Pakistan Economy - News & Updates - Archive

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Oil import bill soars to $2.85bn ​

Sunday, December 02, 2007

ISLAMABAD: Pakistan’s oil import bill stood at US$2.859 billion as food items, machinery, transport as well as petroleum products contributed heavily towards swelling the import bill during the first four months of the current fiscal year.

The food items’ bill stood at $1.048 billion, machinery $2.915 billion and transport sector $968.621 million during the July-Oct period of the current fiscal year. The import of aircraft, ships and boats incurred a cost of $475.388 million during the period.

Pakistan has imported food items worth $1.048 billion including wheat un-milled, milk, sugar, pulses, palm oil, soybean oil, tea and others. The import of palm oil alone consumed $440 million during the period under review as its prices in the international market are mounting.

The food group consumed $1.048 billion during the first four months of the current fiscal year compared to $1.063 billion in the same period of the previous fiscal year, official trade data available with The News showed.

Food inflation had already witnessed new highs during October 2007 by reaching the level of 14.67 per cent, which was eroding the purchasing power of the middle and lower middle class in Pakistan.

The import of milk cream and milk food for infants stood at 8,257MT in the first four months of the current fiscal costing $26.187 million while import of un-milled wheat consumed $5.266 million. The import of dry fruits and nuts totalled 37,388MT at a cost of $23.956 million in the July-Oct period. The import of tea cost $60.483 million for total quantity of 36,357MT while the import of spices cost $20.805 million.

The cost of sugar import stood at $8.025 million in the first four months of the current fiscal year against $246 million in the same period of last year. The caretaker government has to intervene by increasing import duty from 15 per cent to 25 per cent in order to discourage the commodity flooding the domestic market.

The caretaker government also removed 15 per cent export duty on sugar in order to lure exporters to send additional stock to other countries. The import of pulses incurred a cost of $66.450 million in the July-Oct period of the current fiscal against $91.756 million in the same period of the previous year. The cost of all other food items stood at $368.353 million during the first four months of the current fiscal year compared to $246.151 million in the same period of the previous year.

Machinery Group: The import of machinery stood at $2.195 billion in the first four months with power generation machinery $208.027 million, office machines including data processing equipment $84.848 million, textile machinery $145.057 million, construction and mining machinery $72.819 million, telecom sector $795.443 million including mobile phones $244.955 million and other apparatus $550.448 million, agriculture machinery and other inputs $48.259 million and others machinery $583.271 million.

Transport Sector: The import of transport sector was $968.621 million in July-Oct period of the current fiscal year. The import of road motor vehicles (build unit CKD/SKD) was $474.227 million, CBU $125.964 million, buses, trucks and other heavy vehicles $42.880 million and motor cars $79.466 million.

Oil import bill soars to $2.85bn

 

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FBS restructuring delayed further ​

Sunday, December 02, 2007

ISLAMABAD: The much-awaited restructuring of the Federal Bureau of Statistics has been further delayed, forcing the government to appoint acting director general in the neglected department after a lapse of almost five years, it is learnt.

The FBS, which is mainly responsible for collecting data for various sectors of the economy, has been without a director general since 2002, the whole tenure of Shaukat Aziz, first as finance minister and then as prime minister. Now Abdul Hakeem Mukhdoom has been given the charge of acting DG of FBS.

He has been assigned the task to look after day-to-day affairs of the FBS. Earlier, it was thought that the post of DG has been abolished in the wake of proposed restructuring of the bureau.

Heavyweights during the tenure of former prime minister Shaukat Aziz openly used derogatory language against the FBS and spared no chance to criticise its whole operation rather than advising the government to take practical steps to strengthen the neglected department. The Musharraf regime did not take any practical steps for bringing about desired changes in the FBS during the last eight years.

“Now the Statistics Division has received a draft bill with certain amendments from the Ministry of Law and it seems that the restructuring process is being further delayed,” a source in the finance ministry told The News.

