Pakistan Economy - News & Updates - Archive

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Pakistan seventh largest borrower with $985 million World Bank group loans, credits​

KARACHI (December 04 2007): Pakistan was the seventh largest borrower with 985 million dollars loans and credits from the World Bank group, whereas India was by far the largest borrower accounting for 3.75 billion dollars or 15 percent of total lending from the group in the 2007 fiscal year.

World Bank Vice President for South Asia Praful Patel has said in a report received here on Monday that "South Asia is home to the largest number of people in the world living below one dollar a day, so the agenda for poverty alleviation in the region remains very large." He said: "The lending numbers from the IDA and IBRD in 2007 fiscal year are in line with the scaling up strategy we developed for the region three years ago.

"Globally the World Bank group committed 34.3 billion dollars in 2007 fiscal, up 2.7 billion dollars (7.8 percent) from 2006 fiscal year." India was by far the largest borrower from IBRD and IDA, accounting for 3.75 billion dollars, or 15 percent of total lending from these two institutions.

"The World Bank's programme in India focuses on providing basic services such as access to clean water and education, improving infrastructure for rural areas, and employment," he said. The increase also reflected 700 million dollars in lending to the health sector to India, which was carried over from the previous year.

He said Pakistan was the bank's seventh largest borrower with 985 million dollars in loans and credits. Detail about the projects on which the money was spent is not provided in the report.

In general, nearly 60 percent of the World Bank group's commitments to seven South Asian countries came from IDA, and more than two-thirds of this lending financed projects in the areas of rural development and human development such as health, education, nutrition, and HIV/AIDS.

In the 2007 fiscal year, Bangladesh received 379 million dollars, Bhutan 30 million dollars, Afghanistan 312 million dollars, Sri Lanka 72 million dollars, Nepal 103 million dollars, Pakistan 985 million dollars, and India 3,751 million dollars. Afghanistan is also included in the region. It received 120 million dollars IDA grant for the Second National Solidarity Programme. Patel is of the opinion that there was a huge prospect for making a real impact on the ground to reduce poverty.

He said these types of programmes would not be possible without the IDA funding, which enabled the government programmes to innovate and scale up. The World Bank group extended loans, credits, grants, equity investments and guarantees, totalling nearly 6.9 billion dollars to South Asia in 2007 fiscal year. This is an increase of 2.3 billion dollars over the previous year.

South Asian countries are using the support of the group in more than 78 projects designed to overcome poverty and enhance growth - for example, by improving education and health services, promoting private sector development, building infrastructure, and strengthening governance and institutions.

Business Recorder [Pakistan's First Financial Daily]

 

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Work on 90 Fata development schemes in progress ​

PESHAWAR (December 04 2007): Work on 90 development schemes in 13 different social development sectors is in progress at a cost of Rs 3 billion as per schedule in Orakzai Agency of Orakzai Agency tribal belt of the province. Seventy-one percent funds meant for the projects have been utilised and the development schemes would be completed by the end of the year.

This was stated at a review meeting held by NWFP Governor Ali Muhammad Jan Aurakzai at the Governor House here on Monday. The meeting was attended by FATA Additional Chief Secretary Javed Iqbal, Secretary to Governor Azmat Hanif, Secretaries and Heads of the line departments. Orakzai Political Agent Fakhre Alam briefed the meeting. Except one or two projects in the communication sector, which hit snags, work on all projects was progressing satisfactorily, he said. He said that 14 projects were new, and the remaining were ongoing projects.

He said that 100 percent progress had been achieved in Public Health Engineering, Power, Agriculture Extension, Forests and Regional Development sectors, while attainment of targets in respect of Fisheries and Irrigation sectors was more than 80 percent.

The meeting was informed that in the Education sector, one new Women's Degree College had been completed and classes started, while building of a new higher secondary school had been completed and efforts were underway to complete upgradation at the earliest.

Similarly, upgradation of three middle schools to high and three primary schools to middle schools levels were also in process in the Agency. Besides, progress in respect of Communications and Health sectors was noted as 73 percent and 65 percent, respectively, during the first quarter of the financial year.

