Pakistan Economy - News & Updates - Archive

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MoU signed to establish coal-fired power plants ​

QUETTA (December 05 2007): A Memorandum of Understanding (MoU) to setup 50 megawatts coal-fired power plants in Balochistan was signed here on Tuesday by Balochistan government, Balochistan Power Generation (Private) Limited (BPG) and Canadian Everlight Energy Corporation (EEC). Governor Balochistan Awais Ahmed Ghani, the Chief Secretary and other high officials were also present on the occasion.

Provincial Secretary for Irrigation Arbab Mohammad Yusuf, Managing Director EEC Roman G. Mesley and Chief Executive BPG Sardar Anwar Khan Jaffar signed the agreement under which these two companies would prepare feasibility of the project and submit it to Provincial Thermal Power Board for review within a period of six months.

The Board would settle matters relating to tariff and supply of electricity between QESCO and these companies if the project was found feasible. Besides, these companies would be bound to spend five percent of their total revenue on development of social sector in the areas where they supply power.

Speaking on the occasion, the Governor Balochistan appreciated the project and said it would greatly help overcome power shortage in the province by utilising locally extracted coal.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Seven major crops missed MTDF target for 2006-07​

ISLAMABAD: The government has missed the production targets of seven out of 11 crops fixed under the Medium Term Development Framework (MTDF) in last year 2006-07.

The crops, in which the government missed the targets, were rice, basmati, maize, cotton, gram, rape and mustard, and onion. However, the production of sugarcane, wheat, tobacco and potato surpassed their production targets.

The facts and figures revealed during a mid-term review of the MTDF on food, agriculture and livestock are likely to be completed till January 2008. The MTDF has been prepared by the Planning Commission for achieving certain targets leading towards economic development and prosperity till 2010.

The rice production of 5.547 million tonnes during the first year of MTDF was well above its annual target of 5.000 million tonnes by 0.547 million tonnes in 2005-06. However, it declined by two percent to the tune of 5.438 million tonnes during 2006-07. The decline in area cultivated was responsible for decline in rice production due to shifting of area from rice to sugarcane crop.

The production of maize in 2006-07 was 2.968 million tonnes as against the target of 3.029 million tonnes. This production was less than previous year’s production achieved in 2005-06 of 3.109 million tonnes.

Cotton crop is very sensitive to weather conditions and associated with insect/pest flare up. A record production of 14.27 million bales in 2004-05 was achieved due to highly favourable climatic conditions. In subsequent two years, cotton production has declined to 13 million bales, with a grave reduction of 1.27 million bales. The MTDF cotton target in 2006-07 was 15.5 million tonnes. The contributing factors were emergence of Burewala strain of Cotton Leaf Curl Virus, decline in cotton area, crop damage by floods, rain and attack of cotton mealy bug.

The gram production in 2006-07 remained at 0.842 million tonnes as against the target 0.871 million tonnes. However, this production was higher than the previous year 2005-06 production of 0.479 million tonnes.

Production of rape and mustard also missed its MTDF target for the year 2006-07 as the production remained at 0.148 million tonnes as against the target of 0.312 million tonnes.

The production of onion also missed its target and remained at 1.760 million tonnes as against the target of 2.040 million tonnes. Its production in 2005-06 was 2.055 million tonnes showing a higher production than the achieved crops in 2006-07. Heavy monsoon rains in lower parts of Sindh, which is main onion producing area, damaged nurseries and ultimately the production of onion was adversely affected.

However, the production of sugarcane, wheat, tobacco and potato achieved their MTDF targets set for the year 2006-07. The sugarcane production has shown fluctuation over the years. The contributing factors were shifting of sugarcane area to cotton crop due to lucrative price of cotton in 2005-06, to sunflower in Sindh, late payment made by sugar mill owners to growers. In 2006-07, sugarcane production increased by 22.8 percent over 2005-06 period primarily due to attractive market prices and high demand. The production remained at 54.741 million tonnes as against the MTDF target of 51.860 million tonnes in the year 2006-07, while previous year it was 44.665 million tonnes in 2005-06.

During the last five years, the wheat production has increased by 22.5 percent and a record production of 23.3 million tonnes was harvested during 2006-07 as against 21.1 million tonnes production during MTDF base year 2004-05. This was made possible due to balanced use of fertiliser enabled by the government policy of subsidy on phosphatic and potashic fertilisers and timely rains during wheat growing seasons are the main factors responsible for a 10.3 percent increase in wheat production during 2006-07.