Now the FBS will incorporate certain required changes in the draft bill and then send it again to the Ministry of Law for vetting. The restructuring plan for the FBS had been delayed in the past too and it may take more time to accelerate the process to achieve the desired results.

If the government does not promulgate an ordinance for giving legal cover to the restructuring process of the FBS, then it will be done after the upcoming elections when new assemblies will be in place.

This correspondent tried several times to contact Statistics Division Secretary Asad Elahi for seeking his comments but he did not attend his phone. However, sources said caretaker Finance Minister Dr Salman Shah and State Bank of Pakistan Governor Dr Shamshad Akhtar had conducted interviews of selected candidates a few months ago for appointment as chief statistician in the restructured Pakistan Statistical Authority (PSA), but no appointment has been made so far.

Under the restructuring plan, the government will appoint the chief statistician and five other members in the PSA with MP-1 scale. The federal cabinet had approved the restructuring plan for establishing PSA during Shaukat Aziz’s tenure. After implementation of the plan, there will be five members including member national accounts, member services, member human resource development, member economic statistics and member social statistics.

Another issue, according to the sources, which will be equally important in this regard, is how much the restructured Pakistan Statistical Authority will be different from the existing Federal Bureau of Statistics as independent economists as well as common people have lost trust in official figures released by the FBS.

“If the government gives autonomy in real sense to the upcoming statistical authority, then independent economists will be keen to join it,” an economist said. There are many institutions where the government requires economists and statisticians such as the Competition Authority, commissioners for the Securities and Exchange Commission of Pakistan, research organisations, provincial governments and many more.

The sources said the new statistical authority would have to face the problem of capacity-building of its staff as the employees were not fully trained to perform their duties. However, Statistics Division Secretary Asad Elahi has said several times that he is providing training to all his staff without spending any money.

FBS restructuring delayed further

 

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Food, fuel dearer by up to 4pc ​

Sunday, December 02, 2007

ISLAMABAD: The prices of necessary kitchen items have gone further up, as the rates of flour, ghee, cooking oil, and LPG have increased by 1.1 to four percent during a span of one week the Federal Bureau of Statistics (FBS) reported Saturday.

During the week ending on November 29 the prices of wheat went up by 3.98 per cent, flour 2.54 per cent, washing soap 1.87 per cent, vegetable ghee (tin) 1.79 per cent, cooking oil 1.79 per cent, mustard oil 1.21 per cent and LPG (11 kg cylinder) rates were up by 1.13 per cent over previous week.

According to FBS Sensitive Price Indicator (SPI) bulletin released on Saturday the prices of 53 daily use items during the week under review were up 8.42 percent on year-on-year basis (YOY) as compared to the corresponding week of last fiscal.

SPI data collected from 17 centres shows that from the bucket of 53 basic items, 20 registered increase and 20 showed decline, while prices of 13 items remained unchanged.

YOY the FBS weekly review indicates significant rise in prices of some bare necessities and kitchen items. These items were wheat and flour, vegetable ghee, rice, LPG, powder milk, cooking oil and firewood.

Further analysis of the data reveals that YOY 15 items are dearer by double digits. These include; rice basmati broken up 61 per cent, mustard oil 58 per cent, vegetable ghee loose 52 per cent, rice IRRI-6 up 51 per cent, masoor pulse 41 per cent, LPG (11 kg cylinder) 39 per cent, vegetable ghee (tin) 33 per cent, cooking oil (tin) 33 per cent, wheat 32 per cent, flour 28 per cent, washing soap 14 per cent, firewood 14 per cent, plain bread 13 per cent and coarse latha price up by 12 per cent.

The FBS figures further showed that though prices of 20items posted no change during the week, yet compared to the corresponding week of last fiscal, several items are now costly. For example milk powder is dearer by 23 per cent, bath soap 22 per cent and curd prices are up by 11 per cent.

