Pakistan Economy - News & Updates - Archive

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Lack of bank financing hampers Balochistan marble and onyx industry ​

KARACHI (January 26 2008): Non-availability of financing from banks to the marble industry is retarding the development of this industry despite estimated deposits of 2.5 billion tons marble and onyx worth approximately $60 billion in Balochistan.

The biggest province of the country (in area), Balochistan, which spreads over 347,220 sq km--43 percent of total area of Pakistan--is yet to come on the world map as a marble paradise.

According to figures available, 90 percent of the dimensional stones exported by Pakistan originate from Balochistan. Since mines are leased to the miners and are not their property, banks are reluctant to provide financing to miners and small industrialists who do not have enough resources to purchase modern hi-tech machines for better mining due to non-availability of funds. In the absence of modern mining technology and machines, miners are still using primitive method of mining with the result that approximately 70 percent of this precious wealth is wasted in using blasting methods of mining.

Sources said that out of 28 districts of Balochistan, 13 are rich in a very valuable kind of marble called onyx. Despite the fact that total worth of marble and onyx deposits in Balochistan is approximately $60 billion, which is double the figure of total foreign debt of Pakistan, no serious efforts have been made to capitalise on this treasure that can turn around the destiny of Pakistan.

The first serious effort to creep the benefits of these huge deposits were made in May 2004 during the International Conference on Investment Opportunities in Balochistan (ICICB) when Governor of Balochistan announced marble city Gaddani (MCG) project whose foundation-stone was later laid by the Chief Minister in August 2004 and the project was inaugurated by the President of Pakistan, Pervez Musharraf, on May 22, 2006.

The project, located at a distance of 23 km from Site, Karachi on the main RCD Highway, has an area of 600 acres under the Lasbela Industrial Estates Development Authority (Lieda). In Phase-I of the project, 251 acres is being used for constructing factories; in Phase-II 400 acres would be used for constructing more factories. The Government of Balochistan is also allotting an additional area of 500 acres for further expansion of the project.

The cost of the project for initial 200 acres, as announced, was Rs 148 million, out of the total cost of Rs 50 million, given by the Government of Balochistan and Rs 98 million invested by Lieda as self-investment. While inaugurating this project, President Pervez Musharraf had announced Rs 300 million for the development of marble industry in the 'marble city' project, but its implementation is yet to be seen.

To provide fully efficient infrastructure in the project, it was planned to build roads, provide enough water supply to meet the requirements, uninterrupted power supply, effective sewerage network, gas supply, all kinds of telecommunication facilities, active fire fighting system, banking facilities including opening branches of local and foreign banks, modern medical facilities, and post office facilities. Water supply, which is essentially used during the process of cutting and shaping marble, is also available according to the needs.

Former Chief Minister of Balochistan had announced 25 percent subsidy on electricity charges to the factories in the 'marble city' project but it has not been implemented till date. Sources said that subsidy would have been quite helpful in attracting a large number of industrialists to set up processing factories. Several investors, who booked industrial plots in this project, did not turn up to establish their factories despite availability of basic infrastructure and low prices of plots, as compared to Karachi.

Keeping in view the fact that 90 percent of marble is exported from Balochistan, the 'marble city' is an ideally located project which is easy to reach, and miners could bring raw marble for processing easily. Since the investors always look for the best available incentives and returns on their investment, the government should fulfil its promise of providing 25 percent subsidy on electricity charges so that investors, who had booked plots, could start their operations, sources aid.

Currently, there are 18 operational marble processing factories in the 'marble city' project, while about 70 are under construction. The negative portrayal Balochistan regarding law and order situation, in both local and foreign media, keeps the investors away from investing in marble industry in Balochistan. The government also could not get the project the required projection as was done in the case of other industrial projects in Sindh and Punjab.

Sources urged the authorities to devise some kind of strategy to resolve the issues confronting speedy development of marble industry in Balochistan, which has the potential of giving a big boost to economic development.

Business Recorder [Pakistan's First Financial Daily]

 

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Gas, condensate discovered in Hyderabad ​

KARACHI (January 26 2008): The Oil and Gas Development Company Limited (OGDC) has discovered gas and condensate in its exploratory Passkhi East Well, located in Hyderabad district. The new discovery will supply an additional 10.7 million cubic feet gas per day, official sources said here on Friday.

The structure of Pasakhi East Well No 1, a joint venture between OGDC and GHPL, with OGDC as partner, was delineated in Tando Allah Yar E L license area, drilled and tested by OGDC in-house expertise. The well was drilled to the depth of 3407 metres, targeting to test the potential of sands of lower Goru Formation of Cretaceous Age.

Based on log data, 2 zones were selected for testing. Production testing of Zone-1 of Lower Goru Sand member started on January 21 this year, which proved productive.

Business Recorder [Pakistan's First Financial Daily]

 

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Signing of IPI gas sales purchase agreement in few days ​

ISLAMABAD (January 26 2008): A senior official of the ministry of petroleum has brushed aside speculation about delay by Pakistan and Iran in signing a gas sales purchase agreement (GSPA) on Iran-Pakistan-India gas pipeline project. "The agreement can be signed any time during next few days," the official said while talking to APP.