The production of tobacco has surpassed the MTDF target by 90 million tonnes for the year 2006-07 and achieved 125.5 million tonnes production. In the year 2005-06 the tobacco production was 112.6 million tonnes.

Potato production remained relatively stable around 2 million tonnes during 2002-05. The potato crop was damaged by frost in January 2006 and as a consequence, potato production in 2005-06 declined by 22.6 percent relatively to 2004-05 with a production figure of 1.568 million tonnes. In 2006-07, the potato production increased to 2.47 million tonnes, which represents a 57.6 percent increase over 2005-06.

Daily Times - Leading News Resource of Pakistan

 

[Neo]

25-year 8800 megawatts generation plan: nuclear fuel plant to be set up ​

ISLAMABAD (December 06 2007): Pakistan will set up a Chemical Processing Plant (CPP) and Nuclear Fuel Enrichment Plant (NFEP) costing Rs 37 billion, including Rs 12.5 billion foreign exchange component (FEC), official sources told Business Recorder.

The establishment of these two plants is part of Pakistan's 25-year plan to generate 8800 MW electricity to meet the future growing energy needs, sources said, quoting Pakistan Atomic Energy Commission (PAEC) Chairman as having said in a briefing. They said that 'CPP Phase-1', to be set up in the 'Nuclear Power Fuel Complex' (PNPFC), stipulates attainment of indigenous capability in manufacturing basic feed materials of the 'Enrichment Plant for Nuclear Reactors (EPNR), 'Fuel Fabrication Plant' (FFP) and 'Seamless Tube Plant-I (STP-I), and added that, funded through PSDP, the project would be set up in two phases.

Phases-1 envisages a capacity of 400 tons per annum (TPA), natural UF-6 gas, 40 TPA enriched UO-2 powder, and 30 TPA Zr-4 ingots with the prime objective of developing indigenous capability for fabrication of pressurised water reactors (PWR), fuel technology, sources said.

However, with the installation of additional NPPS, the CPP capacity would have to be increased accordingly during Phase-II. They said that PAEC would also set up 150 tons per annum nuclear enrichment plant to feed fuel for nuclear power generation reactor whose further extension will be phased in other three stages.

"Each phase will span over 5-6 years, in which one module will be set up, having the capacity to enrich about 150 tons per year feed natural gas, and a separative power of 100 tons SWU kg per annum," sources added. The project, to be funded through PSDP, has been approved by the Executive Committee of National Economic Council (Ecnec) with some clarifications from PAEC Chairman.

Sources said that initially the government did not agree with the cost of the project, and directed PAEC Chairman to justify its financial viability.

It had also been emphasised that element of subsidy, if any, must be stated upfront to be presented to the Prime Minister and Finance Ministry. Later on, PAEC Chairman cleared the misconception after presenting project documents to the Prime Minister and Finance Ministry.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Mass transit projects: Ministry turns down Chinese firm's offer ​

ISLAMABAD (December 06 2007): The Ministry of Communications has turned down a proposal of a Chinese company to launch mass transit projects in Peshawar, Rawalpindi and Islamabad on turn-key basis.

M/s Beijing Urban Construction International Group Ltd (BUCG) had offered to undertake design and construction of the mass transit projects, sources told Business Recorder here on Wednesday. They said the ministry, in response to Economic Affairs Division query, observed that the company failed to submit its financial soundness and resource profile for the consideration of the proposal.

For ensuring transparency and competitiveness, principal method of procurement which includes open bidding in line with the guidelines of Public Procurement Regulatory Authority (PPRA) functioning under the administrative control of the Ministry of Finance should be adopted, they added.

The sources said the ministry suggested that instead of evaluating the proposal offered by a single company, the projects may be advertised in the international press and the Expressions of Interest (EoIs) may be invited from the prospective bidders having the requisite expertise and resources for handling similar projects on turn-key basis.

Following the procedure, a rational and competitive bid having the most favourable terms and conditions particularly for arranging long-term financial credit on reasonable interest rate can be accepted, they added. They suggested that prior to offering these projects to international bidders, a feasibility study be made mandatory for assessing the financial viability of projects.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Economy should grow at least seven percent: SBP chief ​

FRANKFURT (December 06 2007): Pakistan's economy should grow at least 7 percent in the year to June 2008, central bank chief Shamshad Akhtar said on Wednesday, despite the political turmoil besetting the nation.

Global trends mean food prices are pushing up headline inflation, but past tightening of monetary policy means the current stance is appropriate and weakness in the rupee is not something to be worried about, Akhtar told reporters in Frankfurt.

