Pakistan Economy - News & Updates - Archive

[Neo]

Risks to economy increasing, says State Bank​

KARACHI, Jan 5: All key performance indicators recorded a significant decline during the first quarter of the current financial year and the resulting imbalances could have adverse consequences for the economy, the State Bank of Pakistan said in its quarterly report, released here on Saturday.

The July-September report noted that the political uncertainty ahead of the coming elections was impacting on investor sentiment.

“Risks to the economy are increasing as it is clear that neither the global nor the domestic economic environment is as benign as in the past years,” it added.

The government was relying heavily on borrowings from the State Bank, which added to the reserve money growth, the report said.

“The threat of renewed macroeconomic complications, after five years of good performance would be further heightened if prompt actions are not taken to correct the recent deterioration in fiscal indicators,” the report said.

The fiscal imbalance has already led to a substantial rise in government borrowings from the central bank. The borrowings rose to Rs191.3 billion during the first five months of the current year (2007-08), exceeding both quarterly and annual ceilings and the preceding year’s trend.

“This has enhanced monetary expansion significantly and is likely to fuel inflationary pressures, compounding the impact of the strength in international commodity prices,” warned the SBP.

The 2007-08 growth was also likely to be below the 7.2 per cent annual target, it said.

“The current trend indicates that the fiscal deficit target will not be met unless appropriate corrective measures are taken promptly,” the SBP said.

The report said that all key fiscal performance indicators had deteriorated significantly in Q1-FY08 (July to Sept 2007). The government’s budgetary borrowings from the banking system during July-1st Dec FY08 rose by Rs191.3 billion compared to Rs97.6 billion over the corresponding period in FY07.

“Importantly, the revenue balance moved from a surplus in the first quarters of the preceding years to a deficit in Q1- FY08, despite an impressive growth of 22.3 per cent in total revenues during Q1-FY08,” said the report.

Another challenge was the country’s large external current account deficit. Recent evidence indicated that the modest contraction seen in July-September 2007 was unlikely to continue in months ahead, it said.

The report said the annual current account deficit remained large while the SBP predicted that the annual FY08 deficit could remain at around 5.2 per cent of GDP, very close to the levels seen in the previous fiscal year.

“More troubling is the fact that the high and volatile food inflation is now increasingly influencing core inflation as well. Since May 2007 both measures of core inflation (i.e. non-food non-energy and the 20 per cent trimmed mean) have been trending up.

“These inflationary pressures could rise further, if fiscal imperatives force the government to pass through the impact of the recent oil prices,” the SBP report said.“The domestic economy is now more open and prone to external shocks than ever before which means domestic prices will be more sensitive to the changes in international prices, despite domestic availability. For example, Pakistan had sufficient exportable surplus of rice in FY07, but following a rise in the international prices of rice, domestic prices also increased,” it said.

The report said that the LSM (Large Scale Manufacturing) production data for Q1-FY08 suggested a deceleration in growth that reached only 6.9 per cent, the lowest since FY03 during this period.

The aggregate growth of LSM had decelerated in Q1-FY08, although disaggregate data revealed a mixed picture. The first quarter outcome of a larger number of industries reflected slower growth, said the report.

Risks to economy increasing, says State Bank -DAWN - Top Stories; January 06, 2008

 

[Neo]

Incentives likely for pharma industry​

ISLAMABAD, Jan 5: The government is considering providing incentives to the pharmaceutical industry so that it could compete in the international export market.Official sources told Dawn on Saturday that policy recommendations have been made to the government to enlarge the size of the pharmaceutical sector by providing necessary financial and technical support to help penetrate in the export market in the areas of “bulk drugs” where competitiveness is almost purely determined by economics of scale.

Successful penetration in the global market was termed a Challenge, to be favourably met by the domestic pharmaceutical industry.

In the context of globalisation, intellectual property rights will formulate the rules. Indeed, serious efforts were required to build up pharmaceutical sector as an important source of export earning.

Although, market of pharmaceutical industry is expanding at the rate of 20 per cent annually, about half of the population still has no access to modern medicines.

In their recommendations, official planners said the major thrust of the policy should be on pharmaceuticals and drugs, diagnosis pharmaceuticals, phyto-pharmaceutics, veterinary pharmaceutics and alternative medicines (homeopathy, biochemic).

Pakistan is rich in resources, which can be used for production of pharmaceutical raw material, both for domestic consumption and for export marker.

They believe that proper utilisation of these resources could help develop this sector. It would also result in saving substantial foreign exchange. The government was asked to focus on manufacturing of drugs based on slaughterhouse waste, such as plasma substitutes, insulin, pituitary extract, oxytocin etc.

Attention also should be paid on manufacturing of fermentation products, inorganic drugs, such as magnesium tri-silicate, aluminum hydroxide gel, attapulgite, ferrous salts, kaolin, sodium alginate, etc.

In this regard, phyto-chemicals, such as opium derivates (codeine, papaverine, morphine), sylimerin, aescin, isaphagula husks, etc., plants need to be cultivated and standardised on scientific grounds, and organic drugs based on imported intermediates were also mentioned.