The Governor desired that all possible steps be taken to recruit teaching staff for the colleges to ensure their functioning. He noted that progress on under-construction two hostels for female teachers in the Agency was encouraging, and desired that both projects should be completed on priority basis.

The Governor particularly referred to the under-construction Govt Girls Degree College at Ghiljo which is second of its kind in the Agency, and desired that he wanted to see the institution properly functioning during the current financial year. The Governor said that all road projects were of vital importance for ensuring better travel facilities and no efforts should be spared to remove the bottlenecks.

Business Recorder [Pakistan's First Financial Daily]

 

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PQA to build coal, clinker, cement terminal ​

KARACHI (December 04 2007): The Port Qasim Authority (PQA) is planning to construct a dedicated coal and clinker/cement terminal (CCCT) at Port Qasim at a cost of $150 million. "Technical proposals are being evaluated, which would be followed by financial evaluation of the project", sources in PQA told Business Recorder on Monday.

The terminal, to be built on public-private-partnership (PPP) basis, would enhance the cargo handling capacity of Port Qasim. "With CCCT, the cargo handling capacity of Port Qasim would rise to around 50 million tons per annum by 2010", sources said. The project would be completed in 24 months", they said.

"The cost estimate of the project is open so far, and would be finalised after financial evaluation, but it may cost the investors $100 to $150 million," they added.

They said the PQA has hired National Engineering Services Pakistan (Pvt) Limited (Nespak) as consultant for the project. About date of signing agreement with investors, sources said: "It would take some time, as the consultant would have to see all feasibilities in terms of technique, environment, finance, etc."

After technical evaluation, the project would undergo financial evaluation and approval from Government with permission from Pakistan Navy and all others concerned, they said. When completed, the CCCT along with the Grain and Fertiliser Terminal, to be built at a cost of $78 million from March 2008, would transform Port Qasim into a leading business hub of the region, sources said.

Business Recorder [Pakistan's First Financial Daily]

 

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Work on Hawksbay desalination plant to begin soon ​

KARACHI (December 04 2007): The study on $250 million desalination plant project to purify 5 million gallons per day (mgd) at Hawksbay has been completed and work on the project will start in the first quarter of 2008 for which 100 acres of land handed over to Ecolink company.

Mustafa Kamal told journalists at his office here on Monday that only today he held a meeting with the company's concerned officials. He said that this project will not only help overcome water shortage in Karachi but future water requirement of Karachi will also depend on this project which, if proved successful, it would be easy to meet future water needs.

In the first phase, he informed, the company will desalinate 5 mgd water but the actual success is the transfer of technology to the city and operation of the plant which will later be expanded gradually. To a question the Nazim said that Water Board would be the consumer and distributor of this water. He said that 5 mgd water has been dedicated for SITE industry.

Business Recorder [Pakistan's First Financial Daily]

 

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Resumption of oil, gas exploration work: no positive response from Beijing ​

ISLAMABAD (December 04 2007): Islamabad has not received positive response from Beijing for resumption of exploration and production (E&P) and seismic work for oil and gas sector in Pakistan. Since Pakistani E&P companies are continuously wooing Chinese firms for coming back to Pakistan for resuming work in oil and gas sector.

Some of them had offered the Chinese companies with the security arrangements to their satisfaction, but nothing worked for them. The Chinese companies are waiting for positive signal from their government for resuming work in Pakistan.

The Chinese companies were playing a key role in exploitation of carbon reserves in Pakistan by providing rigs, crew for exploration and production or seismic study to know the prospects of different areas.

They are considered cheaper for hard jobs of oil and gas exploration and production, besides conducting seismic survey in the most difficult remote and hard areas of Sindh, NWFP and other provinces. Pakistani exploration and production companies had been comfortable with the Chinese companies and they did make substantial achievements by finding carbon in different areas of Pakistan.

Then some unseen forces moved against Pakistan and they targeted Chinese engineers mostly working in oil and gas sector. The attackers claimed lives of 11 Chinese engineers during the last two years or so. Islamabad moved quickly and it took all possible steps to protect the Chinese engineers, but by the time attackers had caused the loss.