"Pakistan now for some years has demonstrated a fairly robust economic growth backed by pretty deep structural reforms. We have found that in 2007, despite political noise, economic growth remains on track," she said on the sidelines of a conference of the Islamic Financial Services Board.

Turmoil linked to the future of President Pervez Musharraf, and uncertainty surrounding elections due on January 8, have slowed the inflow of portfolio investment into the country. Inflation is running well above target, while the current account deficit is high and some economists have questioned the realism of Pakistan's 7.2 percent economic growth target for the year to end-June 2008.

Asked whether this growth was likely, Akhtar said: "All the preliminary indications are that it would be. There has been a setback to the cotton crop this year, but we're hoping that it will be relatively limited."

"So 7 percent at least should be manageable, but we need more data to comment further," she said, citing buoyancy in the services sector. Pakistan raised its key discount rate to 10.0 percent, effective August 1, from 9.5 percent. In addition to this surprise move it has taken other steps to tighten the policy stance.

"We're hoping that should suffice but it all depends on the situation in January when data comes in. But at this point we think that the current monetary stance is adequate to take us forward," Akhtar said.

"Core inflation has been curbed quite effectively. It's really food prices, and as we know they are being driven by global supply and demand issues," she said. "Like every country we have food prices growing a bit stronger and this is a complication for the inflation rate. But there's very little monetary policy can do in the short term on food prices." The Pakistani rupee recovered from a three-year low on Tuesday following a central bank decision to decrease the amount of cash reserves that banks have to maintain, but Akhtar said she was not unduly worried about the rupee's weakness.

"There's been a little pressure on the exchange rate but nothing to be disturbed about. We had been pushing ... for a little flexibility in the exchange rate. Market fundamentals are driving the Pakistani rupee."

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Heavy govt Borrowings pushing up inflation​

KARACHI, Dec 5: The government made heavy borrowings from the banking system for budgetary support during the first five months of the current fiscal year amid mounting pressure arose from high international oil prices.

The borrowing put more pressure on the State Bank which had to lend heavily to the government which translated into the higher currency supply. The government borrowed Rs145 billion during July-November period which was more than double when compared to Rs62 billion it borrowed the same period last year.

Of the total borrowing, the government raised Rs122 billion through the State Bank. This had been a serious concern for the central bank which had been requesting the government to find new resources for fund raising. The heavy borrowing puts pressure on the monetary policy that targets inflation.

However, the government kept borrowing heavily despite higher revenue collection and reduction in development expenditures for the current fiscal year, which had been causing inflationary pressures.

Analysts said the economy was already under tremendous pressure due to rising oil prices as the government had not been passing on the impact of this increase to the consumers for the last several months, which cost it Rs101 billion.

Some analysts said the government had yet to take any decision in this regard though the ‘loss’ of Rs101bn had provided enough reason to raise petroleum prices at least by 20 per cent.

They believe that the inflation could touch double digits if the government opts to raise POL prices.

Inflation, measured by CPI, had already entered an alarming zone during last few months. In October 2007, the CPI recorded 9.31pc growth which was 1.23pc higher month-on-month basis. The increase was mainly attributable to the rise in food prices. The food and beverage, with 40pc weightage in the overall CPI basket, registered a growth of 14.67pc on yearly basis in October 2007.

Analysts say the fuel price hike is less harmful than the food prices in the CPI basket, but the cyclic impact of the higher oil prices will hit almost all sectors including the food prices. The reports of shortage of wheat could add fuel to the food inflation as the wheat prices were also on the rise.

Most of the analysts have started reviewing their earlier calculation about the inflation for the year 2007-08 after record oil prices and shortage of wheat in the country. A research head of a brokerage house said the inflation could touch double digit if the trend in oil and wheat prices continued.

He said recent hikes in cement and steel prices were also anticipated to cause a house rent index increment. The house rent index was also expected to move up by 8.5pc on yearly basis as against 7.8pc last month.

“We are revising full year FY08 inflation estimate to 8.9pc from previous 7.5pc. Moreover, if 0.8pc monthly increment becomes a trend for upcoming months, a possibility of double digit inflation from January (also at the year end) cannot be ruled out,” said the research.

Heavy govt Borrowings pushing up inflation -DAWN - Business; December 06, 2007

 

[Neo]

Impact of elections on the economy​

THE election period in Pakistan is, in fact, a season of promises, some of them very strident. The more the political parties, the more the promises and the more coalition groups contesting the elections, far more the number of promises.