The government was proposed that high quality material (medicinal herbs) could be the starting point for investment in the research and development (R&D).

Pakistan is among the major exporters of raw herbs and medical plants. However, most of these plants are exported without any quality standards and at very low prices.

R&D investment in this area should focus on assessing and improving the quality of currently available raw material, cultivation and conservation techniques and organic farming. The government was told to help invest on developing cost- effective extraction technologies, raw material analysis and standardisation methods of commercialisation.

True benefits of value-addition could only be utilised through export of finished herbal products. However, a suitable place in the global market for products of Pakistan origin can only occur when they are supported by extensive pharmacological and clinical evidence.

In addition, these products can also play a vital role in meeting domestic health care needs at affordable prices.

In this regard, it was proposed that adequate funds should be allocated and efficiently utilised for conducting pharmacological and clinical investigation on various medicinal plants which could lead to new products or strengthening the scientific basis of existing products.

About Unani medicines, it was proposed that these be developed on scientific lines which would help create “niche” market for the unique Pakistani products and services to herbal medicines from China and Ayurveda from India.

The government was urged to help in the standardisation and marketing of quality herbal products for exports. Also, testing laboratories of international standards on toxicology, clinical efficacy and a follow-up were proposed.

Incentives likely for pharma industry -DAWN - Business; January 06, 2008

 

[Neo]

Growth in export of sports, leather, surgical goods​

ISLAMABAD, Jan 5: Pakistan’s export of non-textile products witnessed a robust growth of more than 21 per cent during the first five months of the current fiscal year over the corresponding period last year.

Official figures compiled by the commerce ministry showed that export value of such products increased to $2.894 billion in July-November period of current fiscal, up by 21.59 per cent from $2.38 billion last year.

This unexpected growth in the export of such commodities was an outcome of marginal growth in export of sports goods, leather and value-added leather goods, leather footwear and surgical goods after a slump in the past few years.

Ironically, this growth was recorded in export of these commodities despite the fact that government subsidies were only targeted on the textile sector, which witnessed a negative growth during the period under review.

It showed that the potential is there if the government comes up with some relief package for these traditional sectors and reduces their competitive prices.

The statistics showed that the export of all sports goods (footballs and gloves) were up by 9.84 per cent and 60.66 per cent in July-November this year over last year.

Leather goods exports were up by 2.93 per cent during the period. Of these, leather garments were up by 16.83 per cent. However, export of leather gloves declined by 15.68 per cent and other leather manufactured 53.12 per cent.

The over all footwear exports increased by 5.79 per cent in the first five months of the current fiscal year, mainly owing to increase in export of some low brands.

As export of leather footwear declined by 7.13 per cent, canvas footwear witnessed 73.87 per cent during the period under review. However, other footwear exports were up by 114.52 per cent in July-November this year over last year.

Export of these sectors were on the decline for the last two years despite the fact that government exempted them from sales tax and other duties.

This showed that there were some other problems, which handicapped the growth and export proceeds of these sectors.

The export of surgical goods and medicinal instruments increased by 33.67 per cent, followed by jewellery, up by 403.23 per cent, gems 336.52 per cent, gur and gur preparation 29.44 per cent, cement 115.55 per cent, furniture by 42 per cent during the period under review over last year. The other two leading traditional products, carpets, rugs 7.64 per cent and engineering goods 12.87 per cent during the period under review over the last year.

Among the primary commodities, exports of all kinds of rice rose by 0.84 per cent, meat and meat preparations by 44.95 per cent, oil seeds, nuts 24.25 per cent, spices 5.31 per cent, tobacco 20.02 per cent, vegetables 142.33 per cent, fruits 8.36 per cent, respectively during the period under review.

However, export of fish declined by 12.02 per cent, leguminous vegetables by 40.70 per cent, and all other food items 7.12 per cent.

Growth in export of sports, leather, surgical goods -DAWN - Business; January 06, 2008

 

[Neo]

Tax reforms to be ready by next year​

ISLAMABAD, Jan 5: Chairman, Federal Board of Revenue (FBR), M Abdullah Yusuf, has said that the ongoing reforms programme would be completed by December 2009 with major focus on tax gap analysis, taxpayers facilitation, automation, plugging leakages for broadening tax regime and enhance tax to GDP ratio in the country.

“We are in the process of analysing to minimise the tax gap with the help of Data warehouse concept and the models of other countries would also be studied to address the gap and other anomalies,” he told APP here on Saturday.

M Abdullah Yusuf said the government had formulated a 10-years tax policy under which the tax to GDP ratio would be increased from existing 9.7 per cent to 15 per cent in 10-year.

He regretted that Pakistan has currently the lowest tax to GDP ratio and under the plan steps will be taken to enhance this ratio.

The FBR chairman said that during the first six months of current financial year and until Dec 31, 2.04 million tax returns have been filed by the tax payers against 1.52 million returns filed by the taxpayers during the same period of last financial year.

The FBR chairman said that his organisation had paid refunds of Rs50 billion during the last financial year while during the fist six months of current financial year, refunds of Rs27 billion have been paid to taxpayers which is almost half of the total paid during the same period this year.