As Pakistan gives great importance to its relationship with Beijing, it offered a joint security mechanism for security of Chinese engineers during their work in Pakistan. It also offered them at the field residence to avoid travelling of Chinese engineers from fields to cities for stay to make them feel that they were safe and sound during their stay in Pakistan, but nothing seems working in it's favour.

The Chinese companies look so frightened that despite Pakistan's different offers for foolproof security arrangements they stopped work at different fields and pulled out their engineers.

Business Recorder [Pakistan's First Financial Daily]

 

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Deforestation rate in Pakistan highest in world ​

ISLAMABAD (December 04 2007): Deforestation rate in Pakistan, estimated at 0.2 per cent to 0.5 per cent annually, is the highest in the world, which accounts for a 4-6 per cent decline in its wood biomass per annum. The total natural forest cover has reduced from 3.59 million hectares to 3.32 million hectares at an average rate of 27,000 hectares annually.

The decline in natural forests is attributed greatly to the dependence of a major proportion of rural population for fuel and construction on wood. The natural resource is decreasing at such an alarming speed that all the forest area will be consumed within the next 15 years.

Three sectors consume wood in Pakistan ie domestic rural use, industrial sector and commercial establishments. In this regard, the household sector has emerged as the largest consumer with 81.8 percent followed by industrial entrepreneurs 14.9 percent and the commercial sector 3.3 percent. The annual wood consumption in Pakistan is 43.761 million meters against the annual forest growth of 14.4 million cubic meters. So, it has to suffer a loss of 29.361million cubic meters per annum.

The unchecked cutting of trees has resulted in rapid deforestation and now the forest cover is less than 5 per cent. With one of the highest rates of deforestation in the world, Pakistan's forests are in urgent need of protection and conservation. The major threat to Pakistan 's forests is uncontrolled and unsustainable cutting for living purposes and timber products. There is dire need to find out alternate and sustainable livelihood methods to ease pressures on this precious natural resource.

Business Recorder [Pakistan's First Financial Daily]

 

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Agribusiness Zone ​

(December 04 2007): In a seminal initiative, the government is planning to carve out an agribusiness zone in Northern Areas, preferably near Gilgit, as part of a larger effort to exploit agriculture sector's immense potential. The proposed zone will play a crucial role in attracting Chinese investment in Pakistan's agriculture sector, which contributes 20.9 percent to the GDP, and employs 43.4 percent of the country's total workforce.

A Recorder Report quoting official sources has said that the issue recently came under detailed discussion at a meeting of Agriculture Advisory Board (AAB). Although Pakistan-China cooperation has diversified into all sectors of the economy, agriculture remains the major focus under the Free Trade Agreement.

A USDA-FAO outlook has predicted rise in agriculture commodity prices globally, in response to this phenomenon agriculture subsidies by the developed countries will be curtailed by the year 2013. This would put Pakistan in a favourable position, because no subsidies are at present being offered in its agriculture sector.

Pakistani companies will, therefore, have to develop greater competitiveness to be able to capture a sizeable chunk of international market by 2013, when the scenario will have changed. As argued by private sector representatives at the AAB meeting, there is an urgent need to establish an investment-focused agency to facilitate more joint ventures in the agribusiness domain.

Private sector representatives have, meanwhile, requested for a tax holiday, and proposed that the current scheme of TDAP should have maximum annual subsidy limit of Rs 5 million, excluding mangoes, and should provide 25 percent freight subsidy in selected countries.

They have also demanded that subsidy be made applicable to all horticulture and processed food products. Minfal representatives have, meanwhile, discussed setting up an Agribusiness Investment Fund, which is a new concept in Pakistan.

The proposed fund should establish an information base for providing technical advice to both government and private sector investors, prepare company profiles and undertake pre-feasibility studies, aside from mobilising domestic and international investment through promotional campaigns.

Establishment of the proposed Agribusiness Zone near Gilgit, the poverty-ridden backyard of Pakistan, can serve as a pilot project, to be replicated in other underdeveloped parts of the country. Although agriculture sector's contribution to Pakistan's GDP has declined from 53.2 percent in 1950 to only 20.9 percent at present, due largely to inadequate focus on developing new seed varieties, the sector retains vast development potential.