The bulletin further indicates that though the prices of 13 items decreased, yet compared to the prices of corresponding week of last year, items, which showed increase in their prices, were; red chillies, which is dearer by 40 per cent, chicken (farm) 37 per cent and farm egg prices up 18 per cent.

Food, fuel dearer by up to 4pc

 

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Punjab to revive closed industrial estates ​

Sunday, December 02, 2007

LAHORE: Punjab Caretaker Industries Minister Khawaja Jalaluddin has said the province attaches priority to reviving 70 per cent redundant industrial estates, established specifically for small and medium enterprises, and providing entrepreneurs one window facility to deal with all the departments.

Speaking at a function organised by the Federation of Pakistan Chambers of Commerce and Industry, he said the caretaker set-up would continue with the agenda pursued by the previous government, but would also avail itself of the opportunity to initiate some steps for the benefit of industries.

For instance, he said, a 32-acre land was allocated in the Multan Industrial Estate for establishing a workers’ colony, adding the Punjab government would build the colony to enable skilled labourers to live near the industries they were working in.

He said houses would be rented out to the industries which could allot them to their workers. Provision of land in other industrial estates would also be explored as at present only the Sundar Industrial Estate had that facility, he added. He said shortfall in cotton production was the main reason for the textile crisis in the country, adding cost of cotton in spinning was around 70 per cent of the total.

He said the government would take urgent steps to introduce BT cotton seed immediately from original manufacturers and continue local research as well which might take some time to produce results. FPCCI President Tanvir Sheikh urged the minister to take immediate remedial steps for the revival and improvement of textile, leather and dairy sectors.

Punjab to revive closed industrial estates

 

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Mega dams vital for meeting water, power needs ​

Sunday, December 02, 2007

LAHORE: WAPDA has contributed substantially to the development of Pakistan in the 50 years of its existence, said WAPDA chairman Shakil Durrani.

He was addressing a delegation of the National Defence University, Islamabad that visited him at WAPDA House on Saturday, according to WAPDA sources. The delegation was headed by War Course Commandant, Maj. Gen. Shahid Iqbal.

WAPDA member (Water) Mushtaq Chaudhry and PEPCO MD, Munawar Ahmed briefed the delegation about current water and power scenario of the country. Members (Power) Fazal Khan and (Finance) Chaudri Abdul Qadeer were also present on the occasion.

WAPDA chief said that work has yet to be done for optimum utilisation of water and hydropower resources to meet the the rapidly increasing demand in the country. Briefing the delegation, member Water said that rising population and depleting storage capacity of water reservoirs in Pakistan call for construction of more than one mega dam.

He revealed that on average 32.81 million acre feet (MAF) water escapes downstream from Kotri Barrage annually, since 1976. He said that another 22.5 million acres of virgin land could be brought under irrigation in the country if more mega dams are constructed.

He told the delegation that Pakistan may reach the point of becoming a “water short country” by 2012 if the present situation continues. “The per capita water availability has already reduced to alarming figures of 1070 cubic meter in 2007, while according to universally accepted parameters, a country is declared water scarce country if the per capita availability of water reduces to 1,000 cubic meters,” he disclosed.

Managing director PEPCO, Munawar Ahmed, told the visitors that a crisis management plan has been launched to improve customer services and minimise the gap between consumption and generation of electricity in the country. Briefing the delegation on National Energy Plan, he said the plan envisages maximum utilisation of resources to meet the growing demand on a sustained and affordable basis.

Mega dams vital for meeting water, power needs

 

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‘Economic policies to continue’​

Sunday, December 02, 2007

ISLAMABAD: The government believes in continuation of economic policies to sustain economic upsurge and attract more foreign investment, said Caretaker Prime Minister Mohammadmian Soomro.

This would augur well for progress and prosperity of the country, he said this while talking to the Chairman, Fattouch Group of Lebanon, Pierre Michel Fattouch, who called on him along with his delegation on Saturday.