Elections in Pakistan are rare and few and the campaign period is usually limited to three months. At the end of the campaign, there is no certainty if the elections would take place at all. In the United States, the election campaign lasts for two years and since basically it is a non-partisan contest, the number of promises made by the candidates and their parties are a few in number.

The unusually large caretaker government, which keeps on expanding, has decided not to increase the POL rates despite the soaring world prices at least before the elections. President Musharraf is also reported to be not wanting higher POL prices as his first gift to the people after his re-election as president, this time as a civilian.

If the oil price is not raised officially, the government may lose Rs101 billion as revenues but may make up for that loss by charging the people sales tax on petroleum as well as development surcharge which will mobilise Rs90 billion. The consumer will be crushed in the process while the government may eventually walk off with a small liability after it chooses to raise prices at any time.

Simultaneously the proposed 21 per cent raise in power rates and five percent rise in gas rates are to be put off. It will be an awkward task for the newly elected government to come up with a heavy increase in the POL, power and gas rates with all their impact on inflation.

Meanwhile, the furnace oil price has been cut by Rs1035 per tonne and the LPG has been totally deregulated. There is speculation that the forthcoming Opec meeting in Dubai may decide to increase its oil output while noting the sustained fall in the exchange rate of the dollar which is used for trading oil. Meanwhile, the Gulf Cooperation Council has decided to introduce a common currency for the region from 2010 also for fixing prices of their oil.

Prices of cement, wheat, flour, oil and vanaspati have risen in the market along with many other edible items. There was fear that the next wheat crop may fall far short of the target and create a new crisis but the recent rains in the Barani areas have improved the situation.

Iran now wants increase in trade with Pakistan to reach a billion dollars. Turkey wants the same in the face of the small trade between the two friendly countries. The Afghan leaders have been talking of a billion dollar trade target for a long time. We should try to have greater trade with our neighbours instead of being content with the five billion dollar trade we expect in the wake of the FTA agreement with China.

Meanwhile Ms Benazir Bhutto, chairman of the PPP, has come up with a five-point election manifesto promising employment, education, energy, environment and equality. Along with that the old PPP commitment of Roti, Kapra, Makaan has been revived but more as a slogan than as a commitment. Providing jobs to the unemployed, particularly the young and educated, will cost a great deal of money but after the government’s outlay on energy which has to be tremendous, little will be left for creating employment and promote education.

The government will have to rely a great deal on the private sector and revive its old strategy of public private partnership which it advocated but could not practise it. For promoting long term prospects of employment, large scale industries will have to be promoted along with SMEs and the system of micro credit on a large scale. The Shaukat Aziz government gave a free hand to the businessmen so that they could invest more and some of them responded to an extent. Some such policy will have to be followed by the new government.

PPPs commitments include employment for the educated young up to the graduate level, micro credit for five million persons and monetary relief for persons above sixty five years who have no income of their own. All this will cost a great deal of.

Foreign governments who are backing Benazir Bhutto as the voice of moderation will step up their aid if she comes to power. But the increase will not be much particularly for education as a good deal of money has been wasted in the manner education was promoted. So, she will have to generate more resources from within the country. At the moment the budgetary income is good, the revenue collection during the first five months of the new financial year exceeds the target by 12.5 per cent but as the industrialists wait for the new government to come in, the revenues can drop.

The PPP in achieving what it seeks or delivering what it promises depends on its ability to achieve high output with moderate input and to mobilise the private sector to perform its social role. But it is also for the businessmen to be realistic instead of hoping to make more money the easy way and the banks to thrive through consumer credit at high interest rates.

If the foreign investors are holding back their fresh investments, it is not surprising. It happens in every country on the eve of general elections or when there is a transition from the military set-up to a civilian regime.

Businessmen want to ensure whether pro-business policies of Musharraf would continue and that they would still have a free hand. But they must fulfil their social role in the country where 30 per cent of the people live below the poverty line of a dollar a day. Foreign investors are bound to be watchful during the transition period.

Meanwhile, the Shell group has opted out of the offshore project which was earlier welcomed by the government and the Dubai international authority has said it is no longer interested in the 450-500 MW power project located in a small town of Punjab.

Foreign investors had serious complaints about the judicial process in Pakistan. They hired the best lawyers when they had a case against the government or a private party but the judgments came too late and then they were not enforced often.

DAWN - Editorial; December 06, 2007

 

[Neo]

Zero-rated export-oriented sectors ​

FBR says no to WB advice to levy VAT

Friday, December 07, 2007

ISLAMABAD: The Federal Board of Revenue (FBR) has rejected a demand of the World Bank to impose GST in value added tax mode on five zero-rated export-oriented sectors.

