Pakistan Economy - News & Updates - Archive

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Construction of LNG terminal at PQ: Pak-Dutch joint venture violating safety standards ​

KARACHI (February 24 2008): A Pakistani and Dutch joint venture (JV) is reportedly planning to construct a liquefied natural gas (LNG) terminal in violation of national and international safety standards at Port Qasim.

The Engro Vopak Terminal Limited (EVTL) and the Royal Vopak (RV) of Netherlands are negotiating with a four-member delegation of Port Qasim Authority (PQA) in Dubai on a suitable location for development of the Mashal LNG Terminal (MLT) at Port Qasim.

"EVTL wants the terminal to be set up next to the existing Liquid Chemical Terminal (LCT) while the PQA wants it on the allotted land of Chara Creek or muchakland due to safety concerns," well-placed sources told Business Recorder on Saturday.

If the proposed terminal is built next to LCT, which would cost the builder an estimated $100 million to $1000 million, would not only put the surrounding area into risk, but also violate a three-point criterion set by the ministry of petroleum and natural resources in Liquefied Natural Gas (LNG) Policy, 2006 on safety standards.

According to the criteria based on technical, financial and safety standards the project developer would have to ensure that "the project complies with the World Bank's Health, Safety and Environmental (HSE) guidelines, Pakistan's Environmental Protection Act, 1997, National Environmental Quality Standards, Pakistan's health, environment and safety standards."

They said that in case of any accident like fire eruption, etc the consequences would be far more disastrous than caused by a normal blaze. "Placing LNG and chemical together will be nothing but inviting a health and safety risk," they added. "Constructing a gas terminal in proximity of a chemical terminal will be potentially dangerous and risk safety standards of the port... it should be built on an isolated place," they argued.

Sources also said the development was also likely to cause operational problems at the Port Qasim. "Providing a one-way transit to a LNG vessel destined for the proposed terminal would affect general traffic at the port," they added.

They claimed that the EVTL by sticking to its point on location of MLT, wanted to grab an attractive source of income in future by getting charge of the LNG cargo handling. They said construction of the MLT would be undertaken progressively in two stages and during the first stage the terminal would be used as a floating set-up.

The planned design capacity of initial floating terminal would be of two million tonnes of LNG per annum with a capability to handle vessels of up to 75,000 tonnes.

In the second stage, they said a shore-based installation would be made and capacity of the terminal would be increased as per demand to cater for tank capacities, etc on the allotted land. Sources said that full terminal capacity of the MLT was targeted at seven million tonnes of LNG per annum. According to LNG Policy, 2006, the MLT was to be built by the LNG developer, Shell Gas & Power, but the project would now be undertaken by the EVTL and RV after the former showed lack of interest in the project.

Business Recorder [Pakistan's First Financial Daily]

 

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Investors get the jitters before installation of new government ​

ISLAMABAD (February 23 2008): International investors are said to be nervous following the victory of anti-Musharraf parties over his allies in February 18 polls.

The sources said official circles dealing with investors were trying to convince the 'worried' investors by arguing that the leadership of winning political parties would not revert the policies of their predecessors as President Musharraf himself was there to help ensure continuity of his economic policies in the best national interests.

However, political analysts were of the view that President Musharraf would not be as strong as he is, after the installation of a coalition government comprising Pakistan Peoples Party, Pakistan Muslim League-Nawaz and Awami National Party. Economic analysts believed that the new government would be taking a close look at economic policies of Shaukat-led government with a view to effecting drastic changes in them.

The sources said the caretaker government has shelved plan to float international bonds because of increasing spread and political uncertainty in the country, adding that the new government might go for it in May.

Global Depository Receipts issues for government shares in two of the largest commercial banks were ready, but their launching has been postponed due to global financial market slowdown and until the installation of new government. They said some of the international banks were being asked to give presentations to the officials for floating bonds so that everything should be ready for launch at a proper occasion.

The sources said the economic managers were also busy negotiating launching of Islamic bonds with 12-13 local banks, mainly to minimise borrowing from the State Bank of Pakistan.

Business Recorder [Pakistan's First Financial Daily]

 

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$450 million LNG terminal at Port Qasim: SSGC, Shell finalise LNG import project deal ​

KARACHI (February 23 2008): The Sui Southern Gas Corporation (SSGC) and Shell Gas & Power (SG&P) are close to sign an agreement on the establishment of 3.5 million tons per annum (mtpa) LNG import project as an additional source of gas supply to meet soaring demand of the country.

Under the agreement SG&P would also develop a liquefied natural gas (LNG) terminal at Port Qasim as a re-gasification facility at an estimated cost of $450 million, well-placed sources told Business Recorder on Friday.