The Prime Minister said Pakistan has enormous potential in communication and financial sector and added the reforms agenda introduced by the government was prepared keeping in view the national interest as well as incentives for investors both local and foreign.

He said because of these policies, Pakistan has become a lucrative destination for foreign investment in view of the availability of skilled manpower and comparatively low cost of production and a level playing field which is equally available to both foreign and local investors.

Pierre while appreciating the economic policies of Pakistan mentioned that their meetings with the concerned officials in various fields have been very beneficial and the Fattouch Group is eager to invest in the telecom and infrastructure development projects. The Group, he said is working on a large number of projects in the Middle East and elsewhere in various sectors.

‘Economic policies to continue’

 

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Iran wants to see trade with Pakistan at $1 billion ​

Sunday, December 02, 2007

ISLAMABAD: Iran wants to increase bilateral trade with Pakistan from the existing $650 million to one billion dollars annually and enhance economic cooperation in other sectors too.

Iranian Commercial Attache Ahmed Fasihi and First Secretary Head of Economy Mohsen Pakpervar said this during a meeting with president Islamabad Chamber of Commerce and Industry president Nasir Khan.

Commercial Attache informed that his office signed 16 memorandums of understanding with chambers and trade delegations in short time and also arranged meeting with 1,800 members in few months for the enhancing bilateral trade. He added that their office was sending minimum three members of trade bodies daily to Iran for the enhancing of bilateral trade.

He expressed dissatisfaction over the present level of bilateral trade and said that it is not up-to the potential of the two countries.

ICCI president Nasir Khan suggested that to achieve the set target of bilateral trade both countries should encourage border trade by establishing customs ports at borders. He appreciated the role of the commercial section of Iran Consulate Particularly in terms of facilitating the business community of Pakistan .

Ahmed Fasihi also invited President ICCI to send a business delegation to Iran for the enhancing two-way trade. President ICCI Nasir Khan accepted the Proposal and said that about 20 members of ICCI will visit Iran this month.

He said that Pakistan and Iran should make a joint study on their bilateral trade relation and their share in global trade. He stressed that being a brother and neighbouring countries should identify the potential items of import and export between the two countries and give it wide publicity.

Iran wants to see trade with Pakistan at $1 billion

 

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‘Online stock trading has promising future’ ​

Sunday, December 02, 2007

KARACHI: Senior Vice President, Multan Chamber of Commerce and Industry (MCCI) Khawaja Muhammad Ali said on Friday that future of online stock trading in Pakistan looked quite promising as the new generation was more comfortable with this technology.

Ali was speaking on the second Investment Road Show on Friday with theme of “Future of Online Stock Trading in Pakistan”. He pointed out that the economic liberalisation and privatisation policies have unleashed the real potential of Pakistan’s economy. Sharply improved performance of companies listed on the stock exchanges, has enabled investors, both individuals and institutions to participate in the success of Pakistan’s corporate sector, he added.

Muhammad Farid Alam, Deputy CEO, AKD Securities Ltd, while expressing his views on Pakistan’s economic outlook said that higher industrial and agricultural growth and significant improvement of macro-economic indicators were expected to keep the market buoyant despite a few some low points.

Today in Pakistan, the Market Capitalisation is US$72.4 billion against $7.2 billion in June 2002. The concept of Online Stock Trading is also growing in Pakistan. With massive improvements in the telecommunication infrastructure, Online Stock Trading is the way for individual investors to participate in the stock market as the system makes it convenient for the people to buy or sell stocks online, from the comfort of their home or office, on real-time basis with security and ease.

‘Online stock trading has promising future’

 

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Budget deficit touches 40% of full-year target in 3 mths​

* Punjab, Sindh, NWFP nearing their targeted deficits
* Balochistan, most fiscally prudent province of the four provinces, witnesses 15% of targeted deficit in the first quarter

ISLAMABAD: The overall budget deficit faced by the federal government has reached Rs 158.056 billion during first quarter of the current fiscal year, which is 39.60 percent of the whole fiscal year’s target of Rs 398 billion.