The most neglected part of our agriculture has, in fact, been the value addition, which is mainly due to inadequate investment in infrastructure and processing plants, which has in turn restricted our capacity to fully realise the potential of this neglected sector. Although Pakistan is the world's fifth largest producer of milk (37.35 million tons), only 5 percent of the commodity is processed.

Further, despite being the fourth largest exporter of date, the country exports only 13 percent of its total produce. These Minfal figures give a clear idea of untapped potential of Pakistan's agriculture. According to one estimate, the annual growth of agriculture sector in Pakistan has averaged around 4.5 percent over the last three years.

A significant indicator of the trend has been the steep decline in the share of labour force in agriculture - from 65 percent in 1950 to 48 percent at present - though it remains the largest sector in terms of employment. Consequently agriculture's role in poverty alleviation and employment generation has considerably shrunk.

Changes in agriculture productivity have been found to have important implications for poverty alleviation both in rural and urban areas. The declines significantly when household consumption registers an increase due to rising rural incomes.

An important channel of reduction in urban poverty has been the lower food prices as a result of growth in food production. Analysts maintain that diversification in agriculture is associated with commercialisation of agriculture, as high opportunity cost of labour on large farms induces them to substitute machines and modern.

The establishment of the proposed agribusiness zone will probably be the most significant diversification in our agriculture sector. It will also help ensure food security to the local population. While giving liberal incentives, including tax holidays, has become a part of the government's larger strategy to attract investment, the cost-effectiveness of such measures should be kept in mind.

Secondly, there is a need to capitalise on our competitive advantages by investing in developing better seed varieties and increasing the per-acre farm yield to ensure that we retain cost-competitiveness and also improve the quality of agricultural products.

Pakistan ranks among the top 20 producers of rice, mangoes, dates, sugarcane and a vast array of vegetables. However, our export figures depict a depressing picture despite our rich resources. Let us hope agribusiness zones will bring about the desire change and provide a powerful fillip to our agriculture sector.

Business Recorder [Pakistan's First Financial Daily]

 

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ENI, MOL asked to expand oil & gas exploration in Pakistan ​

ISLAMABAD: December 04, 2007: Federal Minister for Petroleum and Natural Resources, Ahsanullah Khan has said that the Petroleum Policy- 2007 envisage more incentives in the upstream sector and asked the ENI and MOL Companies to expand oil & gas exploration activities in Pakistan for the mutual advantage.

He said this while talking to the Managing Director of ENI Petroleum of Italy, Mr. Luigi Ciarrochi and Managing Director of MOL Oil Company of Hungary, Mr. Janos Feher who called on him here Tuesday.

The Minister said that the government was taking concrete steps for exploiting the untapped hydrocarbon resources in order to meet the growing energy requirements of the country for sustaining its speedy economic growth.

He said that caretaker government was ensuring continuity of reforms and policies and would extend all out cooperation and guidelines to the prospective investors for their participation in the oil & gas development activities in the country.

The Minister lauded the contribution of ENI and Mol companies for promoting the oil & gas exploration activities in Pakistan and hoped that they would continue to avail the investment opportunities for the mutual benefit.

The Managing Director of ENI informed the Minister that his company has required three blocks in offshore areas and necessary arrangements were being made to start the exploration activities as soon as possible.

The Managing Director MOL briefed the Minister about his company’s involvement in oil & gas exploration activities in Tal Block in NWFP. He told that MOL joint venture has planned to develop the Manzalai field and four wells would be drilled to increase the level of production from 50 to 250 mmcfd gas per day.

Secretary Petroleum, Farrukh Qayyum and Director General (Petroleum Concessions) Muhammad Naeem Malik were also present during the meeting.

ENI, MOL asked to expand oil & gas exploration in Pakistan : Business Recorder | LATEST NEWS

 

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Pak-Turkey trade up by 268% in last 6 years

KARACHI: The trade volume between Pakistan and Turkey has increased by 268 percent during the last six years and it can be further enhanced.

This was stated by the Chairman, Union of Turkish Chamber of Commerce and Commodity Exchanges, Rifat Hisareikhogluy while addressing the members of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) in Islamabad.