The Mashal LNG Terminal (MLT) would be constructed under the country's first LNG project "Pakistan Mashal LNG Project" to ensure uninterrupted supply of the ever-needed fuel to industries, power or fertiliser plants etc on sustainable basis.

The SG&P, which would be appointed as "LNG Developer", would also be responsible for purchasing LNG supplies, transporting them to the MLT besides designing, constructing, operating and owning the proposed terminal at Port Qasim.

"The SSGC and Shell Gas & Power have finalised talks on the Mashal LNG Project and Shell would soon formally be appointed as a LNG Developer under an integrated project structure," sources close to the project said.

They said the SSGC, which has been appointed by the government of Pakistan as a project facilitator, had earlier received at least eleven Expressions of Interest (EoIs) from various local and international companies and consortia.

"The SSGC had short-listed the Consortium of Fauji/Fotco/4Gas/Sojitz and Shell Gas & Power in its bidding and now has finally selected the Shell as LNG Developer," sources added.

Those pre-qualified in the Pakistan Mashal LNG Project bidding process included AES Pakistan Ltd, BP Gas Marketing Ltd, Consortium of Fauji/Fotco/4Gas/Sojitz, ENI Pakistan Ltd, Mitsui/Kogas, Persian LNG and Shell Gas & Power, they added.

They said the MLT would be used as an LNG import terminal and have facilities of receiving, storage and re-gasification of the LNG.

"The proposed terminal will have a 3.5 mtpa LNG import capacity which is equivalent to 500 MMCFD of gas," said the sources. They said the government had estimated that supply of gas through the LNG import project would be possible by 2010-11.

Sources said that the SG&P would be allowed to import LNG in accordance with applicable rules and regulations of imports and would have to obtain a license from Oil and Gas Regulatory Authority (Ogra) to construct the MLT in line with Ogra Ordinance, 2002.

They said the LNG terminal would be constructed on the basis of a three-point criterion comprising strict technical, financial and health, safety and environmental standards.

On technical side, they said the terminal would be constructed on technical standards prescribed by the Ogra from time to time and internationally acceptable industry technical standards.

Sources said that the SG&P would also need to ensure that the project complies with World Bank's health, safety & environmental standards, Pakistan's Environmental Protection Act 1997 rules, regulations, National Environmental Quality Standards, Pakistan's health, environment and safety standards etc.

Business Recorder [Pakistan's First Financial Daily]

 

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'Financial sector grew smartly despite attendant risk' ​

KARACHI (February 24 2008): The country's financial sector has experienced extraordinary growth during the last few years and its assets have grown to 180 billion dollars, however growth in financial sector brings with it attendant risk, said Dr Shamshad Akhtar while speaking at the convocation of the Institute of Bankers Pakistan on Saturday.

Although, the sector is confronting the financial risks, but growing macroeconomic imbalances, unless addressed urgently, could threaten the financial stability, she warned.

She said one of the major risks to Pakistan's financial stability is lack of financial sector diversification and major concern is regarding the size of surrounding non-bank sector. "We need to revisit the regulatory and supervisory framework of insurance sector and Non Banking Financial Companies (NBFCs), as these are fragmented and weakly capitalised," the SBP governor added.

She said that for financial sector stability, it is critical that such institutions be better capitalised and a conducive environment is created for the growth of promising segments especially investment schemes, including mutual funds.

The SBP governor said during the last 10 years, the county's financial sector has presented tremendous growth reaching at 125 percent of GDP as compared to 95 percent of GDP in 1997, while financial sector stability has been further fostered by strengthening of banks' system-wide capital base to Rs 372 billion.

The governor said that greater credit diversification is another area where there is scope of strengthening financial sector, while presence of undercapitalised small banks is likely to pose risks particularly during periods of adverse economic cycles.

New Islamic and other foreign banks are expending banking industry in Pakistan and foreign and Islamic banks' presence, besides mergers and acquisitions will enhance competition in the banking sector, she said and added that there is also further scope for enhancing banking sector stability.

She said that due to the high competition and acquisitions, the share of five largest banks has dropped to 50.6 percent of total banking sector assets, which stood at 63.2 percent in 2000.

She said that overall banks' Non Performing Loans have also been improved and reached 7.7 percent from 17 percent, while net NPLs stood at 2.3 percent. The SBP has recently allowed 100 percent provisioning against NPLs.

Some measures for the stability of financial sector have been introduced in Sidney (Australia), however the SBP already has implemented these measures to enhance the stability of the financial sector, Akhtar said.