According to a report released by the finance ministry, the total revenue during the first quarter was Rs 312.623 billion out of which collection by Federal Board of Revenue stood at Rs 215.578 billion. Petroleum and Gas surcharges yielded Rs.8.77 billion, including Rs 4.151 billion as petroleum development surcharge and Rs 4.626 as gas development surcharge. Non-tax revenue stood at Rs 97.035 billion during the period under reviw.

According to details, the government spent a total sum of Rs 470.679 billion that includes Rs 39.989 billion in non-development expenditure. The government paid Rs 111.126 billion as interest on local and foreign loans. Out of these, Rs 98.541 billion were spent on servicing of domestic debt and Rs 12.585 billion were spent on foreign debt servicing. Total defence spending stood at Rs 57.546 billion. Development expenditure and net lending during the first quarter stood at Rs 129.817 billion. The budget deficit during the first quarter stood at Rs 158.066 billion that was financed using Rs 36.798 billion from external resources and Rs 121.268 billion from domestic resources.

Punjab: Provincial revenue of government of Punjab amounted to Rs 63.185 billion against the expenditures of Rs 96.591 billion during the first quarter of the current fiscal year leaving a deficit of Rs 33.406 billion. Punjab received Rs 44.451 billion as revenue share from federal taxes during the said period. The province also received grants worth Rs 846 million from federal government. Development expenditures of the province amounted to Rs 44.95 billion and non-development expenditures were Rs 49.54 billion. The provincial government had targeted a surplus budget for the current fiscal year.

Sindh: Total revenue collection by the government of Sindh stood at Rs 29.769 billion and total expenditures of the province remained Rs 41.119 billion during the first quarter of 2007-08, resulting in budget deficit of Rs 11.350 billion. The government had in the budget speech forecast a deficit of Rs 12.34 billion for the whole year. The three-month budget deficit is almost 90 percent of the forecasted figure. Sindh received Rs 27.963 billion under its share of federal taxes from the federal government during this period. Non-development expenditures of the provincial government stood at Rs 33.599 billion and development spending touched Rs 6.467 billion in the said period.

NWFP: Total revenue of the NWFP amounted to Rs 17.456 billion and total expenditures of the province stood at Rs 19.517 billion during the July-September period of 2007-08 leaving a budget deficit of Rs 2.061 billion. The figure is almost 40 percent of the targeted budget deficit of 5.489 billion for the complete fiscal year. The NWFP government received Rs 10.785 billion under the existing NFC Award and Net Hydel Profits share of Rs 1.5 billion from the federal government during the said period.

Balochistan: The government of Balochistan collected Rs 8.950 billion and spent Rs 10.532 billion during the first quarter of the current fiscal year, amounting to a budget deficit of Rs 1.52 billion for the period under review. Earlier in June the provincial government had forecast a deficit of Rs 10.17 billion for the current fiscal year The provincial government received a sum of Rs 7.659 billion from the federal government during the said period.

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Gap between local oil production and demand surging ​

KARACHI: The production gap of local refineries is being widened to bridge the thriving demand of petroleum products, surging imports of these products and import bill of the country.

According to the refined oil production data of October 2007, released by Oil Companies Advisory Committee (OCAC), the total local refineries could only produce 3.4 million various petroleum products during July-October 2007 versus its estimated demand of 6.3 million tonnes. Particularly, the consumption of diesel and furnace oil, which recorded at 7.4 million tonnes and 7.3 million tonnes in the previous fiscal year, have been increasing substantially during the current year and it is being estimated that their demand will increase to 9.1 million tonnes and 8.1 million this year.