He said that the Iranian state-run gas company was currently busy in restoring supply of gas suspended owing to heavy snowfall in that country. "Therefore, the company could not arrange a meeting of its board for the approval of the gas sales purchase agreement", he added.

He said that Iranian gas company was still busy in managing the gas supply and hoped the two countries would be able to sign the agreement after improvement in the situation. Responding to a question, he dispelled the impression that there was a delay following Indian refusal to join the project. "If India decides to join the project, even in that case, separate agreements will be made," he added.

The official said that three bilateral agreements would be signed on the project. One would be between Pakistan and Iran on GSPA, second between Iran and India on GSPA and the third between Pakistan and India on transit fee. "Both Pakistan and Iran are ready to include India in the project," he added.

The IPI gas pipeline project is being developed to bring gas from the Iranian South Pars gas field through land route to Pakistan and India. A term sheet was signed between Iran and Pakistan in 2005 for supply of two billion cubic feet per day of natural gas for a period of 30 years.

An agreement on gas pricing formula had already been reached in January last year. Iran has already expressed its desire to finalise the multibillion-dollar gas pipeline deal with Pakistan without participation of India.

Business Recorder [Pakistan's First Financial Daily]

 

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Musharraf invites foreign investors ​

Saturday, January 26, 2008

DAVOS: President Pervez Musharraf on Friday invited foreign companies to invest in Pakistan and benefit from the country’s liberal investment policies.

In an address to a gathering of local businessmen organised by Chairman Pathfinder Group Ikram Sehgal, President Musharraf assured the business community of investment-friendly environment in Pakistan, offering an attractive profit rate.

Musharraf rejected the impression that recent untoward incidents in Pakistan had affected its economy. He dismissed the western propaganda about insecurity for foreigners in Pakistan and said outlanders were never affected in the terrorist activities.

The President mentioned 700 foreign investment companies currently working in Pakistan and said there was no threat to their safety. President Musharraf defended his country as a moderate state with overwhelming majority of peace-loving people who always greeted the foreigners warmly.

He pointed out the areas of investment where foreigners could get good business rewards. Referring to the power shortfall in recent months, he said Pakistan needed support from foreign investors particularly in energy sector. He said his government undertook seven projects that could be executed with the support of foreign companies on equity basis.

The businessmen appreciated President Musharraf’s initiatives for coping with challenges in tribal areas and assured to stand by his mission of sustainable economic growth. They also commended Pakistan for impressive economic progress, decline in unemployment rate, poverty reduction, its improved ranking in human development index and also for becoming a more outward-oriented economy.

The business community recognized that the economic fundamentals had improved in Pakistan but also pointed some challenges posed by persistent structural weaknesses and political uncertainty.

President Musharraf during his stay in Davos held various meetings with top businessmen representing multinational companies in various fields and discussed with them the areas of bilateral cooperation.

Musharraf invites foreign investors

 

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Foreign investors interested in steel sector: Taseer​

LAHORE: Federal Minister for Industries, Production and Special Initiatives Salmaan Taseer said here Friday that a number of foreign investors are interested to invest in steel sector in Pakistan.

Presiding over a workshop ‘Challenges and Way Forward In Steel Sector of Pakistan’ organised by Engineer Development Board (EDB), the minister said steel is the fastest growing industry in Pakistan with a lot of potential for the foreign investment.

The foreign funds especially the investors of the Middle East are very much interested in making investments in Pakistan and steel is one of the major areas for their investment, he added.

“There is a flood of money around the world especially in the Gulf States and we have to make efforts to attract this investment,” Taseer said adding that Indian industrialists have not put the entire local money there and it was the foreign direct investment that had led to industrial boom in that country.

He said that the government is playing the role to help industrial sector work efficiently. “It is government’s job to provide enabling environment with an objective to accelerate the economic activity in the country,” he said.

Taseer urged the steel sector to attract foreign investment from different parts of the world by adopting the much-required concepts of good governance in their businesses.

Meshing of academia and the shop floor (industry) are much needed to ensure the utilisation of the research and development work going on in the universities and the research institutions.

Taseer said the response of the government and bureaucracy is always positive and quick. “The government has always showed an encouraging response to the investors and businessmen,” said the minister. Nauman Wazir, Chief Executive of Frontier Foundry said the energy is the most important element in running the industry and the government should make such arrangements for undisturbed power and gas supply to the steel industry.

Federal Secretary for Industries, Production and Special Initiatives Shahab Khawaja said that government had set up various companies like Technology Upgradation and Skill Development Company (TUSDEC) under the principle of Public-Private Partnership to give a fillip to industrialisation process in the country.

Pakistan Steel Mills (PSM) Chairman Major General (R) Muhammad Javed said that the PSM is working efficiently like any commercial entity. “We are much alive to our role of stabiliser in the market,” he said. He urged the industrialists to communicate him about any complaint regarding the steel distribution system.

Daily Times - Leading News Resource of Pakistan

 

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IFIs held responsible for economic decline​

ISLAMABAD, Jan 25: Pakistan’s economy could have developed faster and would have made substantial gains had governments not invited world bodies to intervene in its development planning.

This was Dr Noor Fatima’s assessment in her lecture on “International economic agencies and Pakistan economic development”.

Speaking at the Pakistan Social Forum’s fortnightly meeting at TVO on Friday, she described the factors that led to intrusion of IMF and World Bank in economic governance of Pakistan.