"The SBP has introduced exhaustive guidelines on corporate governance, risk management, business continuity plan, internal controls and stress testing in order to promote sound banking practices", she added. In addition, banks have also initiated implementation of the standardised approach, as prescribed under Basel II regulations, the governor said.

"Financial stability will further benefit from State Bank efforts to operationalise Real-Time Gross Settlement System (RTGS) named as PRISM (Pakistan Real Time Interbank Settlement Mechanism) in June 2008 that will allow shift from traditional paper-based, end-of-the-day settlement system to electronic payment system for large value, low volume interbank funds' transfers and settlements," she added.

She said the country's prudential regulatory regime has the ability to promote and preserve financial sector stability, therefore, the State Bank has set up a Financial Stability Department, which is being issuing annual reports on the financial sector performance.

Talking about the training of bankers, she said that SBP field offices would deliver and conduct the special training programmes in the IBP, which would be sponsored by the banks and different financial institutions. The chief executive of IBP, Muhammad Saleem and co-ordination director Johar Ali also spoke on the occasion. Later, Dr Shamshad Akhtar awarded gold medals to successful students.

Business Recorder [Pakistan's First Financial Daily]

 

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Financial sector assets at $180bn: Shamshad ​

Underlines diversification for banking sector growth,calls for consumer protection, deposit insurance

Sunday, February 24, 2008

KARACHI: State Bank of Pakistan (SBP) Governor Dr Shamshad Akhtar has underscored that diversification of banks’ loan portfolio to support more retail and infrastructure financing will be critical for the growth of the banking sector.

Speaking at the convocation of the Institute of Bankers Pakistan (IBP) here on Saturday, she said over 50 per cent of the bank credit portfolio was concentrated in the corporate sector serving few industries.

She said the financial sector was now predominantly owned by the private sector that presents some new challenges. “SBP is now working in developing adequate policy framework for consumer protection, development of Financial Safety Nets such as Deposit Insurance, and a well-laid out ‘Lender of Last Resort’ procedure which strike a balance between enhancing consumer protection and minimizing moral hazard concerns,” she said and maintained that SBP also established Consumer Protection Department to safeguard interest of consumers.

“At the same time, there is a need to encourage improvements in efficiency of financial intermediation by reducing banking spreads,” she stressed and added the State Bank is further developing capacities to monitor operational risks associated with weak internal control systems, delays in adoption of information technology solutions and outsourcing of processes by banks.

She also underlined that the central bank also needed to develop its capacities to monitor the financial position and probability of default of the corporate and household sector within the stability framework.

The governor said that presence of under-capitalised small banks was likely to pose risks, particularly during periods of adverse economic cycles. “Entry of foreign and Islamic banks and mergers and acquisitions will enhance competition, diversify business sources and facilitate further consolidation,” she remarked.

“Although competition is emerging with the growth of mid-sized banks and foreign acquisitions, five largest banks hold 50.6 percent of total banking sector assets; though there is a clear reduction in the level of concentration which was at 63.2 percent in 2000,” she added.

She said one of the major risks to Pakistan’s financial stability was its overall lack of financial sector diversification. “Of particular concern is the size and issues surrounding the non-bank sector,” she said pointing out that of the total financial sector assets the insurance companies account for barely three per cent, mutual funds three per cent and these too are largely sponsored by banks, while other non-bank financial companies account for two per cent of the system and holders of listed private bonds are less than one per cent.

She said the country experienced an ‘extraordinary growth’ in the financial sector as its assets grew to $180 billion or 125 per cent of the Gross Domestic Product compared to 95 per cent of the GDP at the end of 1997.

She added that financial stability in Pakistan had benefited from structural transformation of the banking sector and policy initiatives of the central bank.

She said the country’s prudential regulatory regime had been crafted to promote and preserve financial sector stability and for this purpose the SBP set up a Financial Stability Department.

Dr Akhtar said the regulatory framework encourages financial sector growth, diversification and innovation, healthy competition and risk taking to ensure a sustainable and aggressive income stream, opportunities for enhancing the franchise value of banks, prudent behaviour and effective risk management and loan provisioning requirement are stringent enough to discourage infection of loan portfolio besides safeguarding social obligations and consumer interests.

She said that enhancing banks’ capital base to Rs372 billion had further fostered the financial sector stability. “Process of consolidation has been catalysed by 30 odd proactive mergers and acquisitions (both domestic and foreign-led), moratorium on licensing of conventional banks, and rise in minimum capital requirements for banks and DFIs,” she said and added that banks have also initiated implementation of the standardized approach, as prescribed under Basel II regulations. Over the period, this is expected to augment the economies of scale and scope, and efficiencies as competition and innovation grows, she opined.