“The existing arrangement would continue and the FBR would not get dictates from anyone,” FBR Chairman Abdullah Yousaf said when a group of journalists asked on Thursday about the WB demand.

The FBR, a few year back, had announced sales tax zero-rated regime for five export-oriented sectors, textile, leather, carpets, surgical and sports to boost exports in these potential areas. Pakistani exports are already dwindling owing to growing regional competition and the exporters cannot face another blow in shape of GST on crucial export oriented sector, said the sources.

The World Bank and UK-based DFID during their last review held a last month pointed out in its report that anomaly existed within the tax regime of the country and they asked to remove it by imposing General Sales Tax again in Value Added Tax (VAT) mode.

The country’s exports stood at $5.865 billion in first four months of the current fiscal year with marginal growth of textile group by 1.03 per cent, there was 15.42 per cent decline in food group, 6.36 per cent fall in petroleum group, and carpets, rugs and mats saw negative growth of 7.57 per cent.

Pakistan mainly relies on textile exports that are 68 per cent of total annual exports. The marginal growth in textile sector in current fiscal has made export target of $19.2 billion very difficult task to be materialised.

The overall exports market for textile products stood at $450 billion and Pakistani exporters are vying for only $135 billion market, as they were not making products of the remaining textile products having $300 billion market share.

Chairman FBR answering another query regarding postponement of capital gains tax by the banking companies announced in the budget and would become effective from January 1, 2008, said that there was no change in the plan and it would be implemented in accordance with the devised strategy.

Zero-rated export-oriented sectors

 

[Neo]

Egyptian tourist resort buys Karachi made minibuses ​

Friday, December 07, 2007

KARACHI: An Egyptian company running Orascam Hotels in Egypt imported minibuses made in Pakistan for its Elgouna Island picnic resort near Cairo city.

These two traditional minibuses were exported on the special request of Chairman of Orascam Hotels Samih Swairis. The company also deals in telecom, brewery and real estate development projects in Egypt and the Middle East and is also holding major stakes in Mobilink Pakistan.

Swairis had come to Pakistan with tourism minister of Oman Dr Rajiha Abdul Ameer Ali on an official visit in February 2007 to explore the opportunities for tourism promotion in Gwadar and coastal belt of Pakistan.

During his stay in Karachi, Sawiris was enthralled by the beautiful colours of the minibuses plying on the city roads and requested to arrange few for his resort in Elgouna.

“After a detail research of the market we started with making two buses after arranging brand new chassis from Gandhara Nissan and short listed M/S Gharib Nawaz Body maker located near Quaidabad to carry out the job on two buses,” Vice President Pak- Oman Investment Company Rehan Ahmed said.

He informed that this was a unique bus for M/S Gharib Nawaz as it was supposed to be air-conditioned and left hand-drive as well and he did it successfully and got the proper certificate of fitness of the vehicle from Gandhara Nissan.

The deco body formation of these buses started in July 2007 and completed on November 7, 2007. “Initially we have arranged two 24 seats minibuses and may receive further request of more buses if it would be liked in Egypt,” an official of bus exporting company said adding, “sole purpose of this special job was to promote Pakistani culture and improve the image of the country abroad.”

Rehan Ahmed said that a local vendor M/S Gulzar Chamakpati Maker decorated these buses and he did a fabulous job and decorated the buses like a bride. He said the net cost of one bus is almost $45,000 including the freight also and all paid in advance by Orascom.

The buses were shipped by Dubai Express a liner of APL and will be received in Alexandria-Egypt on December 11, 2007. All the care has been taken to make the buses a piece of art for the tourists in Egypt and promote our culture to the maximum.

Egyptian tourist resort buys Karachi made minibuses

 

[Neo]

KSE up 187 points on buying in front line stocks ​

Friday, December 07, 2007

KARACHI: The buying euphoria at the Karachi stock market kept the bulls in full swing throughout the session. Institutions, both local and foreign remained the driving force behind lifting the leading 100-Index above 14,300 points resistance level.

After briefly touching 14,345 points intra-day high, the KSE 100-share Index finally closed at 14,325 points - recording another fresh surge of 187 points or 1.32 per cent on Thursday. The 30-Index also surged by 272 or 1.60 per cent and closed at 17,221 points.