According to FPCCI here Tuesday, Mr Hisareikhogluy said that Pakistan’s exports to Turkey were only $100 million six years ago, but now they area $390 million.

He stated that Pakistan has acquired a central position in the fields of trade and energy at the international level.

Mr Hisareikhogluy stated that few years back, Turkey was also in economic crisis but due to the efforts they have come up as an economically strong nation.

In the welcome address, president FPCCI Tanvir Ahmad Sheikh underlined the need for a joint agreement between the two brotherly countries to take the volume of bilateral trade to $1 billion.

He further demanded that the governments of both the countries should take up this matter with Iranian government for land route business and get permission for crossing the borders.

Business through land routes will reduce the time as well as expenditures, he said. app

Daily Times - Leading News Resource of Pakistan

 

[Introvert]

Chinese company-Huawei expands business network in Pakistan
ISLAMABAD, Dec 4 (APP): Ufone will be covering more than 4500 cities, towns, villages and all major highways in the country by the end of June, 2008.

The project was approved by the Ufone Board of Directors which reflects the commitment by the share holders to invest in the Ufone infrastructure and to provide best quality network and facilities to Ufone customers.

Ufone, one of the leading telecom operators in the country has announced yet another phase towards expansion of its network amounting a total of $ 150 Million.

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 Ufone’s confidence in their professionalism and state-of-the-art technologies.

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.

Mr.Yi Xiang, CEO, Huawei Pakistan further stated that Huawei is fully committed to Pakistan Telecom Industry as well as implementing this new Ufone network expansion contract in the fastest and most seamless fashion.

Unfolding the details of this network expansion, he said that Ufone would be acquiring state-of-the-art network infrastructure based on Release 4 standard for future mobile communication, highly compatible for smooth and seamless migration to the 3G UMTS (Universal Mobile telecommunication).

The expansion plan focuses on the expansion of the network in terms of capacity and coverage in existing and new cities besides providing high speed cellular mobile and wireless data services based on EDGE technology.

This will add up more than 1000 additional cities, towns and highways in Ufone footprints.

Associated Press of Pakistan - Chinese company-Huawei expands business network in Pakistan

 

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Inflation to further rise amid election fever ​

Thursday, December 06, 2007

KARACHI: The “emergency-clamped” nation of Pakistan is expected to face more inflation amidst election fever during the current fiscal as the previous set-up has miserably failed to arrest ever-increasing inflation in the country.

The so-called democratic set-up led by former Prime Minister, Shaukat Aziz had given up the charge of the government soon after the emergency was imposed in the country and a lose and even weaker than outgoing cabinet was set up under Muhammadmian Soomro to take over the charge of the administration. The caretaker government seems to be helpless, as it has no grip on administrative affairs and economy.

Whenever such a situation arises that a government has no grip on the helm of affairs the profiteers take the utmost advantage and feel they have been let lose to loot the consumers. A similar situation is prevailing in the country, as the private sector is free to inflate the already high prices of kitchen items sans an effective administration.

The prices of most of the kitchen items are continuously on the rise despite the fact that the new arrivals are already in the market after the crop harvest. The rice, which had never seen such a skyrocketing trend in its price, is still mounting. The price of super basmati has gone up to Rs65 to Rs70 per kg from Rs55 to Rs60 per kg a few days back. Similarly, the price of sugar has increased by Rs2.50 per kg from Rs28 to Rs30.50 per kg in a few days time. Edible oils and ghee too, have crossed the barrier of Rs105 per kg from Rs95 to Rs98 per kg. The fresh produce such as all fruits and vegetables are still on higher side although new crops have reached the market. Citrus of grade-I have completely disappeared from the outlets this year.

According to survey conducted by Federal Bureau of Statistics (FBS), the city-wise inflation indicates that 26 cities out of 35 were found in the category of high inflation cities. Inflation recorded for all cities depicted a higher level of YoY CPI inflation compared to their relative positions in general and food categories.

Out of five selected cities, all cities have shown an increase in YoY inflation compared to the previous month. City-wise inflation in Islamabad, Karachi, Quetta and Peshawar was recorded at 8.6, 10, 10.1 and 9.5 per cent increase respectively in October 2007.