About litigation of tax related matters, he said that historically this was a big issue of pending appeals, he added.

M Abdullah Yusuf said during the past three years, 82,000 pending appeals had been cleared and disposed of.

He expressed the hope that remaining pending appeals would be cleared in next six-months.

However, he attributed the delay in the pendency in the tax related cases to the unavailability of lawyers due to their strikes.

“We have no refunds pending now,” he remarked.

He said in income tax, 99 per cent refunds claims have been cleared and “we have no arrears.”

He added that in the sales tax front, 90 per cent refund claims have been cleared.

He said that because of changes in the systems, procedures and adoption of information technology in the organisation , the “level of appeals is far less than our actual appeals,” he remarked.—APP

Tax reforms to be ready by next year -DAWN - Business; January 06, 2008

 

[BATMAN]

Industrialists’ concern: Steps to be taken against load shedding​

LAHORE: The industrialists of the township industrial area have constituted a 10-member high-powered committee to take a final decision as the prolonged unscheduled load shedding has virtually crippled the whole industry. The committee has been empowered to take extreme steps in case the concerned authorities fail to take corrective measures.

The Chairman PIAF Mian Abuzar Shad would head the committee. The other members of the committee include Chairman Lahore Township Industrial Estate Amjad Ali Jawa, Senior Vice Chairman Baber Mehmood Chaudhry besides the representatives of Gulberg Industrial Estate, Riawind Industrial Estate, Ferozepur Industrial Estate and Sheikhupura Chamber of Commerce and industry.

Daily Times - Leading News Resource of Pakistan

Who says Pakistan have no problems actually we have lot of those but they are different type.
I guess we need to build dams to compensate the shortage of electricity and water.
If this shortage is pain enough than people should shun the opposing nationalist parties and all those who are in alliance with them for personal gains.

 

[Neo]

Investment in textile sector promised​

KARACHI, Jan 5: The newly-elected chairman of All-Pakistan Textile Mills Association (Aptma) Mohammad Iqbal has pledged to pursue policies for injecting fresh investments in textile industry for improving quality of products and capacity building during his tenure.

Speaking at the 49th annual general meeting of Aptma held at Aptma House, Karachi and zonal offices at Lahore and Peshawar simultaneously on video conference system on Saturday, he also pledged to take up raw material issues and rising production cost problems of the industry with government effectively and transforming Aptma into a fully professional body.

Iqbal further stated that in future Aptma would interact more with government departments and other textile associations to take them along for the growth of textile industry and to restore its due share in the country’s economy. The outgoing chairman Shafqat Ellahi Sheikh, in his speech thanked entire membership of Aptma in extending full support to him and apprised the house on various achievements during his term of office.

Investment in textile sector promised -DAWN - Business; January 06, 2008

 

[solid snake]

Just to make a comment on the textile sector. I used to go to stores like Macys, Abercrombie & Fitch etc and see a lot of "made in Pakistan" clothes. In recent months, these seem to have disappeared, replaced with "made in India" products. Actually, it's alarming how many clothes of these elite stores are now made in India. Just a few weeks ago I bought a really sleek shirt from Macys that is made in India.

But now with the appreciating Indian rupee and weakening Pakistani rupee, I expect Pakistani clothes to be back on the American market pretty soon.

 

[Neo]

Technocrats to play vital role in future government: Salman ​

ISLAMABAD (January 07 2008): Caretaker Finance Minister Dr Salman Shah on Sunday said technocrats would have an important role to play in future government to sustain economic growth achieved during the last eight years.

"I think they (future government) cannot manage the economy without having outstanding technical expertise, and I presume that they will definitely have this kind of expertise available to them as without that it is impossible to manage this economy," he told a private TV channel.

Salman Shah was responding to a question that not many people were seeing much space for technocrats in the next government.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

SBP report an eye-opener for all: LCCI ​

LAHORE (January 07 2008): The Lahore Chamber of Commerce and Industry (LCCI) on Sunday expressed grave concern over the quarterly report of the State Bank of Pakistan (SBP) that sees a significant drop in GDP growth from its target of 7.2 to 6.6 percent.

In a statement, LCCI President Mohammad Ali Mian said the SBP report was an eye-opener for all those, who matter. He said that there were little chances of improvement in the situation unless and until prompt corrective measures were taken. He said that deceleration in textile exports growth is a major area of concern as it employs 38 percent of country's total labour force, contributes 27 percent of value addition, and has 67 percent share in total exports.

The LCCI chief said the SBP report is enough to prove that the existing policies have failed to yield results. He urged the government to immediately convene a meeting with all the economic experts and the country's chamber presidents so new policy guidelines could be evolved to avert the situation.

He said the significant deterioration in all key fiscal indicator calls for urgent measures from the government side as the resulting imbalances could have adverse consequences for the economy.