The KSE 100-Index is restored above this 14,300 points level after one month. Index slipped below this level on November 01 following conflicting news regarding the emergency rule. Major support was seen from the banking stocks, followed by energy, fertilizer and telecom stocks.

Most of the cement counters saw profit taking at available margins and accordingly settled in the red region. MCB Bank alone contributed 45 points in the total score of the index, followed by the United Bank, which included another 20 points, Jahangir Siddiqui Co., added 10 points, Pakistan Telecommunication Company 10 points, Allied Bank nine points and Oil and Gas Development Company’s share in the total gains of the 100-Index was nine points.

The others gainers of the day contributed in the range of 0.01 points to nine points in this benchmark. On the other hand, no big loser was registered in this index. “The active accumulations on selective front line stocks and in second tier scrips was an extension in the buying euphoria triggered a day earlier.

The fundamental changes encouraging buying include rise in international oil prices; Oil Marketing Compnies (OMCs) exempted from paying 15 per cent GST on crude import; rise in local cement prices; and increasing cash flow in the inter-bank market after State Bank of Pakistan slashed the special cash reserve requirements from 15 per cent to five per cent,” a leading analyst said.

Market also witnessed rising foreign interest in the energy, banking and fertilizer sectors, he explained. Analyst Hasnain Asghar Ali said charged by excitement linked to capital gains being booked by the banks (in order to avoid CGT applicable from Jan 01, 2008) the ghost buyers barged in right from the word go, although a couple of banking stocks failed to join the rally.

Although the sectors, other than the banking, invited modest offloading in the initial hours, prevailing positive sentiments reset market bank on upward track and index closed with handsome surge, he added.

Following the reports by the international research houses, the economy has invited fresh foreign inflows. Therefore, the SCRA numbers should not be taken as parameter to judge the future movement of indices, as they can be withdrawn more quickly than pumping them into the equity markets, he said and added that change in the rules of political game would impact market accordingly.

Owing to institutional participations in the market, the overall volumes in the ready markets slightly surged to 297.442 million shares from 273.900 million shares a day earlier.

Volumes in the future market also surged to 34.407 million as compared with 29.770 million changed hands yesterday. The bullish trends on board also helped in attracting more fresh funds of worth Rs53 billion in the overall market capitalisation that surged to Rs4.420 trillion.

Positive signs led the runners, as 225 stocks advanced against 151 declined, while the value of 43 scrips remained unchanged with total 419 active counters on board. Highest volumes were witnessed in Bosicor Pakistan at 22.008 million closing at Rs20.30 with a gain of Re1, followed by Arif Habib Securities at 20.319 million closing at Rs174.70 with a gain of Rs1.30, Bank of Punjab at 12.503 million closing at Rs102.50 with a gain of 55 paisa, NIB Bank at 11.919 million closing at Rs21.10 with a gain of 70 paisa and Azgard Nine at 11.098 million closing at Rs39.45 with a gain of Rs1.85.

KSE up 187 points on buying in front line stocks

 

[Neo]

Scope of Pak-Malaysia FTA expanded ​

Friday, December 07, 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) which has enlarged the scope of Free Trade Agreement.

The agreement was signed by Malaysian International Trade and Industry Minister Datuk Seri Rafidah Aziz and High Commissioner of Pakistan Tahir Mahmood Qazi, in Kuala Lumpur, stated a press release issued on Thursday. Considering the market potential of Malaysia and ASEAN, negotiations on a comprehensive Free Trade Agreement were initiated in 2005. Early Harvest Programme was signed in December 2005 and implemented with effect from January 1, 2006. Negotiations on MPCEPA were concluded in September, 2007, signed on November 8, 2007 and will come into force on January 1, 2008.

The MPCEPA is Pakistan’s first comprehensive agreement on goods, services, investment and economic co-operation with any country of the world, besides being its first such agreement between the two members of the OIC and Malaysia’s first such agreement with any of the countries of South Asia.

This agreement will provide Pakistan a firm foothold in Association of South East Asian Nations (ASEAN) region and for achieving summit level partnership with ASEAN. It will also facilitate linkage with efficient and growing economy of ASEAN by providing market access to Pakistan’s future items of export interest and opportunities to the Pakistani exporters and industrialists to source out raw materials and intermediary goods from China or Malaysia at zero/ reduced duty enabling them to reduce the cost of their export and become competitive in the global market.

This agreement will also open new vistas of opportunities for the qualified Pakistan financial institutions to undertake currencies in Malaysia and insurance companies to establish representative offices in Malaysia and employ Pakistan expatriates in these entities after obtaining new licences on Islamic banking and Takaful, besides the MPCEPA will also cover energy and gas service as well as commitments in financial services and sectors such as maritime transport and franchise.