During the previous fiscal year, the local refineries could have capacity produce 12.8 million tonnes oil products as against the demand, which stood at 17.5 million tonnes.

Therefore, the difference was met through imports in which two-heavy weights furnace oil (FO) and diesel (HSD) constitute around 82 to 83 percent of total country’s oil imports. During the last fiscal year, the import of FO and diesel were posted 8.2 million tonnes and is expected to increase in the current fiscal year.

Analyst, Farhan Mehmood said the local demand and production gap have been increasing due to high consumption of FO and diesel in power and transport sector.

He added that difference of 5 million tonnes in local production and demand will surge to 8 million next year in the country. Hence, the oil manufacturing companies (OMCs) will have to import more petroleum products that will enhance import bill and current account deficit of the country.

Although, local refiners’ production tonnes of petroleum products is increasing but the thriving demands could only be met by new refineries., he said. The recent overhauling of Pakistan Refinery Limited (PRL) and Park-Arab Refinery Limited (PARCO) production units have enhance production of HSD & FO during Jul-Oct 2007, which was up by 21 percent and 26 percent as against corresponding months of last year respectively. But, these are deficit products as their local production meets only 47 percent and 45 percent of the local demand for HSD and FO, respectively. Hence, any variation in their domestic demand does not have any impact on production.

Daily Times - Leading News Resource of Pakistan

 

[Neo]

Great potential for JVs between Pakistan and Turkey​

KARACHI: Consul General of Turkey, Erdem Mutaf said that there exist a great potential of trade and joint ventures (JVs) between Pakistan and Turkey and both countries could gain fruitful results by mutual cooperation.

He was talking to the members of Karachi Chamber of Commerce and Industry (KCCI) on Friday.

He said business and trade community of Turkey is interested to initiate JV in the areas of machinery, chemicals, surgical instruments, automotive industry, textile and clothing, natural stones, ceramic, IT and software, shipping, jewellery and construction.

Mr Mutaf said our bilateral trade volume increased from $130 million in 2001 to nearly $600 million in 2006. “We target to reach $1 billion in near future”, he added. He pointed out that there were bright chances of investment as cumulative inflow of net foreign direct investment in Turkey exceeded $50 billion during 1980-2006. Tourism industry in Turkey enjoys tax exemption, he said.

He said Turkey has become 17 biggest economy in the world with a nominal GDP exceeding $400 billion, besides GDP per capita income of $5,500 and set a target for 2010 to become one of the ten economies in the world with a GDP per capita income of $10,000. He also informed that senior vice president, KCCI, Iftikhar Ahmed Sheikh said invited the Turkish businessmen to participate in My Karachi, An Oasis of Harmony exhibition on June 6-8, 2008 at Karachi Expo Centre.

He said Karachi’s share in the country’s financial activities is about 40 percent, 30 percent of manufacturing, 40 percent of large scale manufacturing, 50 percent of bank deposits and 68 percent of tax revenues.

Daily Times - Leading News Resource of Pakistan

 

[Neo]

Soomro for highest standards of corporate governance, transparency ​

* Chairman, Karachi Stock Exchange (KSE) Chairman Shaukat Tareen calls on Soomro at Prime Minister’s Secretariat

ISLAMABAD: Caretaker Prime Minister Mohammadmian Soomro has underlined the need to focus on achieving the highest standards of corporate governance, transparency and professionalism in equity market in order to strengthen investors’ confidence.

Talking to the Chairman, Karachi Stock Exchange (KSE) Shaukat Tareen, who called on him at the Prime Minister Secretariat here on Friday, Soomro emphasized that high standards of corporate integrity and excellence are of fundamental importance for development of any capital market.

The reforms introduced by the Security Exchange Commission of Pakistan (SECP) to provide transparency and better governance of the capital market needs to be recognized and appreciated, as it would provide solid foundations to attract more investors domestically and internationally, the PM added.