The LCCI chief said the LCCI had been demanding of the government for the last many years to take steps for improvement in law and order situation but no solid action was ever taken. The deteriorating law and order situation in the country has adversely impacted foreign investment as the number of foreign investors has gone down by 25-30 percent as compared to last year and Pakistan was fast losing its business credibility in the international market. He also called for immediate action to offset the inflationary pressure, which now has started taking its toll.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Pakistan IT exports to touch $11 billion mark by 2011 ​

ISLAMABAD (January 06 2008): The IT industry of Pakistan with low telecommunication cost, 100 percent ownership of equity and repatriation of the foreign investors profits as well as tax exemption until 2016, has the potential to increase exports from $1.4 to $11 billion by 2011, Business Recorder learnt.

As a result of the government incentive-oriented policy, Pakistan is now emerging as a major player in the global IT market. These initiatives include 100 percent ownership of equity to foreign investors with the incentive to repatriate profits and tax exemption to it companies until 2016. With the overall $2.8 billion IT industry including annual export of about $1.4 billion, Pakistan attracting investment which is likely to touch over $11 billion by 2011.

IT exports in FY 2005-2006, as reported by the State Bank of Pakistan (SBP), were $72.210 million, thus exceeding the target of $72 million. This represents an annual increase of 56 percent as compare to the exports of $46.355 million in FY 2004-2005.

There are about 700 active IT companies in Islamabad, Karachi and Lahore. Other cities are being surveyed, and it is expected that there are around 50 IT companies in other smaller cities and towns. Growth in Islamabad, over the last three years, has been around 300 per cent, Karachi around 180 percent and in Lahore it is around 150 per cent.

The global community has placed Pakistan in the 'First Category' countries in 2007. Previously, in 2006 Pakistan was placed in the 'Third Category' countries. Moreover, Pakistan's IT revenue had grown to 59 percent in 2006. Similarly, new IT parks in major cities are being set up across the country while 750,000 square feet of space has already been leased out to IT companies for new parks.

There are many Pakistani IT companies that have developed world class software's in areas such as car leasing, enterprise application integration, mortgage lien processing, stock market order management, mobile convergence, data and web content management for some of the top most corporations of the world.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

WLL subscribers doubled in a year: PTA ​

ISLAMABAD (January 06 2008): The wireless phones are fast replacing fixed-line telephony as the popular mode of connecting coupled with mobile phones. Based on Pakistan Telecommunication Authority (PTA) figures, as of November 30, the Wireless Local Loop (WLL) have doubled their subscribers in a year.

The wireless users have increased to 2,074,275 in 2007 from 1,027,868 in 2006 against 4,597,279 fixed line phones. On the basis of these figures, it could be safely assumed that wireless connections are set to grow further in the time ahead while fixed line phones have come down from 5,277,546 in 2006 to 4,731,805 in 2007 with major cut to the main operator in the country.

Though, the Pakistan Telecommunication Company Limited (PTCL) has lost its fixed line subscribers, yet it emerged as a big player in wireless phones with 1,213,822 subscribers in 2007 against 661,532 in 2006. However, its fixed line users have reduced to 4,597,279 in 2007 from 5,128,442 in 2006, showing a decline of over half a million.

There are currently four players WLL operators and seven in fixed lines with PTCL and World Call operating in both the modes but both losing fixed line subscribers. World Call subscribers have dropped to 9,728 in 2007 from 13,327 in 2006.

Month-wise figures showed that WLL phones subscribers were growing regularly. The PTCL has added over half a million subscribers to its WLL network with total subscribers growing to 1,213,882 in 2007 from 66,132 users in 2006 while 447,455 are subscribing to the service of Tele Card. Tele Card had only 229, 292 subscribers in 2006.

The subscribers of World Call, another WLL operator, increased to 358,254 in 2007 from 115,637 in 2006 while Great Bear who had just 21,407 users in 2006 operates with 54,744 subscribers in 2007.

A PTA official said the trend indicates growing market for the WLL operators and both the WLL and cellular phones have changed the life of people, adding that landlines have their own benefits and will co-exist. "Is it not good that people today have more options?" he posed a question, saying that total teledensity in the country going beyond 50 percent.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Street turmoil, business losses​

The insurance firms are mulling tariff increase for insurance policies issued against riots, strikes, and fires, anticipating Rs8--Rs10 billion compensation claims on account of huge losses suffered by industry, businessmen, car owners and bankers during the four-day street turmoil following Ms Benazir Bhutto’s murder on December 27.

After the situation normalised, the Insurance Association of Pakistan (IAP) met on January 1 to assess the immense losses to their clients. Initial estimate of losses in Karachi alone are of more than Rs4 billion on the assumption that 300 cars were burnt fully while about 1,500 were burnt partially or damaged. Property worth Rs2.5 billion was destroyed in fire while marine cargo valued at Rs500 million was destroyed in transit.

‘These figures do not include motor cars and vehicle losses and also of property outside Karachi’’ a top executive of one of the leading insurance company informed this scribe. He feared that in the final count, the total losses may go up to twice as high as estimated initially.

In his address to the nation on Wednesday, President Pervez Musharraf put total losses at Rs100 billion indicating the magnitude of the catastrophe that hit the people in Sindh and Punjab.