Scope of Pak-Malaysia FTA expanded

 

[Neo]

Steps taken to tap hydrocarbon resources ​

Friday, December 07, 2007

ISLAMABAD: Various concrete steps have been taken to tap the hydrocarbon resources over 627,000 sqkm in sedimentary onshore and offshore areas as the government is very keen to promote oil and gas exploration activities in the country.

Caretaker Minister for Petroleum and Natural Resources Ahsanullah Khan expressed these views during a meeting with Orient Petroleum chairman here Thursday. The minister encouraged this trend a package of incentives to the prospective investors has been offered. He appreciated the contribution of Orient Petroleum Company for promotion of oil and gas exploration activities in the country.

He hoped that the company would continue to avail of the investment opportunities in these sectors for the mutual advantage. The chairman informed the minister about the company’s involvement in the acquired onshore blocks in Mirpur Khan and Khapro from where around 85 per cent mmccfd gas was being produced. He expressed company’s willingness to acquire more blocks. Secretary Petroleum Farrukh Qayyum and Chief Operating Officer of OPI Anwer Moeen were also present, said a press release.

Steps taken to tap hydrocarbon resources

 

[Introvert]

Pak-Sri Lanka trade volume increases

Friday, December 07, 2007
ISLAMABAD: Free Trade Agreement (FTA) has positive impact of bilateral trade between Pakistan and Sri Lanka and the country’s exports to Sri Lanka touched a figure of 87.9 million dollars during last year.

This was stated by the Vice President Federation of Pakistan Chamber of Commerce and Industry (FPCCI) Zubair F Tufail while talking to Bandula Gunawardena, Trade Minister of Trade Marketing and Consumers Affairs of Sri Lanka on Thursday, says a press release. He said that export of Pakistan to Sri Lanka has increased by 112 per cent in fiscal 2005-06. He added that Sri Lanka was a major buyer of Pakistani cotton yarn and woven fabric which contributes 63.3 per cent in total exports including Iron articles, pharmaceutical products and rice.

He pointed out that Sri Lankan exports to Pakistan also increased by 102 per cent as the total import from Sri Lanka was 71.31 million in 2005-06. He said that Pakistani imports include rubber articles followed by oil seeds, grains, coffee, tea and spices fruits, nuts and wood charcoal, food and its articles.

Tufail said that Free Trade Agreement (FTA) between Pakistan and Sri Lanka had positive impact on bilateral trade, adding that there was huge potential to further boost trade ties in various sectors. He said that Pakistan Cement Industry has great potential to export cement to Sri Lanka. He said that FPCCI was indeed a truly an apex body of trade in Pakistan and representative of entire business community of Pakistan.
Pak-Sri Lanka trade volume increases

 

[Neo]

Mismatched data raises doubts over credibility​

KARACHI, Dec 6: A more than $2 billion difference in trade imbalance figure shown by the Federal Bureau of Statistics (FBS) and those of State Bank of Pakistan during four months of the current fiscal year has again brought into sharp focus the issue of credibility of government data and statistics on trade and in other areas like prices, industrial and agricultural production, poverty assessment, social indicators, etc.

Trade figures released by the FBS for July to October 2007-08 showed trade deficit at $5.58bn. Imports amounted to $11.44bn and exports were worth $5.86bn. The State Bank of Pakistan figures showed trade deficit of $3.53bn which is more than $2bn less than reported by the FBS. The SBP figures show imports at $9.53bn and exports at $5.99bn.

The Customs data indicate a total volume of international trade at $17.30bn against which the State Bank reports transaction of $15.5bn. It leaves a balance of over $2bn with a question mark. “If the orders booked for export or for import of goods worth more than $2bn are cancelled and not delivered, would the customs correct these figures?” is one question being raised.

“One simple reason for difference between FBS and SBP figures is that the Bureau collects information from customs based on letters of credit while State Bank reports actual inflow and outflow of foreign exchange,” a senior banker explained.

On the export side the incoming proceeds shown by State Bank of Pakistan is about $130 million more than the amount of export documents lodged at the Customs which is understandable because this may pertain to outstanding proceeds in the pipeline.

But it is difference of $1.91bn in imports being reported by the SBP and Customs that has sparked off speculation in the business. The customs show import at $11.44bn based on letters of credit. But the SBP report clearance of $9.53bn worth of imported goods. Goods worth more than Rs100bn booked for import in Pakistan are either not being delivered or stuck up at the port of origin for some reason.