Tracing the economic history of the country from 1947 when Pakistan had no sources of revenue she said Pakistan had to find external donors to meet the basic needs but with the passage of time the aid factor magnified due to political expediency of the various governments. Later the developed countries led by the US introduced various plans and philosophies like the Washington Consensus, Neo-Liberalism and Millennium Development Goals (MDGs) transforming the International Financial Institutions into agents of “Free Market Economy”.

She said that Neo-Liberalism had emerged as a powerful modern ideology over the last two decades.

The economic, political and sociological debates are devoting increasing attention to its ideological foundation, theoretical basis, and practical orientation as a worldwide phenomenon affecting almost all nations including Pakistan, she said.

Not only that, she said, these purely economic aims were buttressed by ideologies like ‘end of history’, ‘clash of civilizations’ and ‘Neo-liberalism’ to subjugate the economies of the South. Relying on foreign aid for economic development was basically a shortsighted policy bringing what could be termed prosperity without any foundation.

Dr Fatima criticised the role of the comprador bourgeoisie who did not allow the capital goods industry to develop as they were profiteering from imports from developed countries.

She said most of the macro-economic indicators were performing well the IMF entered the arena. It was IMF which created the bogey of economic failure and rapid change of the government made it easy for the economic pundits of the then governments to ask for more loans.

It was then on when the major macro-economic indicators in the 1990s — GDP, inflation, balance of payments — started showing downward trends.

She was of the view that Pakistan’s economic development could have proceeded well if more attention had been paid to development of capital industries and recourse to consumerism had not been taken.

IFIs held responsible for economic decline -DAWN - Top Stories; January 26, 2008

 

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SPI-based inflation up 12.33 percent ​

ISLAMABAD (January 27 2008): The weekly inflation, measured through Sensitive Price Indicator, surged by 12.33 percent on week ending January 24 against the same period last year, said Federal Bureau of Statistic (FBS). The SPI released by the FBS on Saturday showed that the increase in the prices of 20 essential commodities was major reason of surge in SPI.

According to the FBS, weekly inflation based on SPI was 14.92 and 14.60 percent, respectively, for Rs 3,000 and Rs 3,000-Rs 5,000 income groups. The volatility in prices of essential commodities coupled with the shortage of one after another commodity has been making harder the life of salaried class and low income group.

As inflation based on SPI was 13.42 percent for households in the income bracket Rs 5,001 to 12,000 and 10.44 percent for above Rs 12 000 on January 24, though on weekly basis the SPI declined by 2.04 percent. The combined SPI after 2.04 percent decline was recorded 165.80 percent on January 24 from 169.26 percent on January 17.

The SPI bulletin, based on data of 53 items collected from 17 urban centers showed that prices of 20 essential commodities increased, 13 declined whereas prices of 20 commodities remained stable.

As compared to last week, the prices of 20 commodities, including vegetable, cooking oil, milk, fruits, and gas witnessed the increase. As the increase of 14.03 percent was noted in the price of tomatoes, 6.57 percent in gas up to 3.3719 mmbtu, 2.88 percent in mustard oil, 2.87 percent increase in the price of 2.5 liter cooking oil tin, 2.58 percent surge in the cost of 2.5 liter vegetable ghee, 2.37 percent in washing soap nylon, 2.15 percent in masoor pulse washed, 1.48 percent in vegetable ghee loose per kg, 1.30 percent in tea (prepared) and 1.20 percent in rice Irri.

Similarly, the price of rice basmati broken increased by 0.75 percent, moong pulse washed 0.93 percent bananas 0.69 percent, gram pulse washed 0.61 percent and milk fresh 0.20 percent per liter.

Shockingly, the prices of 28 commodities have gone up by double digits over the same period last year. These included tomatoes, mustard oil, cooking oil, vegetable ghee, masoor pulse (washed), vegetable ghee (loose), tea (prepared), rice Irri, rice basmati (broken), cooked dal (plate), milk, red chillies, wheat flour, LPG, wheat average quality, chicken, firewood, bread plain (mid-size), milk powdered, etc.

Business Recorder [Pakistan's First Financial Daily]

 

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20 small dams to be built in Karak ​

KARAK (January 27 2008): The federal and provincial governments have started pondering on construction of 20 dams in the Karak district and Rs 13 billion has been earmarked for the construction of five dams. The funds have been earmarked for small dams at Ghol, Karak, Lwagar, Payal and Mardankhel.

The construction work has been started on Lwagar and Karak dams by the provincial government. Moreover, the former provincial government has completed the survey and prepared the estimated cost for small dams at Payal, Mardankhel and Ghol.

Business Recorder [Pakistan's First Financial Daily]

 

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Time for an economic U-turn​

By S.M. Naseem

WHILE the political failure of the Musharraf regime is now being accepted widely in the country, the claim for its survival and perpetuation is being staked on its dubious economic achievements during the past eight years.

Ironically, while the political U-turn that Musharraf took seven years ago, may be difficult to reverse, the time for an economic U-turn the country has avoided for so long may now have come.