However, the initial estimate of Rs100 billion losses include Rs50-60 billion suffered by Pakistan Railways as rioters attacked more than two dozen railway stations, destroyed large rail tracks and damaged many other installations at various places in Sindh and southern Punjab. There are reports of cash being taken away from many railway stations. For decades, the Railways has been operating without any insurance cover.

For the last few years, the public sector National Insurance Company Limited has been trying to offer various policies to Railways to cover the damages-- losses of its roll and stock and of cargoes as well as of casualties-- being suffered in a few accidents every year.

“Neither the minister of Railways or any top bureaucrat responded positively to our offers,’’ confided a senior executive who was apparently feeling relieved as the company was spared from paying huge compensation for losses in case of insurance arrangement with the Railways.

The National Insurance Corporation (NIC) officials anticipate claims from more than 50 branches of National Bank of Pakistan and First Women Bank that come under insurance over given by them. ‘’No NBP branch in Karachi has reported loss of much cash as vaults were pretty fortified and no one could enter safe room’’, a senior official said. He said that NBP may seek compensation for damages to its furniture and some of the fixtures and of course, for the loss of cash.

As it now emerges, the large scale spree of arson, looting and damages due to horrific rioting has put private general insurance companies under tremendous financial strain. Three main companies-Adamjee, Eastern Federal Union and New Jubilee Insurance-share the biggest chunk of business and obviously would receive big claims. ‘’The big companies will somehow sustain these losses but the real crunch will come on small companies and their minor losses will look big in ratios’’, says an insurance executive.,

“But I assure you that no insurance company will collapse under the pressure of these claims, which no doubt are going to be the highest in any single year, and may cause some problems’’, a top executive pointed out. He ruled out any possibility of seeking financial help from the government. ‘’Of course, we will talk to the government to offset any future shock of such nature’’ he said.

While people suffered from the sudden outbreak of rioting and total collapse of law and order machinery in Sindh and Punjab, businessmen are probably worst shaken. ‘’Imagine 1,500 trailers carrying transit import-export cargo being damaged, looted and burnt down on the highway,’’ Shamim Ahmad Shamsi, President, Karachi Chamber of Commerce and Industry (KCCI) said. The KCCI has set up a Help Desk to assess the losses suffered by businessmen and shopkeepers.

“We, in Lahore, were wondering at the fragile nature of our security system that is not even able to protect the overland transport and trade arteries linking us with the biggest port city “ a business leader in Lahore informed Dawn on telephone. With communication links disrupted, businessmen were worried about piling up of inventory of their products in factories. While much to their relief the transport link has been restored, the businessmen in Karachi and upcountry are still haunted by the possibility of a breakdown in future.

The industrialists in Sindh were stunned by the burning down of more than 22 factories by rioters. ‘’It never happened before that factories were attacked and people burnt alive,’’ a leader of Korangi industrial area said. Factories in Korangi, North Karachi, Kotri, Gharo, Nooriabad and some other places were attacked and machinery was damaged and both products and raw materials looted.

“Many such factories like Colgate, Masco Exports, Sunflower and a few others were almost gutted to ashes causing huge losses, ‘’ an industrialist said. Other factories like Clariant, Novartis Pharma in Jamshoro, Color Ital and BASF in Landhi Korangi were severely damaged.

“For the first time, as many as 500 bank branches including 50 ATMS were burnt down,’’ a multinational reported back to its principal office in Europe. On January 1, about two dozen businessmen met Sindh Governor Dr Ishraul Ibad. Also present in the meeting were top officials from all law enforcing agencies. They opened their heart to tell the Governor and senior law enforcers of their sufferings on December 27 evening. ‘’Never before we felt so insecure and vulnerable as it was that fateful evening’’, a former President of Karachi Chamber of Commerce and Industry said.

But then from the Governor House meeting emerged a positive proposal. The Governor named Sindh caretaker industries minister, chairman of a committee that will suggest setting up of security hubs around half a dozen industrial areas on public-private partnership basis. ‘’I will co-opt a few members in the committee to draw up proposals with consensus’’ Arif Abbasi, the caretaker provincial Industries minister confirmed.

The proposal came only after businessmen offered to pay for the salary and upkeep money for a force of 300 policemen to protect factories. ‘’If this proposal gets going, we will consider extending it to commercial areas’’, a participant of the meeting said.

A feeling of growing insecurity reportedly forced some businessmen from Karachi to buy property worth about Rs5 billion in Dubai in those four days which literally shook Pakistan.

Street turmoil, business losses -DAWN - Business; January 07, 2008

 

[Neo]

Energy crisis: serious and worsening​

Serious energy shortage, massive load-shedding and lowest ever strategic oil reserves are emerging as major risk to the economy.

The situation, it appears, will not be any better in the days ahead given the political uncertainty and policy planning failure over the last few years.

Combined with multi-layered risks including current account deficit, the critical shortage of energy--an ingredient that fuels the economic growth— has the potential to choke economic growth.