SECP had been actively pursuing a capital market reform programme, geared towards development of a modern and efficient corporate sector and capital market, based on sound regulatory principles that provide impetus for high economic growth, Soomro said adding that the reforms introduced in the fields of risk management, governance and transparency had significantly contributed towards the growth and development of capital market and building investor confidence, he added.

The Prime Minister said that the capital market in Pakistan had played a positive role in development and expansion of the economy. Like other sectors of the economy, he said, the capital market had also done remarkably well, although there was a lot of room for further improvement.

The capital market had witnessed rapid progress through structural reforms in both its institutional set-up and operational matters.

The Prime Minister emphasized that high standards of corporate integrity and excellence are of fundamental importance for development of any capital market. He underlined the need to focus on achieving the highest standards of corporate governance, transparency and professionalism in order to strengthen investors’ confidence.

Although companies, he said, had been able to raise some capital but further efforts needed to be made to encourage companies to raise capital through fresh equity offerings, which would serve to deepen the market and develop the retail investor base.

KSE Chairman briefed the premier about the activities of the KSE and said continuity of reforms, which cover the capital market and insurance would also result in increased economic growth, better transparency and enable Pakistani capital market to attract domestic and foreign capital.

Daily Times - Leading News Resource of Pakistan

 

[Neo]

Pakistan always welcomes foreign investment: PM​

ISLAMABAD: Caretaker Prime Minister Mohammadmian Soomro on Friday said Pakistan had always welcomed foreign investment to allow friendly countries to take advantage of Pakistani markets and investment friendly policies. The prime minister said this while talking to Aizaz Sarfraz, Managing Director, Pak-Iran Joint Investment Company, who called on him at the Prime Minister’s Secretariat here on Friday. This trend, he said, was being encouraged so that joint-investment companies could participate in industrial projects, financial services as well as infrastructure projects. Iran, he said was an important investor and trading partner of Pakistan and the relations between the two countries were developing well. The Prime Minister said that besides Iran, Pakistan had joint venture investment companies with Kuwait, Saudi Arabia, Libya , Brunei and China.

There were several other ventures under consideration with other countries, he said. This model of cooperation between institutions of friendly countries had been a catalyst to promote investment and trade between Pakistan and these countries, he added. Soomro said that the government economic strategy was to create an enabling environment for the private sector to become an engine of growth. “Our strategy for improving the investment climate is multi-pronged - marked by financial sector, trade and taxation reforms, dismantling of archaic procedures, better enforcement of civil contracts and documentation of property rights, infrastructure development and, above all, ensuring consistency and continuity of government policies,” he maintained.

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[Neo]

Study identifies 100 items for exports to China​

* Currently, Pakistan exports $460 million worth of exports to China and the country’s export base is just confined to four or five items

KARACHI: Over 100 items have been identified to enhance and diversify the exports to China under Free Trade Agreement (FTA) contrary to present narrow base, which is consisted of few major items, a government study suggests.

“Government and the private sector in Pakistan should make joint efforts to increase the base for production of these items as well as improve their quality” preliminary report on Pak-China FTA of WTO Cell, Trade Development Authority of Pakistan (TDAP) recommends.

Officials, however, pointed out that this preliminary study is first phase and now it is being discussed with the private sector to incorporate their recommendations in it to forward to top level to further discuss it with China so that the county could benefit from the FTA maximum in future.

“It will not only focus on increasing the existing exportable items but will also focus on diversification of export base by identifying those items which are imported by China from different country sans Pakistan,” they added.

Currently, Pakistan exports $460 million worth of exports to China and the country’s export base is just confined to four or five items, which makes major part of the exports.

Following the signing of FTA with China, export volume of $5 billion is being estimated in the future. “This export figure could only be achieved through broadening and diversification of export base,” the officials felt.