My esteemed friend and former colleague, Professor Aly Ercelan, who has made an admirable transition from the academia to social activism, not unlike that of his more renowned Vanderbilt contemporary, Nobel laureate Yunus, without giving up his forte of rigorous analysis, has forcefully exposed (Dawn, Jan 19.) the thin veneer of ‘success’ that has been achieved in recent years (as epitomised by the ice-cream-pizza-hamburger consumerism, the bank-credit financed automobile explosion and the LBOD-Chashma-Tarbela-Gwadar mega project development strategy) and its impact on the poor.

The atta crisis is just the tip of the iceberg which has resulted in our titanic economic failures. As the economic shipwreck hovers on the horizon, the embattled crew is busy arranging the deckchairs to assure the passengers that it is nothing but a passing turbulence in the sea. What is really surprising is that the regime and its supporters not only continue to be in denial about the looming disaster, but that the president has made it a prerequisite for future governments to adhere to the continuity of policies that have been its genesis.

The general (retd)-president has embarked on an eight-day largely self-imposed, politically-motivated European tour, including Davos and London, to underline his key role as the guarantor of the flawed western agenda of globalisation in Pakistan. He would try to convince the Davos crowd that, without him, Pakistan will not only become a political, but also an economic disaster. A major aim of the trip is stated to be ‘image-building’ and there are no prizes for guessing whose image is at risk.

With the Bush administration already having given him the assurance that his services will continue to be needed in the war on terror, he hopes to somehow extricate himself from the external and political pressures mounting on him to give up the reins of government to ensure credible elections. Whether this gratuitous foreign tour in the midst of a critical period of extreme uncertainty and insecurity in the country, is based on false bravado or complacency, the future alone will tell.

Although Pakistan’s economic development since the Ayub years had been based on elitist and inegalitarian foundations, there was some moderation in them during the ‘democratic interregnum’ of 1972-77 and 1988-99, forced by the need to adopt populist policies in an electoral democracy. That desirable course was reversed and pushed back by the now-retired Gen Musharraf towards the Ayub era of the 1960s, which for all its faults had at least a modicum of economic rationale behind its development strategy, and failed largely because of its inability to get a majority of the population living a thousand miles away from the centre, into the loop of a virtuous circle of growth.

The Musharraf years have been bereft of any economic vision, other than the regime’s focus on reviving the economy through the largesse received from the US and other western countries in lieu of services rendered during the war on terror and the distribution of the benefits of the windfall among the regime’s political allies. The underlying socio-economic philosophy of the Musharraf-Shaukat Aziz era was callous towards the poor and obliging towards the privileged.

A fundamental tenet of this tunnel vision has been the almost total withdrawal of the state from its economic and social responsibility, including the provisioning of essential commodities and utilities, as succinctly pointed out by Ercelan. However, the distinctly militarist character of the regime so conspicuous in its political agenda has been equally transparent in its economic programmes.

While profitable public enterprises, such as Pakistan Steel Mills and Pakistan Telecommunications Corporation have been cheaply privatised after being run down by the meddling of the government in their functioning, the military-run commercial enterprises were continually strengthened and kept out of the pale of privatisation.

Luxurious housing complexes, including farm houses and shopping malls, have been developed around major metropolises by the defence housing authority through the acquisition of land from small farmers and transfer of the acquired land at below market prices to military personnel. The military also gave a shot in the arm to feudalism by evicting farmers on its land.

On the other hand, no serious attempt was made to provide affordable housing to the poorer sections of the population, the cost of which along with that of transport, constitutes an increasingly high proportion of their budgets, making it impossible for them to cope with the rising prices of food and fuel.

While the poor stand in long queues outside under-stocked and poorly-managed utility stores (which fail to cater to those who can’t afford to buy 20kg bags), the well-heeled and privileged buy their provisions from defence canteens and department stores, providing fuel to the fire of disgust, anger and violence.

Along with the military, the foreign aid and loan dispensing agencies have encouraged the privatisation of social services, especially education and health. Poverty alleviation programmes, allegedly ‘home-grown’, were meant mainly as a sop to insistent donors and were bureaucratically-run, with minimal impact on poverty reduction.

A major problem with the assessment of the economic performance of the Musharraf years has been the credibility of the data used for measuring economic growth and poverty alleviation. Despite repeated calls by economic experts for creating an autonomous statistical commission to ensure the quality and reliability of economic data, the government has continued to doctor the data to suit its political ends.

The tall claim of economic resurgence, made on the basis of high foreign exchange reserves and high GDP growth rates is now under serious doubt, as the macro-economic situation (on which the recent quarterly report of the State Bank has raised alarm bells and that poverty reduction and social indicators and the shortfalls in MDG targets indicate) has been rapidly deteriorating in the past few years.

If US foreign aid and foreign direct investment, which have provided artificial respiration to the economy, also react adversely to the worsening perception about the Musharraf regime, worse could follow.

Before it becomes too late, the doctrine of continuity of economic policies should be buried, along with kindred doctrines of necessity, indispensability and unity of command, which were forced down gullible brains in the last eight years or more. The time for taking roads not treaded for fear of upsetting the status quo has come.

The writer is the author of “The Unravelling of the 9/11 U-Turn”.

DAWN - Editorial; January 27, 2008

 

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17 trading complexes to be set up in Karachi​

KARACHI: The City District Government, Karachi (CDGK) has decided to establish 17 trading complexes in the city to promote business activities and attract investment. For this purpose, CDGK has already allocated sector wise land.