In October 2007, Islamabad and Lahore were among the category of low inflation cities, whereas Karachi, Quetta and Peshawar were among high inflation cities. The highest level of YoY inflation was recorded in Nawabshah (14.1 per cent) followed by Samundari (13.5 per cent) and Khuzdar (12.7 per cent) during October 2007. On the other hand the lowest YoY inflation was recorded in Okara (7.2 per cent).

State Bank of Pakistan has pointed out this in its new Inflation Monitor for the month of October 2007.

The headline CPI inflation, on year-on-year (YoY) basis, accelerated significantly to 9.3 per cent (highest increase since May 2005) in October 2007 from 8.1 per cent in the same month last year mainly on account of a surge in food inflation that muted the impact of decline in non-food inflation. Food inflation showed acceleration and was recorded at 14.7 per cent (highest since May 2005) in October 2007 compared to 10.5 per cent in the corresponding month last year.

The 12-month moving average (12-mma) CPI (consumer price indicator) inflation for October 2007 show decline, as compared to the same period last year and stood at 7.5 per cent in October 2007 compared to 7.9 per cent in October 2006. Food inflation depicted a significant rise due to double-digit rise in prices most of commodities (10.7 per cent in October 2007 compared to 7.7 per cent in October 2006).

Monthly CPI inflation was 1.2 per cent in October 2007, which was more than the five-year average of monthly increases in October. This increase in overall monthly CPI inflation was primarily due to a one-month significant increase in food inflation, which was recorded at 2.0 per cent compared to the 0.5 per cent inflation in October 2006.

Monthly non-food inflation also showed increase and was recorded at 0.6 per cent in October 2007 compared to 0.2 per cent in October 2006 and was more than the five-year average.

The core inflation based on NFNE (non-food non-energy) increased to 6.5 per cent in October 2007 from 6.0 per cent in October 2006 on YoY basis.

The WPI (wholesale price indicator) inflation accelerated sharply and witnessed a double digit YoY rise to 11.8 per cent during October 2007 compared to 6.7 per cent in October 2006. This rise was attributed to both WPI food and non-food inflation. SPI (sensitive price indicator) also showed an increase in October 2007 and was recorded at 10.9 per cent compared to 9.9 percent in the corresponding month of last year.

Overall CPI inflation on a year on year (YoY) basis rose by 1.3 percentage points in October 2007. The contribution of house rent index (the largest item of the CPI basket) dropped to 19.5 per cent in October 2007 from 20 per cent during the corresponding month last year.

Food inflation (YoY) was recorded at 14.7 per cent in October 2007 - highest since May 2005 - from 10.5 per cent in October 2006. This sharp (4.2 percentage points) increase is mainly due to an increase in the prices of some food items such as onion, tomatoes, edible oil, different types of rice, wheat, eggs, fresh milk and maida, etc.

Out of the total 124 commodities included in the food group, 53 commodities including tomatoes, onion, eggs, some fruits, cooking oil, different types of rice and vegetable ghee exhibited YoY inflation in the range of 10 to 100 percent in October 2007.

The ever-increasing inflation in the country has forced the people to discontinue the purchase of various kitchen items of even essential items in order to reduce the cost of living. No one knows when and where the state-sponsored terrorism of price hike will end up.

Inflation to further rise amid election fever

 

[Neo]

Pakistan, Spain to promote investment ​

Thursday, December 06, 2007

ISLAMABAD: Pakistan and Spain on Wednesday signed a Memorandum of Understanding (MoU) aimed at jointly assisting and creating a favourable environment for the promotion of investment in all economic sectors of both the countries.

Board of Investment (BOI) Secretary Mushtaq Malik and Embassy of Spain Commercial Attache Antonio Martinez-Ligero signed the MoU on behalf of their respective governments. The Ambassador of the Kingdom of Spain, Jose Maria Robles Fraga and Dr Salman Shah, Minister for Finance witnessed the ceremony while other senior officials were also present.

Under the MoU, the Investment Division & Board of Investment (BOI) of the Pakistani government and “Interes Invest in Spain” of Kingdom of Spain would facilitate each other in making investments in various sectors of their countries.