Whatever the reason, the business circles fear further widening of this difference between the customs and State Bank figures as international oil prices are showing no respite and trade gap is expected to further expand because of import of wheat, edible oil and other commodities.

“An independent and professional statistical institution is a nightmare for every government,” to quote a retired bureaucrat who said statistics and data have therefore always remained weak areas in Pakistan. He said the General Statistics Act was enforced in 1975 that led to the formation of a Federal Bureau of Statistics.

“But it was never supported by the government by way of allocation of funds in the budget or training of the people,” he said.

The FBS as many officials recall remained a dumping ground for all those bureaucrats who for one reason or the other fell from the grace of the government of the day. “The Bureau is last port of call for every government officer who is on his way out,” he said.

Soon after taking over in 1999, the economic managers of President Musharraf announced on many occasions to restructure the FBS into an independent and professional institutions. The World Bank and the International Monetary Fund too advised the government to set up an independent data gathering institution.

“A committee that included deputy chairman of Planning Commission, governor of State Bank and adviser to the former prime minister on finance interviewed three foreign qualified persons for appointing him as head of the proposed Statistics Institution,” a well-placed and authoritative source in Islamabad disclosed to reveal that none of the three candidates were found competent.

How serious was previous government in setting up an independent and professional statistics and data collecting and information disseminating institution can be understood by the fact that no meeting of Federal Statistical Council has been held in last 10 years.

Trade figures have been in doubt for last several years. The first controversy on trade figures was raised by vice-chairman of the then Export Promotion Bureau Abu Shamim Arif when he found that official export figures were not being reported correctly. This controversy was resolved after the matter was taken up a joint committee of the EPB and Federal Bureau of Statistics.

Responding to the growing public scepticism and advice from international institutions like the World Bank and the International Monetary Fund, the government after the year 2001 decided to restructure Federal Bureau of Statistics to convert it in to an independent and professional institution.

The economists question and people are not willing to accept government claims of growth rate, poverty containment, increase in per capita income and improvement in social indicators unless there is an independent and professional statistics and data body.


Mismatched data raises doubts over credibility -DAWN - Business; December 07, 2007

 

[Neo]

Pakistan all set to start mango export to US ​

By Ijaz Kakakhel

ISLAMABAD: Pakistan is ready to start export of mangoes to USA from the next season and to kick off the export to US, concerned officials of both the countries would hold a live videoconference in January 2008, sources in the ministry of food, agriculture and livestock (MINFAL) told Daily Times here on Thursday Times.

In this regard, the government will install proper irradation processing plant soon to eliminate pests in mango orchards. Irradation plants have already been purchased from Canada and when it reaches the country, export of mangoes would start as a first step. Gradually, the export of other fruits would also be started, the officials maintained.

The government has already established an irradation plant at Lahore and another one would be built at Karachi that would help in increasing mango exports, the official said.

The US authorities seem to have agreed to allow Pakistan to export mangoes in the coming season. The matter was in its final stages as the US is helping Islamabad in establishing infrastructure for testing the fruit’s quality.

The officials claimed that the country was producing 1.34 million tonnes of mangoes per annum and exporting less than six percent of it. If Pakistan succeeds in getting access to US market, mango export was likely to yield $150 million per annum. Such a high return would help increase mangoes production by 50 percent. The government exported 0.11 million tonnes of mango in the outgoing season 2007.

Pakistan can earn up to $1400 per tonne through mango export if it raises fruit quality, processing, packing, grading standards to the US-level against its present earning of only $350 per tonne, the officials maintained.

They said that Pakistan was the fifth largest mango producing country but it still lacked modern technology. No other country can compete with Pakistani mango in taste, flavour, pulp and beauty but it was being wasted due to recklessness of institutions concerned and orchard owners. A task force has been constituted under the chairmanship of caretaker Finance Minister Dr Salman Shah for resolving all related issues in order to ensure mango export to the US as early as possible.

Other countries importing mangoes from Pakistan include Canada, Portugal, Russia, Brazil, Chad, Burkina Faso, Spain, Bolivia, Bangladesh, Switzerland, Sweden, Denmark, Norway, Kuwait, Bahrain, Qatar, France, Malaysia, Austria, Lebanon, Syria and Central Asian States. Singapore, Malaysia and Hong Kong have shown interest in certain varieties of mango such as Sindhri, Begum-Phali, Chaunsa and Samar Behisht.

Daily Times - Leading News Resource of Pakistan