This was stated by Executive District Officer (EDO), CDGK Enterprise and Investment Promotion (EIP) Dr Shahab Imam in a meeting with members of Chamber of Commerce and Industry, Karachi (KCCI).

He said keeping in view the future needs of the city, the CDGK has prepared a Master Plan 2020, under which infrastructure of the city would be improved and better facilities would be provided for increased industrial and trading activities. These steps would generate more economic activities in the city and attract local and foreign investment, he said adding that the city government is making all economic policies in consultation with the business community. It was an outstanding demand of the business community to improve city’s infrastructure and the city government is fulfilling that requirement, he added.

KCCI President Shamim Ahmed Shamsi said on the occasion that Karachi is the revenue engine of the country, but it has not been given its due importance. The traders and industrialists of the city have always played an active role in development of the city, but this mega city has been deprived of basic facilities for many years, he added.

The KCCI chief said that he wish the 2015 Asian Olympics should be held in the city, where as efforts should be made to host 2040 World Olympics in Karachi.

He informed Dr Imam that in continuation of its tradition the KCCI holds “My Karachi” exhibition to attract investors. The main objective of holding this event is to portray Karachi’s soft image in front of the world, he added.

Daily Times - Leading News Resource of Pakistan

 

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PM’s visit to China: Pakistan-China relations to be further strengthened​

ISLAMABAD: Pakistan and China are set to ink three important agreements for promotion of investment, trade, road and rail links during the forth coming visit of the caretaker Prime Minister to China expected in current week, official sources told Daily Times on Saturday.

First agreement relates to laying railway line from Gwadar port oil city to China. Other is to double Karakuram Highway for enhancing land link of Gwadar Port with China to attract the Chinese investment in Gwadar oil city by providing better communication link.

Third and most important is Chinese lending programme based on soft loans for mega projects being carried out by Chinese companies in Pakistan. Sources said that the laying of railway line track is a part of trade, energy, transport and industrial corridor programme between two countries. Sources said that the corridor would require a set of important measures to make this initiative a success. The laying of railway line track and double Karakuram highway is one of those important measures required.

They also said that many companies are working in the areas of energy, water and power sectors and therefore China wants to provide soft loan for all the mega projects in these sectors. Sources also said that by double road of Karakuram Highway and laying railway line track between the two countries would help China to open doors for the access to central Asian states through Gwadar port.

Sources further informed during the forthcoming visit of caretaker prime minister Mohammedmian Soomro to China, two sides may also move ahead on signing agreements on Chinese investment in Gwadar Oil City, incentives for setting up of special economic Zones(SEZ) and Gawader seaport development programme.

Two sides also may sign Memorandum of Understanding (MOU) on cooperation in energy sector and Chinese petroleum ministry had earlier indicated shifting of energy related industry and it access capacity to the port. Chinese ministry has estimated that this zone can attract Chinese investment of around $ 13 billion.

Balochistan government has been asked to identify state land for development of projects at Gwadar out of which 50 square kilometers land would be allocated to Chinese developers for setting up SEZ. China-Saudi Oil refinery would be set up in proposed oil city at Gwadar.

Daily Times - Leading News Resource of Pakistan

 

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700 villages to be electrified in Balochistan​

* NHA develops toll culture
* ‘Illegal’ medical colleges’ students to be accommodated
* Progress of Utility Stores reviewed

ISLAMABAD: The Senate Functional Committee on Government Assurances has constituted a four member Sub-Committee to ensure the supply of electricity to 700 villages and the construction of three grid stations in Balochistan under the Kuwait Fund.

The sub-committee, headed by Senator Syed Dilawar Abbas, has been constituted with a directive to hold a meeting with the Balochistan chief minister for identifying 700 villages where electricity would be supplied. The committee considered the assurances given by the federal ministers on the floor of the house relating to ministries of communications, water and power, health, women development, religious affairs and industries, production and special initiatives, and underlined the need for timely implementation of the assurances.

NHA toll culture: Regarding the assurance to review the suitability of the toll plaza on DI Khan-Zhob Road and completion of the bridges on the road, it was informed that the road up to Mughal Kot has already been completed and that the work on the remaining project was currently underway.

Considering the assurance given by the then communications minister, regarding the completion of Dargai-Charsada and Tamergarra-Akargram section in response to a question asked by the Senator Sahibzada Khalid Jan, the committee was informed that N-45 originated from Nowshehra and culminated at Chitral and that its possession was transferred to the National Highway Authority because the Frontier Highway Authority could not manage it.

The committee was told that the NHA was trying its best to overcome the challenges and the entire project was likely to be completed by June 30.

To ensure timely completion of the project, the committee decided to authorise the sub-committee, constituted earlier, to review the progress of the project in March and June this year and submit the report to the committee.

It was further told that Rs 13 Million were collected from the said toll plaza during July 2006 to December 2007, which reflected that NHA had been able to develop toll culture in the country.

‘Illegal’ medical colleges: While considering the assurance regarding steps taken by the Government to save the future of students studying in illegal medical colleges, it was told that such students took up the case with the apex court and the court, taking a lenient view, directed that these students should be accommodated in the regular medical colleges.