The shortfall in electricity generation did not emerge suddenly but was developing over the years as the development of cheap and indigenous energy sources was discouraged for lack of any vision. Sponsors of hydropower producers who were offered a tariff of 4.7 cents per unit under the 1997 policy were practically blocked from developing their plants at this tariff rate and offered a much lower rate of 3.3 cents per unit in 1999.

Same happened with development of coal resources. A Chinese firm that had agreed to set up a 600MW project at Thar for 5.79 cents per unit was forced to quit when the authorities refused to offer a tariff of more than 5.39 cents per unit. As a result, no power project could be set up in the last eight years. The regime never tired of criticising political governments for signing costly energy contracts (at the average rate of 5.7 cents per unit). But it allowed signing of contracts for thermal power project at a much higher tariff of up to 15 cents per unit, although none of these projects would be available to the economy in the next 6-12 months.

Likewise, the recent revelation of the country’s strategic oil reserves at a precarious level clearly exposed the government’s lack of vigilance and failure of energy companies to meet their contractual obligations. The strategic oil reserves for defence had also been consumed to meet shortage and thus the country’s security has been exposed to great risks.

Under the fuel supply and power purchase agreements, the oil marketing firms and power generation companies - whether in the public or in the private sector – are required to maintain a minimum of 21 days of their fuel requirements. Non-compliance of such contractual obligations is subject to heavy penalties under the law. The government, too, is required under the standard operating procedures defined in the official Blue Book to ensure that it has oil stocks for at least 21 days of consumption to meet any eventuality, either a natural calamity or war or any such event.

The imperative of maintaining stocks for 21 days was highlighted by the blocking of communication routes during the violent protests following the tragic killing of former Prime Minister Benazir Bhutto. The entire episode led to disruption of fuel supply chain that included railway, pipeline and road transport. In varying degrees, it came to light that neither the independent power producers, nor the oil marketing companies including those in the public sector had maintained sufficient stocks as required under the law.

The result would be more load shedding in the days ahead. The export growth that is already stagnating would be hit if enough energy – gas and electricity – is not ensured to the industrial sector.

The power shortage that had officially been estimated to remain in the range of 1000-2000MW during the current year has already touched 3600 MW. The economy is being run at almost 30 per cent energy shortage, which could worsen if oil supplies continue to remain short or the current disruption of oil transportation prolongs.

Wapda estimates that the country could face a power shortage of about 5,500MW by 2010. Overall, Pakistan’s total energy need is expected to be around 80 million tons of oil equivalents (MTOE) in 2010, up by about 50 per cent from the current year’s 54 MTOE. And since at least four out of five major initiatives, originally planned for meeting this demand, are uncertain at present or significantly behind schedule, the shortage estimate could be anybody’s guess.

Even the closure of business after sunset and reduction in street lightening did not get the desired results, leading to a massive load shedding of almost daily four hours across the country. Most of the industrial and commercial sector has also been deprived of the natural gas since the advent of winter. Energy shortage is severe and widespread in almost all areas, while different sectors contribute to each other’s problems. “Natural gas, power, and oil shortages were all posing risks to the economic growth in medium to long-term period,” a government official said.

A major shortfall is expected in natural gas supplies. According to an official energy demand forecast, the demand for natural gas, having about 50 per cent share in the country’s energy consumption, would increase by 44 per cent to 39MTOE from 27MTOE currently. The government had planned to add an overall power generation capacity of about 7,880MW by 2010. Of this, about 4,860MW was to be based on natural gas, accounting for 61 per cent of the capacity expansion. However, the gas-based power expansion of about 4,860MW would remain in doubt since these estimates are based on three gas import options for completion in 2010, 2015 and 2020.

A major part of about 4,860 gas-based plants may not be available and the difference may be met through other costly options. Even if the physical work is started today, it will take at least seven years to complete a pipeline project and it was not clear if construction of Iran to Pakistan pipeline project could be taken in hand in the near future.

Partly contributed by gas shortfalls, the power shortage is expected to be little over 5,500MW by 2010, said a Planning Commission official, adding that the oil demand would also increase by over 23 per cent to about 21 million tons in 2010 from the current 16.8 million tons.

This would leave a total deficit of about nine million tons of diesel and furnace oil imports. Since gas shortfalls are expected to be much higher, the country would need to enhance its dependence on imported oil, increasing pressure on foreign exchange balances.

Energy crisis: serious and worsening -DAWN - Business; January 07, 2008

 

[Neo]

Another GI clash with India​

IN a replay of Superbasmati battle, Pashmina shawl is the latest bone of contention between Pakistan and India over claims to its intellectual property rights. The clash erupted when India went ahead to apply for a geographical indication (GI) of the wool product in order to protect artisans against cheaper, machine-made fakes now flooding the market.

The move has been challenged by Pakistan. India claims that this popular luxury shawl only originates in Indian-held Kashmir territory while the fact remains that it is also produced in Pakistan’s Northern Areas. Pashmina is a textile which became popular in the West in the late 1990s. It is very soft and warm, and used primarily in scarves and shawls. Its name is derived from the Persian word pashm, which refers to the undercoat of fur on many animals –– in this case, the goat.