Dr Akhtar said the enhanced push from the State Bank for delivery of development finance will help diversify the credit portfolio and will alter risk profile as there is relatively low correlation of the inherent risk factors among different sectors.

She believed that the financial stability would further benefit from SBP efforts to operationalise Real-Time Gross Settlement System (RTGS) named as PRISM (Pakistan Real Time Inter-bank Settlement Mechanism) in June 2008 that will allow shift from traditional paper-based, end-of-the-day settlement system to electronic payment system for large value, low volume inter-bank funds transfers and settlements.

Moreover, derivative market, which is an important pillar for effective risk management, though still in its infancy, has taken off.

The derivative market is being regulated under SBP’s Financial Derivatives Business Regulation. “At present, interest rate swaps are allowed in Pak Rupee and in other currencies after SBP’s approval. Likewise, forward rate agreements are also allowed in Pak Rupee and other currencies with the approval of SBP.” Presently 5 banks have been given the status of Authorized Derivative Dealers by SBP, she added.

Financial sector assets at $180bn: Shamshad

 

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Jute exports to meet $15m target ​

Sunday, February 24, 2008

ISLAMABAD: The jute industry of the country is all set to achieve an export target of over $15 million in 2007-08, industry sources told The News.

The industry has the capacity to produce more than 200,000 bales per year. Despite being at a disadvantage position in respect of raw material, this industry is establishing its export market through quality assurance, firm commitment and remarkable service portfolio.

The jute industry caters to the eco-friendly packaging demand of the government food departments including PASSCO, Punjab food, Sindh food etc.

The industry, however, has many challenges and impediments that need to be addressed immediately. The major impediment in enhancing the export base is volatile procurement schedule of the government departments.

The most glaring of which is the sudden demand from Trading Corporation of Pakistan. The industry fulfilled the requirement but this uncertain situation disrupted the logistics position. Industry sources say that the most plausible solution to save the industry from keeping more than desired inventories and abrupt orders is the co-ordination among all the government departments with the active participation of industry representatives for chalking out a detailed supply programme.

The industry believes that the change in the buying pattern and switching it to quarterly basis instead of buying in one go would help sustain and enhance the export potential of the industry.

This buying pattern will relieve the industry from keeping undesirable inventories in one end of the extreme and keep the exportable surplus for sustained foreign exchange earnings, on the other.

The industry has also consistently faced problem shipping raw material from Bangladesh as the protocol signed between Bangladesh and Pakistan governments envisages that only the two country flags carriers can transport cargo on this route. This is further aggravated by non-availability of berthing facilities at Karachi Port Trust.

As the country is a non-cultivating country of the raw jute, the industry should be encouraged by fixing at least two berths for jute shipments.

Recent shortage of power and gas has also led to non-conformity of production schedule resulting in huge losses for the industry.

Primarily due to power shortage, the industry switched over to gas generators for keeping its mills running but later on the gas shortages started to disturb the manufacturing process.

Jute exports to meet $15m target

 

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Pakistan, Greece to sign MoU for olive oil production ​

Sunday, February 24, 2008

KARACHI: Pakistan and Greece are likely to sign a Memorandum of Understanding (MoU) for cooperation in olive cultivation and olive oil production.

According to the information reaching Trade Development Authority (TDAP) here on Saturday, MINFAL has already accepted the draft of the MoU which has now been forwarded to the Greek authorities for finalizing arrangements for signature.

Once signed, the MoU would also provide the necessary framework for collaboration in the field of agriculture.

Pakistani exporters would be able to re-export Greek olive oil to various regions where quality olive oil is needed.

Olive oil is one of the major and eminent products of Greece and is stated to be the finest in the world. The olive oil currently being sold in Pakistani supermarkets is imported mainly from Spain and Italy. These countries mix 30 percent of Greek olive oil with their own product to improve its quality and then re-export under their own brands.

According to the Pakistan Embassy in Athens, Greek entrepreneurs have shown interest in Pakistani market for olive oil.

They seek a base for further future collaboration between Pakistan and Greece through which Pakistan can benefit from Greek expertise and experience to plant olive trees on a large scale and then eventually set up olive oil processing units here.

The weather conditions in the northern part of Punjab and the Hazara area in NWFP are quite similar to those in Greece.

Pakistan with a population of over 160 million is deficient in edible oil, which is imported in vast quantities.