The committee members appreciated the court’s decision and directed the Pakistan Medical and Dental Council not to compromise on the standard of education. It directed the ministry to come out with a proper legislation in this regard.

Regarding the completion of Rawalpindi Women and Chest Diseases Hospital, the committee directed the authorities to ensure completion of the project within the shortest possible time. While considering the assurance regarding framing of law for restriction on dowry and marriage gifts in response to the bill moved by Senator Muhammad Anwer Bhinder, the committee regretted the delay and directed the Religious Affairs Ministry to send the bill to the cabinet division within 10 days and the cabinet division should refer the same to the PM Secretariat for inclusion in the agenda of the cabinet at an early date.

Utility stores reviewed: The committee, in its meeting, also reviewed the progress regarding opening of mobile utility stores under the Pakistan Rozgar Scheme. It noted with satisfaction that Utility Stores Corporation (USC), which had accumulated losses up to Rs 1.7 billion seven years ago, had incurred Rs 400 million profit during the last financial year. It was told that the network of Utility Stores was being expanded and that at least one Utility Store would be open in all union councils.

It was informed that 4,500 stores have so far been established and 1,500 will be opened within the next two months.

Daily Times - Leading News Resource of Pakistan

 

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feeble voice at Davos​

Quoting economic numbers or sweet talk at a global investor forum will not help. Pakistan needs to recast its image before it succeeds in attracting new investment or sustaining the investment already being made by the overseas companies.

The image of the country projected abroad over the last one year was not enviable. It was projected to be a country at war with itself, a nation whose judiciary was struggling for justice, and defence personnel hankering for security; a country where civil society was trying to protect its rights, industrial plants closing down for want of uninterrupted energy supply, and where ration cards had to be introduced to cope with food shortages and price hike. It was projected as a country where the writ of the government was weak and despite repeated reassurances people doubt that it would hold free and fair elections and on the announced date.

It was brave of Pakistani leaders to have gone out there and make an attempt to sell Pakistan as a possible destination of investment at this point in time, an influential diplomatic source said commenting on participation of Pakistan’s delegation in the World Economic Forum.

It was a useless expensive exercise that could have been avoided. If you start on the wrong foot, you will tumble. The credibility of a country for international investors cannot be higher than what it is for the local businessmen. All you need to do is to ask any local investor about his immediate investment plans and you will get the answer, said Dr Zubair Khan from Lahore who was finance minister during Farooq Laghari’s interim government.

“I am here to dispel misconceptions about Pakistan amongst international investment community”, President Pervez Musharraf was reported to have told business elite at Devos. If

local investors were shy and put important investment decisions on hold, it would be absurd to expect foreigners to enter, what the reputable business magazine, Economist called, the most dangerous place on planet, said a senior business leader from Islamabad. “We cannot afford to give up. We must participate in international forums. It was the right decision to participate, if nothing to show that we were around. The problem was with the team that represented the country. You need to be both smart and credible to earn investors confidence. Unfortunately our leaders fall short on both counts, said a senior executive working with a lending agency wishing anonymity.

Arthur Bhayan, the CEO of Competitive Support Fund was optimistic. “The delegation, I understand, must have tried to convince the prospective investors that fundamentals of the economy were strong with most companies doing very well, the market friendly policies would continue even after the next government assume charge and the elections would be held on specified time of Feb18”.

Davos was not a mere parade of those who have reached high enough to have made it to the meeting. It was a gathering of most shrewd men and women who cannot be fooled by pep talk, said another local businessman weary of the prolonged period of uncertainty.

An attempt was made to get official response on the issue but secretary finance was in Karachi and could not make himself available despite repeated requests. None of the other officers of economic ministries reached over telephone were aware of the agenda that the official delegation was supposed to be pursuing at the WEF.

Without the strength of institutions and people no government could deliver. Which investor would dare oblige such uprooted band of self- appointed people?, asked an annoyed analyst in Karachi who wished not to be named.

A senior official accompanying President Musharraf as a member of Pakistan delegation told Dawn on condition of anonymity that the delegation had to conduct business in what he termed hostile environment. “We did what we could have done in the current situation: reassure people that fair elections were just round the corner that will put an end to the phase of uncertainty”, he said from Davos.

The business and political elite of the world pondered on business strategy and investment options in wake of tumbling key capital markets and fragile state of world financial system at the World Economic Forum.

Chances are slim that Pakistani delegation could have charmed prospective investors or successfully calmed the nervous foreign financiers who have already invested here.

Every year around this time Davos, the scenic ski resort of Switzerland, plays host to the big and mighty of the world. These leaders converge there to strengthen old links and establish new contacts. This year, however, the negative world market news took some shine off the glitzy event. The tumbling key capital markets and fragile global financial system posed fresh questions over the prospects of global economy and reliability of strategies and options pursued so far.

Till the last year, the fault lines of global economic system were not as obvious and news of bumper corporate profits, strong economic growth and tame inflation set the tone that infused optimism in participants. But the current 38th World Economic Forum was held at a time when the global economy was grappling with massive slides in stock markets, fears of a US recession and the rising oil, food and other commodity prices.

The atmosphere, therefore, was not buoyant in Davos. What the World Bank senior delegate called the better-equipped developing countries to cushion the global market fluctuations and strong fundamentals in giant Asian economies, however, provided some solace to the stressed power brokers.