The study outlines the existing and indicative potential of Pakistan’s exports to China by placing these items in four different categories (1) top 20 items in terms of value exported from Pakistan to China, (2) top 40 import items of China in terms of value, for which Pakistan’s share is insignificant, (3) 32 items imported by China for which Pakistan’s share is nil in terms of value and (4) 29 export items of Pakistan, of which the total or a greater share (66-100 percent) is exported to China.

Study pointed out that narrow base of the exports to China could be gauged from the fact that there are top 20 items, which constitute 85 percent of Pakistan’s total exports to China and 9 of these top 20 items belong to the category of cotton yarn and their share in top 20 items is 54 percent. On the other side, the share of the top 20 export items of Pakistan to China, in the total imports China, was only 2.4 percent.

Cotton yarn is the single largest export item, with 47 percent share in the total exports from Pakistan to China.

Out of these 20 items, only four items relating to fabrics and metals have been zero-rated immediately under FTA whereas 12 items relating to cotton yarn, fish and PTA would be zero rated after 3 years under the provisions of FTA.

Pakistan is the largest trade partner of China in cotton yarn. However, it is amazing that China has put one item “cotton, not carded or combed” in the sensitive list despite the fact that China is the biggest importer of this particular item in the world.

Also, three items relating to leather are out of the Pak-China FTA despite the fact that China is world’s top importer of these items.

“The inclusion of these items in the FTA will not hurt China and its other trade partners because of the fact that the unit price of Pakistani leather goods exported to China is comparatively higher than those imported from other countries,” the officials pointed out.

Daily Times - Leading News Resource of Pakistan

 

[Neo]

SBI to raise $4 billion to meet credit demand​

NEW DELHI: State Bank of India (SBI), the country’s biggest bank, will raise 160 billion rupees ($4 billion) to help meet credit demand and compete in the booming economy after the government on Friday approved a rights issue.

Competition in India’s banking sector may intensify in 2009, when Indian authorities are scheduled to review controls on operations of foreign banks.

The government, which already owns about 60% of SBI, would invest 100 billion rupees ($2.5 billion) in the issue, Finance Minister Palaniappan Chidambaram told reporters.

“The government will subscribe fully to its share,” Chidambaram said. The share sale is likely to be completed in the fiscal year to March 2008, the government said in a statement.

Shares of SBI, valued at $30 billion, rose as much as 4% before ending up 1.3%. The shares have risen 85% this year, outperforming a 40% gain in the main index. The rights issue would equip SBI with capital to compete with local and foreign rivals, said Jigar Shah, head of equities at brokerage KR Choksey.

“Capital adequacy is a major issue. It will help the bank make investment in technology and other things to transform itself and face the new situation,” Shah said. The government would pay for its shares by issuing securities to SBI, but said it had not finalised the number of shares it would subscribe to, or the coupon or tenure of the instruments it would issue.

SBI is facing tough competition from ICICI Bank, HDFC Bank and foreign banks such as HSBC, Standard Chartered and Citigroup, which are growing in rapidly in India.

Receipts: The government said its investment in the issue would help it get dividends and taxes amounting to 13.58 billion rupees from the bank in 2008/09 against an estimated expenditure of 7.9 billion rupees for interest to be paid to the bank. In the following year, it would receive 15.52 billion rupees, and in 2010/11 the amount would rise to 18.92 billion rupees, it said.

“(SBI) will gain in terms of its position in the industry, ratings — both in international as well as domestic markets, and increased valuation of its stock, besides boost to the economy at large,” the government statement said.

Indian banks have been raising funds to meet the demand for loans from consumers and corporates in Asia’s third-largest economy, which grew 9.4% in the fiscal year to March 2007. Chidambaram said on Friday he expected the economy to grow by nearly 9% in the current fiscal year also.

Earlier this year, leading private bank ICICI Bank raised $4.9 billion in India’s biggest-ever share sale, while HDFC Bank raised $698 million by selling American Depositary Shares to strengthen its capital base and to support future growth. reuters

Daily Times - Leading News Resource of Pakistan