Pakistan, Greece to sign MoU for olive oil production

 

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Financial sector assets are now 125 percent of GDP: Dr Akhtar​

KARACHI: The assets of country’s financial sector have grown to $180 billion or 125 percent of the Gross Domestic Product, said Dr Shamshad Akhtar, Governor State Bank of Pakistan (SBP), on Saturday. She said its assets were only 95 percent of GDP in 1997.

Speaking at the convocation of the Institute of Bankers Pakistan (IBP), the governor said, “Financial stability in Pakistan has benefited from structural transformation of the banking sector and wide-ranging policy initiatives of the State Bank.”

“The country’s prudential regulatory regime has been crafted to promote and preserve financial sector stability and for this purpose the State Bank has set up a Financial Stability Department,” she said.

Dr Akhtar said the regulatory framework encourages (i) financial sector growth, diversification and innovation; (ii) healthy competition and risk-taking to ensure a sustainable and aggressive income streaml; (iii) opportunities for enhancing the franchise value of banks; (iv) prudent behavior, effective risk management and loan provisioning requirement stringent enough to discourage infection of loan portfolio; and (v) safeguarding social obligations and consumer interests.

SBP governor said the State Bank has introduced exhaustive guidelines on corporate governance, risk management, business continuity plan, internal controls and stress testing in order to promote sound banking practices.

In 2007, SBP was stringent in overseeing the management and board conduct, their conformity to fit and proper criterion. Furthermore, two major sets of new regulations were introduced under which banks were required to induct independent board members and adopt umbrella risk management guidelines. “There is now a survey underway to assess the compliance of banks’ corporate governance with SBP regulations,” Dr Akhtar added.

She said the financial sector stability has been further fostered by strengthening of banks’ system-wide capital base to Rs 372 billion. “Process of consolidation has been catalyzed by 30 odd proactive mergers and acquisitions (both domestic and foreign-led), moratorium on licensing of conventional banks, and rise in minimum capital requirements for banks and DFIs,” she said and added that banks have also initiated implementation of the standardized approach, as prescribed under Basel II regulations. Over the period, this is expected to augment the economies of scale and efficiencies as competition and innovation grows, she opined.

Dr Akhtar said the enhanced push from the State Bank for delivery of development finance would help diversify the credit portfolio and would alter risk profile. She said the financial stability will further benefit from State Bank’s efforts to operationalize Real-Time Gross Settlement System (RTGS) named as PRISM (Pakistan Real Time Inter-bank Settlement Mechanism) in June 2008 that will allow shift from traditional paper-based, end-of-the-day settlement system to electronic payment system for large value, low volume inter-bank funds’ transfers and settlements.

Dr Akhtar pointed out that money market’s stability has also improved with the SBP’s efforts to develop an effective market-determined yield curve for government securities which sets the stage for the corporate debt market.

Moreover, derivative market, which is an important pillar for effective risk management, though still in its infancy, has taken off. The derivative market is being regulated under SBP’s Financial Derivatives Business Regulation. At present, interest rate swaps are allowed in Pak Rupee and in other currencies after SBP’s approval. Likewise, forward rate agreements are also allowed in Pak Rupee and other currencies with the approval of SBP. Presently there are five banks which have been given the status of Authorized Derivative Dealers by SBP, she added.

However, Dr Akhtar said the substantial growth in financial sector brings risks as well. She said although it is comforting that financial risks are well contained, growing macroeconomic imbalances, unless addressed urgently, could threaten the financial stability. She said one of the major risks to Pakistan’s financial stability is its overall lack of financial sector diversification. “Of particular concern is the size and issues surrounding non-bank sector,” she said and added that of the total financial sector assets insurance companies account for barely 3%, mutual funds 3% and are largely sponsored by banks. Other non-bank financial companies are only 2% of the system and holders of listed private bonds even less than 1% of it, she said.

Dr Akhtar said the NBFCs are fragmented and weakly capitalized, and added that there is a need to revisit the regulatory and supervisory framework of insurance sector and NBFCs. For financial sector stability, it is critical that such institutions be better capitalized and a conducive environment be created for the growth of promising segments (collective investment schemes including mutual funds), niche markets and products for leasing, modarabas, housing finance and venture capital.

While market capitalization has grown impressively, its role in raising long-term risk capital or debt for new industry over the last several years has been limited, she added.

She stressed that there is also further scope for enhancing banking sector stability too. Although competition is emerging with the growth of mid-sized banks and foreign acquisitions, five largest banks hold 50.6 percent of total banking sector assets, though there is a clear reduction in the level of concentration which was at 63.2% in 2000, she added.

The governor said that presence of undercapitalized small banks is likely to pose risks particularly during periods of adverse economic cycles. “Entry of foreign presence and Islamic banks and mergers and acquisitions will enhance competition, diversify business sources and facilitate further consolidation,” she remarked.