The Pakistani delegation was headed by no less than President Pervez Musharraf and comprised of star members of the economic team of the last government who were not shunted out in the caretaker set-up.

Those who travelled with the President included Dr Salman Shah, the caretaker finance minister, Dr Ashfaque Hasan Khan, the special secretary finance, Dr Shamshad Akhtar, Governor State Bank of Pakistan, Mr Riaz Mohammad Khan, foreign secretary, Mr Mushtaque A. Mullick, Secretary investment. Besides them, there were many more: security and supporting staff that included officers from several embassies in Europe and the US.

There was no one in the ministry of foreign affairs or ministry of finance willing to divulge the exact number of people who travelled as part of the delegation on public expanse or quantum of the money spent on the event.

One could only hope that by the same time next year, under an elected government, Pakistan would have a better deal to offer to the global investors community at WEF 2009.

A feeble voice at Davos -DAWN - Business; January 28, 2008

 

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Steel Mills’ accord to buy Balochistan’s iron ore​

Pakistan Steel Mill (PSM) has renewed its efforts to purchase coal and iron from Balochistan to cut its expensive imports of these raw materials. However, the question arises: why local iron and coal was not used by the PSM in the past ?

Bolan Mining Enterprises (BME) — a joint venture of Balochistan, the federal government and the PPL — is the lease holder of 50 million tons of magnetite iron deposit at Chigendik and Pachinkoh in Chagai district.

When this scribe asked BME about the PSM’s latest offer for buying iron ore, its resident manager (Quetta), Mr Shamim said: “We have yet to receive such an offer”.

He recalled that a few years back, a deal was finalised between PSM and BME for the supply100,000 tones per year iron ore to Pakistan Steel. The PSM had then blended 10 per cent of local ore with the imported ore to produce sinter and pig iron.

In 2003, Mr.Shamim says the BME had supplied 100,000 tons of iron ore from Dilband mine in Mastung to PSM, but the iron proved to be of low grade. “We have not been supplying iron to PSM since then”, he said. A feasibility study about ore deposits at Nokandi area was underway. “The indigenous resources need to be developed and upgraded through beneficiation plant so that they could replace the high price imported iron”, he added.

The BME has been exploring possibilities for upgrading its iron ore through beneficiation process and it recently signed an agreement with a German consultant to carry out engineering studies for setting up such a plant. According to one assessment, iron ores found at Nokkundi and Chaghi have 64 per cent content of iron. Investments can be made for producing sponge iron by direct reduction process using iron ores from these areas.

Iron ore deposits are found at Dilband, Chilghazi, Lasbella, Nokkundi and other areas of district Chagai.

For the supply of iron ore, Pakistan Steel has negotiated with a Chinese company, the Metallurgical Corporation of China (MCC) and the Pakistan Mineral Development Company. The Chinese company is already the lease-holder of copper and gold mine at Saindak in district Chagai.

Under the proposed deal, the Chinese company will set up a plant from its own resources to extract iron ore and the ore supply is expected to begin from April 2008.

Pakistan Steel Chairman Muhammad Javed told a workshop participant in Lahore on Friday that PSM will sign an agreement on January 29 with Chinese company to buy 50,000-60,000 tonnes of iron ore. He said the purchase of 15,000 tons from Chagai had also started on a experimental basis which could be enhanced to 150,000 tonnes.

Pakistan Steel also plans to purchase 60,000 tons of coal during the current financial year from Balochistan. Over the last five years, coal demand increased by 400 per cent. Currently the local coal is being sold at a rate of Rs3000-4000 per ton, while imported coal costs between Rs6000-10000 per ton, says a trader.

Balochistan possesses huge reserves of coal at Hamai, Degari, Mach, Ziarat, Chamalang and Abegum (Table-1). The estimated reserves of coal fields in the province are 217 million tons. The 60km-long Chamalang mines produce good quality of coal ranging from high volatile C bituminous to high Volatile A bituminous with a total reserve of six million tons. Over 80 per cent of the local coal is utilised by bricks makers, while the rest are being consumed by cement plants for blending it with imported coal to reduce the cost of production.

A local businessman dealing in coal mining told this scribe on the condition of anonymity that Balochistan government provides subsidy to coal mine owners who pay only Rs100 a ton as sales tax when about 15-18 per cent a ton of coal is required to be paid as sales tax. He said, “If local mine owners supply coal to Pakistan Steel, they have to pay15-18 per cent a ton as sales tax to the government. Hence it is not cost-effective to them and they prefer to sell coal to the cement sector or brick makers.

In reply to the question as to why indigenous coal is not used by the PSM he said: “Technically, it is not feasible for Pakistan Steel to use Balochistan coal with larger sulphur content as it gathers in various parts of boiler. On the other hand,it is no longer cost-effective for the Pakistan Steel to continue relying on imported coal, as its price has increased in the international market. What is feasible to mix the cheap local coal with the imported one, hence the Pakistan Steel has planned to buy Balochistan coal, he added.

Moreover, there is a strong lobby that fiercely resisted the use of indigenous iron or coal and other inputs as that would slash their business. Appropriate technology can make relatively cheaper steel available for export and for use in the local market for construction, manufacturing, engineering and automobile sector.