Both the countries have agreed to grant incentives and other facilities to investors of the respective countries as per the investment policies and packages available from time to time, says a news statement issued here on Wednesday.

While addressing the participants of the event, Dr. Salman Shah said that Spain and Pakistan are two of the most dynamic economies of the world. Spain is one of the fastest growing economies of Europe with vast infrastructure facilities and industrialization, paving way to huge business potential.

Similarly, Pakistani economy is also growing at a rapid pace, with an average growth rate of 7 per cent. He also highlighted improving economic and investment climate of the country and said that Spanish investors may take advantage of this conducive business environment.

He added that BOI and Interes Invest in Spain should devise strategy for jointly undertaking investment promotion efforts and enhance awareness through joint seminars and interactive forums, so that productive forward linkages among the business communities of both the countries be developed.

While emphasizing on the importance of the MoU, Secretary BOI said that BOI and Interes Invest in Spain are the key investment promotion agencies that support local and foreign enterprises seeking to set up or expand their businesses in Pakistan and Spain respectively and by joining hands, the two agencies would be more equipped with extended facilitation to investors, enhancement of information sharing, and above all investment promotion of all sectors.

Pakistan, Spain to promote investment

 

[Neo]

Sri Lanka keen to import rice and cement from Pakistan ​

KARACHI (December 05 2007): Sri Lanka has expressed keen interest to import 350 metric tonnes of rice at the rate of $340 per tonne besides 2,500 metric tonnes of cement on immediate basis.

Visiting Sri Lankan Minister for Trade, Marketing Development and Consumer Affairs, Bandula Gunawardhanthe expressed its country's keenness in import of the aforesaid commodities from Pakistan at a meeting with the officials of Trade Development Authority of Pakistan (TDAP) on Tuesday.

DG Export Supply Management TDAP Jawaid Anwar Khan, DG Policy and Planning, DG Corporate Communication Affairs Mrs Rizwan Khan, ED Marketing Riaz Khan and other officials including Dr Yousuf Khan, Saifullah Khairi, Asad Zahoor, and Junaid Yousuf also attended the meeting.

The Sri Lankan minister was accompanied by Sri Lankan Consul General V.S Sidath Kumar and K.D Anura Shantha.

"We have met the members of Rice Exporters Association of Pakistan (Reap) to finalise the deal for rice import, however progress on rate finalisation is hoped to come about soon," the minister said. Regarding the import of cement from Pakistan, he said that Sri Lanka presently needed 2,500 metric tonnes of cement and hoped that TDAP would help it procure the commodity.

The Sri Lankan minister also shown interest in the purchase of Pakistani steel. However, he emphasised on the purchase of rice and cement on immediate basis.

He said that Sri Lanka was also going to propose a single currency for entire Saarc region like euro in the Europe.

V.S Sidath Kumar pointed out that bilateral trade since the signing of Free Trade Agreement (FTA) had declined by 30 percent.

He said that various trade delegations from Sri Lanka participated in My Karachi Exhibition this year and many of them had negotiated on trade of various commodities with Pakistani traders. He added that a Sri Lankan trade delegation was expected to visit Pakistan in March-April next year.

Jawaid Anwar Khan said that TDAP would make efforts to persuade the local rice and cement exporters to finalise deal on fair and immediate basis and in this regard he added TDAP would hold meetings with them.

He said that presently, Pakistan was exporting cement at $66 per tonne to India, while there was only few local firms having the capacity to export cement in bulk quantity.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Pakistan and China sign MoUs for cooperation in various fields ​

ISLAMABAD (December 05 2007): Pakistan and China have refreshed commitment to continue cooperation in fields of science and technology under the agreement on Scientific & Technological Cooperation, says a press release.

High-level scientists' delegation led by Parvez Butt, Secretary, Ministry of Science and Technology visited China and held meetings with senior scientists of the Chinese Academy of Engineering. Jing Long Industry and Commerce Group, State Oceanographic Commission, Chinese Academy of Sciences and the Ministry of Science and Technology. The delegation also visited a poly-silicon factory at Luoyang in Henan province.