The SBP governor pointed out that another area where there is scope of strengthening financial sector stability is the greater credit diversification. She said that over 50% of the bank credit portfolio is concentrated in corporate sector serving fewer industries.

“Diversification of banks’ loan portfolio to support more retail and infrastructure financing will be critical for the growth of banking sector,” she said and added the State Bank also needs to develop its capacities to monitor financial position and probability of default of the corporate and household sector within the stability framework.

Dr Akhtar said that taking cognizance of maturity mismatches, SBP has introduced different cash reserve requirements for demand and time liabilities to encourage banks to mobilize long-term deposits.

She said the financial sector is now predominantly owned by the private sector that presents some new challenges. SBP is now working in developing adequate policy framework for consumer protection, development of Financial Safety Nets such as Deposit Insurance, and a well-laid out ‘Lender of Last Resort’ procedure.

“At the same time, there is a need to encourage improvements in efficiency of financial intermediation by reducing banking spreads,” she stressed and added the State Bank is further developing capacities to monitor operational risks associated with weak internal control systems, delays in adoption of information technology solutions and outsourcing of processes by banks. staff report

Daily Times - Leading News Resource of Pakistan

 

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Pak products’ fair in London attracts big crowd ​

Sunday, February 24, 2008

LONDON: A two-day exhibition and sale of fabric, home ware, fashion wear, jewellery, carpets and gifts by Pakistan’s women entrepreneurs opened here on Friday at the Kensington Great Hall, Central London, and drew a big crowd which came to see the country’s wide range of products.

Entitled as “From Loom to Luxury,” the exhibition reflected the quality of manufacturing rooted in the rich heritage of Pakistan. It is being participated by 55 women entrepreneurs.

The visitors showed keen interest in the products which included textiles, leather, marble, carpets, fine art crafts, herbal food while information on travel and tourism was also available to the guests. The unusual and diverse array of products and items not usually found in trade and business exhibitions caught the eye of the guests drawn from the diplomatic corps, business community, students and the private sector.

Speaking on the occasion, Dr Maleeha Lodhi, Pakistan’s High Commissioner to the UK, described the event as the first of its kind to be arranged in the British capital for promoting products manufactured by small and medium entrepreneurs of Pakistan.

She mentioned that the two key objectives of the exhibition were to boost trade and enhance Pakistan’s image by countering stereotypes. “The main purpose of this event is to secure access to the UK and European markets for Pakistani women entrepreneurs,” she said.

Dr Lodhi praised the entrepreneurial skills of Pakistani women and said on display are their creative magic.

According to the High Commissioner, Pakistan is generally known in Europe as the main manufacturer of towels and bed linen but this trade exhibition will show to the British people a wide range of other products manufactured in the South Asian country.

The idea of holding such an event was conceived by the Pakistan High Commission and has been sponsored with the active collaboration of the Trade Development Authority of Pakistan.

Pak products’ fair in London attracts big crowd

 

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CDWP to discuss 36 projects worth Rs 102 billion​

* The projects are planned in sectors including flood protection, energy, health, governance, physical planning and housing, devolution and area development, transport and communication and higher education

ISLAMABAD: The Central Development Working Party (CWDP) is likely to discuss 36 developmental projects worth Rs 102.124 billions including a foreign exchange component (FEC) of Rs 18.753 billion.

Earlier the CDWP meeting was scheduled to be held on February 16, but was delayed and now it would be held on Feb 26. The meeting would take up 36 different development projects worth Rs 102.124 billion with foreign exchange component of Rs 18.753 billion.

The projects are planned in sectors including flood protection, energy, health, governance, physical planning and housing, devolution and area development, transport and communication and higher education. Deputy Chairman Planning Commission Dr Akram Sheikh will preside the meeting.

The CDWP can only approve projects costing up to Rs 500 million and the projects costing above this limit must be approved by the Executive Committee of the National Economic Council (ECNEC). The CDWP will recommend to ECNEC for approval if a project’s cost is above Rs 500 million. The CDWP agenda, obtained by Daily Times, shows that the Flood Protection Project worth Rs 1.997 billion consists of eight different projects.

The agenda shows 10 projects in the energy sector with total cost of Rs 24.245 billion including a foreign exchange component of Rs 5.043 billion. These projects are: 132 KV substation down town, Gwadar, Qesco; 132 KV substation Sanghar Housing Scheme Gwadar, Qesco; 132 KV substation industrial estate Gwadar, Qesco; interconnection of 9 IPPS with national grid Phase-I; electricity distribution and transmission improvement project Mepco; power distribution enhancement project; electrification of villages under President Kohlu Development Package; development of national integrated energy modeling system for Pakistan; sustainable development programme for energy efficiency; development and operation of test-pit in the leased area comprising block-II of Thar liginate resource Sindh granted to Thar Coal Ministry Company Limited.