Balochistan’s Dilband reserves of over 200 million tonnes contains between 30--40 per cent iron, as against 60 per cent used by PSM. Similarly, the local coal has more sulphur content than the required level. Steps need to be taken for establishing “beneficiation” plants for iron ores and ‘de-sulphurisation” plants for coal.

Table:1

Coal resources in Balochistan

Deposits Coal Resources

(Million Tons)

Hamai 76

Sor Range-Degari 50

Duki 50

Mach-Abegum 23

Pir Ismail Ziarat 12

Chamalang 6

Sub-Total 217

Table: 2

Significant iron ore deposits

in Balochistan

Deposits Size

(Million Tons)

Dilband 200

Shekran 10

Chilghazi 23

Kundi Baluchap 0.13

Pachin Koh 45

Durban Chah 1.125.

Steel Mills’ accord to buy Balochistan’s iron ore -DAWN - Business; January 28, 2008

 

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Is doing business in Pakistan easier?​

DOING business is seen slightly easier in Pakistan in certain respects than in India although the latter remains a preferred destination for foreign investors.

According to just-released 2008 edition on the ‘ease of doing business’, the fifth in a series of annual reports investigating the regulations that enhance or contain business activity, by International Finance Corporation, an arm of the World Bank, Pakistan is ranked 76 among 178 economies of the world and India sits at 120th position. In the context of South Asia, only Maldives is ahead of Pakistan, ranked at 60, but India lags behind other five nations ––Bangladesh(107), Sri Lanka (101), Nepal (111) and Bhutan (119). India held 134th ranking last year and has, thus, moved up by 14 steps and Pakistan has retreated by two steps.

However, Pakistan fares better in business start-up. Those starting a new business have to go through 11 procedures and spend 24 days in Pakistan compared to 13 procedures and 33 days in case of India. And it costs 14 per cent GNI of income per capita in Pakistan while in India it is 74.6 per cent. Pakistan ranks 59 overall in starting a business while Australia is the top-ranked economy.

Land and construction account for between half and three quarters of the wealth in any country. Thus securing rights to property strengthens incentives to invest and facilitate trade. It takes six procedures in both Pakistan and India but requires 50 days in the former and 62 days in the latter to register a property, the cost of getting registered being 5.3 per cent of the property value in Pakistan and 10.3 per cent in India.

The collateral and bankruptcy laws in most South Asian countries do not effectively protect the legal rights of borrowers and lenders. The region’s average is 3.8 in the 0-10 index, the lowest in the world. But in respect of protection of investors, which is crucial to entrepreneurship and investment, it fares relatively well. Pakistan is slightly ahead of India on 0-10 scale by scoring 6.3 compared to six by India.

Regarding number of tax payments in a year, Hong Kong holds an ideal position in the world. There is only one income tax and one fuel tax to be paid by a medium-sized enterprise. Pakistan ranks 146 overall in this respect and is placed slightly better than India. There are 47 tax payments in a year in Pakistan and 560 days are involved, compared to 60 and 271 days in India. And these taxes constitute 40.7 per cent of the companies’ profits in Pakistan, but 70.6 per cent in India.

In South Asia, doing construction work is a difficult proposition. Complying with building regulations is so costly that many builders would prefer to opt out or pay bribes to pass inspections or simply build illegally. To deal with licences requires 12 procedures, 223 days and costs 869.5 GNI per capita in Pakistan. In India, it requires 20 procedures, 224 days and costs 519.4 per cent GNI per capita.

The pace of reforms has been slow in South Asia. In 2005-06, India took five reforms and Pakistan two and in 2007 both countries another two reforms each to reduce the time, cost, and hassle for businesses to comply with legal and administrative requirements. India took over top position in reforms from Pakistan which held it two years ago.

A country must decide which reforms to tackle first. Four steps to successful reforms are: administrative reforms that need legislative changes, cutting unnecessary procedures and introducing standard application forms. Pakistan, according to the report, did all these things in reforming its trade administration. Apart from implementing risk management techniques, Pakistan also introduced a new customs clearance process that allows importers to file cargo declarations before goods arrive at the port. Hence, trade is easier in Pakistan as customs clearance at container terminal takes only four hours compared to ten days in 2004.

In Pakistan and India, cities vary in their performance on the ease of doing business. Hyderabad in India and Karachi in Pakistan outperform the rest of the cities. If each state were to adopt the country’s best practices, India would rank 79th in the world instead of current ranking of 120th. This means, for example, adopting Jaipur’s regulations on starting a business, Bhubaneshwar’s rules on licensing, contract enforcement and taxes, Hyderabad’s property regulations and Chennai ’s trade practices.

The same is true for Pakistan. If each Pakistani region adopted Lahore ’s regulations on starting a business, Peshawar’s regulations on dealing with licences, employing workers and contract enforcement and Karachi ’s regulations on bankruptcy, taxes and property, Pakistan’s ranking would jump from 76th to 52nd.

The IFC methodology has, however, its limitations. It only studies regulations affecting ten stages of a business’s life but does not take into account the important areas such as a country’s proximity to large markets, quality of infrastructural services, underlying strength of institutions and transparency of government procurement. Then abnormal law and order situation vitiates the business environment. So mere improvement in regulations is not enough to make doing business easier.

Is doing business in Pakistan easier? -DAWN - Business; January 28, 2008