A programme has been mutually agreed for jointly setting up a pilot plant for the production of Photovoltaic Solar Cells from poly silicon in Pakistan. MoUs for cooperation in the fields of herbal medicine and oceanography was also finalised and signed during the visit.

The MoU between Pakistan Council of Scientific & Industrial Research (PCSIR) and Institute of Chinese Materia Medica (ICMM) pertains to government of Pakistan Institute of Traditional Medicines at Peshawar whereas the MoU between National Institute of Oceanography (NIO), Karachi, Pakistan and the Chinese Antarctica and Arctic Administration (CAAA), Beijing pertains to a 5-years programme of cooperation in the field of oceanography, organising of joint expeditions to Antarctica and availing of technical guidance/advice from China to meet the pre-requisites and avail benefits from accession to the Antarctic Treaty.

Besides facilitating collaboration in the technological fields the closer understanding reached in the relevant fields would also be instrumental in further strengthening of friendly relations between the peoples of the two countries.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

SBP move great comfort to banks to meet dollar demand: $400 million to be returned ​

KARACHI (December 05 2007): State Bank of Pakistan will return $400 million to the banks and DFIs to give them a temporary liquidity comfort on account of reduction in the Special Cash Reserve Requirement (SCRR) from 15 to 5 percent, according to sources.

The need for this measure arose as banks had placed around $1.3 to 1.4 billion as deposits abroad to take advantage of falling interest rates on US dollar deposits. As a result, the swap activity had become minimal and banks were being forced to do buy/sell activity to meet their clients' needs and pump dollars into their Nostro accounts for trading activity.

Banks hold $3.8 billion in F.E. 25 whereas $2.2 to $2.3 billion form part of the forex reserves, reflecting $1.3 to 1.4 billion utilisation by the banks themselves.

According to sources, the SBP move on Monday has nothing to do with its Monetary Policy. It only indicates Central bank's sensitivity to the dollar crunch domestically as well the liquidity crunch overseas in December 2007 - January 2008.

The SCRR is dollar based that cannot be invested in government securities. Hence, return is given to banks on LIBOR minus one percentage point being service charges.

Interbank foreign exchange market has been facing a dollar liquidity crunch since last couple of months, but banks have been managing to feed their Nostro accounts through Buy/Sell swaps. In November SCRA, oil bill and debt payments could not match the inflows. Thus, a demand for dollar started to weaken the rupee.

Business Recorder spoke to the Treasurers of local and foreign banks to know the fate of FE 25 deposit of $3.8 billion. But no one was able to provide the real numbers. Based on our findings, 20 percent or $760 million is the Special Cash Reserve Requirement placed with SBP. Loans given to customers is $1.3 billion, Deposit in other currency could be equivalent to $400 million and the remaining amount of $1.34 billion is placed overseas.

Deposit Dealers could have placed their funds with overseas banks anticipating better return, as FED is constantly slashing its rates to support US market following turbulence in the US and European markets. The spill-over of the US subprime housing crisis is spreading across the globe. Money market dealers fear that over-the-year lending rates will sharply shoot up if the Global Central Banks do not come to the rescue of banks and financial institutions.

The SBP has clearly stated in its circular that this new SCRR circular is being changed temporarily to provide liquidity comfort to banks and the same will be reviewed in February, which means banks are given sufficient time to mature their foreign currency deposit instead of rollover.

The circular certainly does not guarantee that dollar liquidity position of banks straighten up things unless banks are willing to understand the problem or appreciate the situation. Neither can the central bank be sure that Rupee/Dollar market will get back to normal with this circular. This quick and timely action would defiantly provide opportunity to banks to straighten their books.

Meanwhile, interBank foreign currency dealers said that it was a volatile days in Ready, Spot and forward market, since it was unclear in the morning that when will the circular become effective. Rs/Dollar was hovering in 12 paisa band 61.28-40.

Forward swap premiums in 1 month to 6-month tenor recovered by 15 to 30 paisa respectively. Six-month swap points, which was dealt at 30 paisa premium a day earlier, recovered 35 paisa to close at 65 paisa. Fx dealers are of view that market may witness stability in the interbank market in next couple of days.

Business Recorder [Pakistan's First Financial Daily]