In the health sector the project of providing sterotatic radio surgery facility to Jinnah postgraduate medical center Karachi worth Rs 517.500 million would be undertaken. The governance sector has two projects: Restructuring of PIDE as a Center of Excellence worth Rs 228.122 million with FEC of Rs61.048 million; and establishment of national institute of disaster management (NIDM) January 2008 – December 2010, Islamabad Phase-1.

Daily Times - Leading News Resource of Pakistan

 

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Inflow of $78.96 million portfolio investment in a signal day ​

KARACHI (February 25 2008): A massive inflow of portfolio investment in the country's equity market was witnessed on a single day on February 22 as $78.964 million came in country mainly from USA and UK. On the other hand, an outflow of $11.644 million was seen on the said date and the net flow was recorded at $67.320 on the end of the week.

According to State Bank of Pakistan data, out of the total inflow, $64.352 million came from the USA, $13.714 million from UK, $494,000 from Germany and $404,000 from Hong Kong on the said date while an outflow of $8.12 million was witnessed by UK, $1.611 by USA, $1.345 by Hong Kong, $545,000 by Switzerland and $23,000 by Singapore on February 22.

The data shows that as many as $281.545 million of foreign investment came in the country's equity market during the current month till February 22, while $39.058 million were withdrawn by the foreign investors during this period.

Analysts are of the view that holding of peaceful general elections and improving law and order situation in the country invited fresh foreign investment in the equity market as the foreign investors came back to invest here on their expectations that political stability will come after elections.

Business Recorder [Pakistan's First Financial Daily]

 

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ADB considering providing $6.15 million for Lahore RMTS ​

FAISALABAD (February 25 2008): The Asian Development Bank (ADB) is considering providing $6 million from Asian Development Fund and $150,000 from Technical Assistance Special Fund for Lahore Rapid Mass Transit System.

In update project, prepared by ADB Officer Ms Eunkyung Kwon, ADB Department Central and West Asia Department Social Sectors Division, CWRD, revealed that the TA loan provides a key intervention of the long-term partnership between the ADB and Pakistan for the development of Lahore's transport sector.

The TA loan supports a recruitment of a transaction advisor to help formulate, structure, and take to the market a public-private partnership (PPP) for the first priority line of a proposed rapid mass transit system (RMTS) in Lahore.

According to the report, a team of two PSP specialists will be recruited to work intermittently during the implementation of the TA loan. The team will work in close coordination with all interested parties of the Punjab government and the major development agencies active in the sector.

The team will assist the Punjab government to review and comment on due diligence report, financial model, regulatory arrangements, transaction structure, draft agreements, pre-qualification and bidding documents, and evaluation report; and facilitate in negotiating with the bidders.

The expected impact of the SSTA and the ensuing project will be the initiation of a long-term transport system investment program that will enable Lahore to make a greater contribution to national development, while improving in the quality of life for the city residents, including the poor. The SSTA outcome will be an investment project design and financing agreed upon by the government and the ADB.

Business Recorder [Pakistan's First Financial Daily]

 

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13.5 percent rise projected in sugarcane target ​

FAISALABAD (February 25 2008): The sugarcane target for the year 2007-08 was set for production at 55.88 million tons from an area of 1,039,500 hectares. According to official sources, estimated sugarcane 2007-08 production has been projected as 62.3 million tons from an area of 1.15 million ha.

The increase ratio is 13.5per cent over the last year production of 54.9 million tons. The sugarcane (2006-07) area and production was 1.03 million ha and 54.9 million tons respectively. In 2006-07, the sugar production was 3.52 million tons at an average of 74 per cent crushing and 8.7 per cent recovery. For 2007-08, it is expected that about 4 million tons of sugar could be produced at an average of 80 per cent crushing and 8.7 per cent recovery.

In view of the irrigation water shortage, the Ministry of Food, Agriculture and Livestock (Minfal) has successfully conducted experiments to introduce sugar beet as a new crop to produce sugar. It is also encouraging the mills with proper facilities for its marketing, said sources.

Business Recorder [Pakistan's First Financial Daily]

 

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Government spending on health increases 5.5 times over last 15 years ​

ISLAMABAD (February 25 2008): The government has been spending 0.5-0.8 percent of its GDP on health but Ministry of Health and the provincial health departments do not take into account other public and private sector health services, say Health Indicators of Pakistan 2007.