Pakistan and India have already locked their horns in an unending battle over the registration of Superbasmati as a geographical indication and have failed to reach a satisfactory settlement.

What is of interest in this conflict is the absence of concrete measures by the two countries to seriously solve the problem. This conflict is now set to take a new turn in the months ahead as New Delhi has decided to make lab-produced Pusa 1121 a member of its Basmati family.

And for the purpose, Indian agriculture ministry would soon redefine Basmati. That is bound to trigger a fresh round of clash between the traditional foes. Regarding Pashmina, Pakistan is reportedly ready to accept a joint GI tag over the Kashmiri shawl. But India has certain reservations. It says it would agree to that only if Pakistani Pashmina is proven to be of the same quality as the Indian variety.

The dispute surfaced when the Srinagar-based Craft Development Institute filed an application with the Geographical Indications Registry in Chennai for Pashmina.

The Rawalpindi Chamber of Commerce and Industry immediately challenged this on grounds that Pashmina shawls are also woven in Pakistan’s Gilgit-Baltistan region and that India could not solely claim the GI right.

The chamber filed a complaint last year (2007) with the registry through a New Delhi-based lawyer Najmi Waziri. India’s case became further complicated when another local body, the Kashmir Handmade Pashmina Promotion Trust, also served a notice. But later the two groups tentatively agreed to jointly apply for the Indian registration.

In India, GIs can be filed under the Geographical Indications of Goods Act, 1999.

The Indian Pashmina shawls industry has annual sales of Rs3500-6500 million and has impressed generations of women for their spectacular ability to slip through a ring. It is made from the fleece of the Changra goat, found in the higher altitudes of the Ladakh and Tibet regions. How Pashmina is faring in Pakistan is not known. Pashmina, however, is not the only case in point of a GI being disputed by different countries.

Other products particularly in the arts and crafts whose origins lie along the border lines in the subcontinent are Kutchi-work in Gujarat, Kantha embroidery and Madhubani paintings in Bihar. All of these have not been registered as GIs simply because it is not clear how are these entities to be treated.

Neither Trips law of the WTO nor the Indian legislation provides for the joint registration of GIs. At best, such an arrangement will have to be arrived at through bilateral or multilateral agreements.

Meanwhile, Pashmina market in Kashmir is facing a parallel flourishing trade in fakes in the wake of a rise in global demand for the luxury product that has now become a fashion statement. Fakes are a fallout of the prolonged state of militancy and violence in the occupied Kashmir as the local industry suffered an acute shortage of raw material.

In disputes between the two countries over GIs, the problem mainly stems from the fact that Pakistan is yet to have a GI law in place. Once Pakistan adopts a GI law, then a possible solution is simultaneous registration of homonymous GIs by both countries. And there are many commodities which are identifiable for being produced in the subcontinent and belonging to more than one country.

Homonyms are names which consist of, or contain, the same identifier for different geographical places. And under the Trips, protection is accorded to each indication, subject to certain provisions.

Meanwhile, Rice Exporters Association of Pakistan has been too critical of the government for its failure to adopt a legislation on the geographical indications (GI), a draft of which was provided by the Association to the ministry concerned.

The delay has benefited India in a big way. While the Association claims that India has notified Superbasmati in the world market as its ‘trade mark’ (exclusive Indian grain) and as a result its member firms have suffered a loss worth millions of dollars, the fact remains that it is all media reports.

The fact remains that it can only be registered as a GI by New Delhi which has not yet done so. The commerce secretaries of the two countries had been meeting off and one but have failed to reach a definite solution or compromise.

What is problematic is the fact that Basmati is sui generis to both India and Pakistan and, in a sense belongs to both countries.

Pakistan claims that the Superbasmati is an indigenous discovery. Recently Pakistani Association had stated in a presentation to the EU that its Superbasmati is an authentic variety developed as per the original methods under which Basmati-370 was approved for the first time.

Basmati-370 was first found at Kolu Tarrar in Hafizabad district in 1926. India did not grow basmati in commercial quantities since the 1970s and eventually developed a variety called Pusa. What India has done in recent months, and which could be described as a setback to Pakistan, is that it acquired a first mover advantage by making the first move to register the Superbasmati as an Indian GI in the EU.

As a result of this development, the scheduled GI talks between India and Pakistan were called off, with Pakistan alleging that India has resorted to ‘subversive’ tactics to acquire the IPR and GI. However, the fault lies with Pakistani trade bureaucracy for not enacting a GI law as yet. The next battle will be fought over what Indians describe a distant cousin of the Basmati family -- Pusa 1121. A new definition of Basmati would include this variety.

The agriculture ministry also intends to register Basmati under the International Plant Variety Protection Act. The Act would provide safeguard for only 15 years. Once Pusa 1121 is declared part of the Basmati family, exporters can market it as a cheaper alternative to the more expensive traditional varieties and increase their sales volumes.

Another GI clash with India -DAWN - Business; January 07, 2008

 

[Neo]

Biotechnology for raising farm yield​

LOW productivity in agriculture is a major cause of poverty, food insecurity, and poor nutrition in low-income developing countries. Agricultural biotechnology offers great potential as an instrument for achieving food security and poverty reduction.. It uses advanced plant-breeding techniques to introduce beneficial traits to the crops grown for food and fibre.

