ahead of the Jan. 8 parliamentary election," said Tim Condon, head of research at ING in Singapore.

To be sure, politics isn't the only issue on investors' minds. The economy counts for a lot too, and that picture looks good.

Domestic private investment has grown at an average 27% rate over the past five years while foreign direct investment reached US$5.1 billion, or 3.6% of gross domestic product, in the fiscal year ended June 30, 2007 from only US$300 million in 2001, according to Standard & Poor's Ratings Services. The Asian Development Bank forecasts the country's GDP will expand 7% this year and 6.5% next year.

But that rosy outlook could change.

"The political quagmire or unstable revolving-door governments would be detrimental to policy making and could drag down the country's 7% annual growth to the 4.3% average of the 1990s," said Agost Benard, an analyst at S&P.

Foreign currency inflows could also weaken while the fiscal position could deteriorate, Benard said.

"Parties new to holding the reins of power are likely to be preoccupied with shoring up their positions. Economic policy and decision making could become politicized and suffer delays and/or undue influence from special interests," he said.

Pakistan has ratings of B1 from Moody's Investors Service and B+ from Standard & Poor's.

Nasdaq 100 Flash Quotes

 

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Revenue shows12.6pc increase in five months​

ISLAMABAD, Nov 30: The Federal Board of Revenue (FBR) on Friday claimed to have collected revenue amounting to Rs333.6 billion during the first five months of the current fiscal year, which is up by 12.6 per cent from Rs296.3 billion last year.

The official figures released here, however, reveal that the growth in revenue collection materialised on the back of substantial decline in payment of refunds by almost 50 per cent (Rs20 billion) to taxpayers of all the federal taxes — income tax, sales tax, federal excise duty (FED) and customs duty during the period under review.

It is believed that tax authorities withheld the genuine refunds of taxpayers, which helped tax authorities to achieve the revenue collection target for the period under review.

Total refunds paid stood at Rs20.648 billion in July-November this year as against Rs41.137 billion last year.

The tax-wise break-up showed that the payment of income tax refunds to taxpayers declined to Rs4.862 billion in July-November period this year as against Rs15.494 billion last year.

The same trend of decline was witnessed in the payment of sales tax, FED and customs refunds. The sales tax refunds declined by 38.9 per cent to Rs11.578 billion during the period under review against Rs18.947 billion last year.

A decline of 37.2 per cent was recorded in payment of customs refunds to taxpayers and it stood at Rs4.208 billion in July-Nov this year as against Rs6.696 billion last year.

The FED refund dipped by 91.7 per cent to Rs8 million during the period under review against Rs96 million last year.

According to the statistics, even the overall provisional figures collection was up by Rs1.1 billion during the July-November period of the current fiscal year when compared with the target of Rs332.5 billion set for the same period.

Tax-wise collection showed that revenue on account of direct taxes reached Rs110 billion in July-November this year as against Rs96.5 billion last year, showing an increase of 14 per cent.

The sales tax collection stood at Rs142.1 billion during the period under review as against Rs125.7 billion, indicating a growth of 13 per cent whereas the growth in sales tax import stage was 12.4 per cent and domestic sales tax collection increased by 13.9 per cent, respectively, during the period under review over last year.Tax receipts on account of federal excise duties recorded an increase of 24.1 per cent, touching Rs31 billion against Rs25 billion in the past. The collection on account of customs duty stood at Rs50.6 billion as against Rs49.14 billion last year, an increase of 2.9 per cent.

On monthly basis, the revenue collection stood at Rs62.1 billion in November 2007 against Rs59 billion last year, indicating a growth of 5.25 per cent.

Revenue shows12.6pc increase in five months -DAWN - Business; December 01, 2007

 

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Australia asked to extend farm project term​

ISLAMABAD, Nov 30: Pakistan’s premier agricultural research body has requested the Australian authorities to extend the life of the multi-million-dollar Australia-Pakistan Agriculture Sector Linkages Programme (ASLP) up to five years to achieve the project targets.

The three-year programme is focused on the horticulture (mango and citrus) and livestock (dairy) enterprises and simultaneously addresses underlying issues of water management and institutional and technical capacity building.

Pakistan Agricultural Research Council (Parc) Chairman Dr M. E. Tusneem had made a formal request in this regard to Mr Les Baxter, Research Programme Manager Horticulture Australian Centre for International Agriculture Research (ACIAR), who led a delegation of Australian researchers during its nine-day visit to Pakistan which concluded here on Friday.

The delegation during its stay also met with various authorities to gauge the progress work on the ASLP.

Sources told Dawn that high-ups of the Federal Ministry of Food, Agriculture and Livestock (Minfal) were also in favour of the extension of the vital project keeping in view the country’s prospects for the export of citrus and mango.

After a year of ban, the Russia has allowed Pakistan to re-start export of its citrus to its market. Minfal officials also see resumption of mango export to the Russian market along with rice in the near future. And, ASLP is of immense help in this regard.

But this year, sources said, ASLP has seen a sort of stagnation as for as its citrus related component was concerned.

PARC officials were of the view that ASLP had played a vital role in the development of the citrus crop from production up to the marketing chain. Now, the Australian technical support was being taken for the mango crop as well.

A Parc spokesman said that Mr Baxter was of the view that ASLP should speed up work on the citrus component of the project as it was relatively slow, while work on the mango crop was going on at fairly reasonable pace.

He said that Mr Baxter had also acknowledged that delay in the release of funds by the Australian side was mainly responsible for slowing down of the citrus project.

The ASLP has a total budget of 6.6 million Australian dollars. Its objective is to transfer Australian knowledge and expertise to key sectors of Pakistan agribusiness to increase profitability and enhance export potential.

This project is to contribute to poverty alleviation of smallholder farmers through collaborative research and development; and to enhance the capacity of the Pakistan research, development and extension system to deliver targeted and practical research outputs to agribusiness and farmers.

Australia asked to extend farm project term -DAWN - Business; December 01, 2007