If these ignored sectors are taken into account, the total expenditure roughly ranges between 2.3-3.7percent of the GDP. The government's spending on health has ranged between 2.6-4 percent which currently stands at 3.2percent, it said.

However, besides utilisation issues, the total government health spending has increased 5.5 times over the last decade and a half, increasing from Rs 7.7 billion in 1990 to Rs 50 billion now. Unfortunately this figure has not been adjusted towards inflation and population growth.

Statistics show that private sector spending on health as a total percentage of the expenditure on health has ranged above 67 percent over the last several years, 98 percent of this is out of pocket budget. This is clearly a significant burden for a greater chunk of the country's population, which lives below poverty line.

The ratio between the development and non-development budgets, a comparison of the federal and provincial development and non-development financial plan shows dominance of non-development budget in the provinces; this gap appears to have widened over the last 10 years.

An analysis of the government expenditure on health reflects that spending has ranged between 63 percent to the current 80 percent over the last five years.

It is difficult to estimate the expenditure on health in the districts because development allocations are made all at once. Data on government spending on health must also be contextualised to its appropriate share of health financing, giving the realisation that public sector contributions are just one of the sources of financing health within the country. The government's spending on health as a percentage of the total spending has ranged below 35 percent over the last several years.

As a contribution to public sector health expenditure, foreign aid is officially quoted as having ranged from 4-16%percent over the last several years.

A major part of the donor contributions is not reflected in the Public Sector Development Programme (PSDP) and other than the contributors like the World Bank and Asian Development Bank. Most of the international departments, however, remained unaccounted for.

World Health Organisation (WHO) has reflected this in a form of sizeable chunk in its recent publications. Considering this, a system for tracking contributions made by donors and development agencies is a prerequisite. There is a dire need to put in place a system for National Health Accounts to enhance efficiency and promote greater transparency in health system.

In line with the Fiscal Responsibility Act 2005, the government has committed to increase health allocations by 1percent of the GDP by 2015. However, even this is far below the internationally recommended level for any government's spending on health, which should be $34 for essential health interventions by the year 2015 to achieve MDGs.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

'SME policy to be implemented soon' ​

SIALKOT (February 25 2008): Chief Executive Small and Medium Enterprises Development Authority (Smeda), Shahid Rashid has said that the first ever and comprehensive SME policy will be implemented in near future.

The policy has been formulated keeping in view the problems and needs of the SMEs of the country and under the policy credit guarantee fund and sub-contracting exchange would be introduced to facilitate the SMEs, Rashid said.

Talking to Business Recorder here at the Sialkot Chamber of Commerce and Industry, the Smeda Chief Executive said that implementation of the policy will activate more SMEs and ensure rapid development in this sector. Rashid revealed that an Agro Food Processing Facilities centre with a cost of Rs20 crore is being set up in Multan with the aim to provide processing facilities for pulp extraction of various fruits like mango, guava etc. The construction work of the centre would be completed by June next and machinery for the said centre is being imported from Italy, he added.

He said that the project will also facilitate local growers to prepare tomato paste and puree, lead to value addition, and help reduce post harvest losses currently estimated at 30 percent, with the introduction of latest technology.

The proposed centre will expose growers to the latest fruit and vegetable-processing techniques that can add value to the products and fetch increased foreign exchange through exports, Rashid added.

Smeda chief further disclosed that a Business Centre at Gujranwala would be operational in May next adding that this centre has been established jointly by Smeda and Gujranwala Chamber of Commerce and Industry (GCCI) at a cost of Rs20 crore, which will provide a single promotional and display platform for the wide range of products manufactured in that region, to attract national and international buyers.

Rashid said that Women Business Incubation Centre has been established in Lahore and this cell is making strenuous efforts for resolving the women entrepreneurs problems and extending hand-on support including business infrastructure, fully furnished offices with the facility of telephone and internet facilities, display area for exhibition purposes, administrative and business development support to encourage female participation in economic development.

He said that a Sports Industries Development Centre at a cost of Rs272.61 million will be set up in Sialkot enabling the sports goods sector to adopt the new mechanised ball technology which is threatening the current hand-stitched inflatable soccer ball. Work on the proposed centre, he added will be initiated shortly and completed within a year.

Rashid further said that the centre with a production capacity of 3,500 balls per day would provide technical know-how and a trained labour force. He said that work on other projects including Product Development Centre for composite based sports goods and Sialkot Business and Commerce Centre will be initiated shortly.

Business Recorder [Pakistan's First Financial Daily]