The need for food security and economic value of agricultural products highlights their significance for all countries of the world, no matter at what stage of development they may be. It has been estimated that around 70 per cent of poor and food-insecure people reside in rural areas and depend directly or indirectly on agriculture for their livelihoods. Whether in rural or urban areas, poor people spend as much as 50–70 per cent of their incomes on food.

In spite of the past advances in food production 800 million people, mostly in developing countries go to bed hungry everyday. Micronutrient deficiencies affect three billion people. Malnutrition hinders the development of human potential and the nation’s social and economic development.

To face these situations of food scarcity and insecurity to farmers, considerable attention has been focused on the use of biotechnology to improve the quantity and quality of food supply. This interest is fueled, in part, by a growing world population that is expected to double by the year 2025, coupled with the realisation that there are limited options for increasing the amount of land under cultivation for the production of food crops without imposing undesirable environmental costs.

Productivity gains are also essential to assure that food supplies remain adequate as world population increases by 25 per cent to 7.5 billion in 2020. And it is estimated that over 97 per cent of the projected growth will take place in the developing countries.

Applications of agricultural biotechnology to developing countries could address some of these very issues if research focuses on how to reduce the need for inputs and increase efficiency of input use. This could lead to the development of crops that utilise water more efficiently, fix nitrogen from the air, extract phosphate from the soil more effectively, and resist pests without the use of synthetic pesticides.

Successful efforts in this direction would reduce dependence on access to inputs, making the technology more readily available to poor farmers. It is possible that the introduction of agricultural biotechnology in the developing countries like Pakistan can contribute to increased productivity, lower unit costs and prices for food, preservation of forests and fragile land, poverty reduction, and improved nutrition. This depends on whether the research is relevant to poor people, on the economic and social policy environment, and on the nature of the intellectual property rights arrangements governing the technology.

In these days, the emphasis is being put up on using crops that have been evolved by biotechnological ways. So, genetically modified organisms have been produced and used commercially. Globally over 70 different commercially important species of plants have been modified to incorporate mainly seven transgenic traits i.e. herbicide tolerance, insect resistance, viral disease tolerance, fungal disease tolerance, product quality improvements, male sterility traits, others i.e. production of metabolites/chemicals, improvement of nutritional traits, incorporation of marker genes, stress resistance properties etc.

The important crops that have been modified genetically include maize, soybean, cotton, tomato, potato, alphalpha, petunia, rapeseed and mustard, rice, wheat, beet, barley, chickpea, cabbage and tobacco. But at present, four plant species (soybean, maize, cotton and rapeseed) dominate with two traits (herbicide tolerance and insect resistance).

Modern biotechnology is not a silver bullet for achieving food security, but used in conjunction with traditional knowledge and conventional agricultural research methods; it may be a powerful tool in the fight against poverty that should be made available to poor farmers and consumers. It has the potential to help enhance agricultural productivity in developing countries in a way that further reduces poverty, improves food security and nutrition, and promotes sustainable use of natural resources. Solutions to the problems facing small farmers in developing countries will benefit both farmers and consumers.

Biotechnology may offer cost-effective solutions to micronutrient malnutrition, such as vitamin A- and iron-rich crops. By raising productivity in food production, agricultural biotechnology could help further reduce the need to cultivate new lands and help conserve biodiversity and protect fragile ecosystems. Policies must expand and guide research and technology development to solve problems of importance to poor people. Research should focus on crops relevant to small farmers and poor consumers in Pakistan, such as cotton, rice, maize, wheat, and millet, along with livestock.

Expanded enlightened adaptive research on agricultural biotechnology can contribute to food security in developing countries, provided that it focuses on the needs of poor farmers and consumers in those countries, identified in consultation with poor people themselves. Public sector research, particularly through international agricultural research centres and national agricultural research systems, is essential for assuring that molecular biology-based science can fulfill the needs of poor people. Yet at present, public international agricultural research centres are devoting less than 10 per cent of their research budgets to biotechnology.

Agricultural biotechnology must be viewed as one element in a comprehensive sustainable poverty alleviation strategy focused on broad-based agricultural growth, not a technological quick fix for world hunger. There is considerable potential for biotechnology to contribute to improved yields and reduced risks for poor farmers, as well as more plentiful, affordable, and nutritious food for poor consumers. It is not, as some critics have charged, ‘a solution looking for a problem.’ The problems are genuine and momentous.

The biggest risk of modern biotechnology for developing countries is that technological development will bypass poor people. In such a case, if agricultural biotechnology research is prohibited in the developed countries, opportunities for reducing poverty, food insecurity, child malnutrition, and natural resource degradation will be missed, and the productivity gap between developing and developed country agriculture will widen.

So, it is obvious that the governments and funding agencies should continue and increase their investments in biotechnology as a means of achieving their goals of poverty reduction and food security.

Biotechnology for raising farm yield -DAWN - Business; January 07, 2008