Pakistan Economy - News & Updates - Archive

[mujahideen]

Budget deficit widens to Rs 356b

SHAHBAZ RANA

ISLAMABAD — Contrary to official estimate to restrict the fiscal deficit at 4 per cent of GDP by June 30, 2008, Pakistan’s budget deficit has widened to 3.6 per cent of GDP during first-half year (July-December 2007-08).
Summary of Fiscal Operations, a copy of which available with TheNation, shows that during the first half of the financial year 2007-08, the economic managers remained unsuccessful to contain the deficit despite the repeated rhetoric to meet desired targets.
The government ended up at 3.6 per cent dearth that is near to the annual target and is more than the first-half year projection. For the first six months the deficit was estimated at 1.9 per cent of GDP or Rs 190.68 billion.
In absolute terms the deficit remained at Rs 356.321 billion. The total income during the under review period stood at Rs 625.591 billion whereas the total expenditures recorded at Rs 981.912 billion.
According to the budget documents, Shaukat Aziz-led economic team projected fiscal deficit at Rs 398.73 billion or 4 per cent of GDP. The government estimated total revenue at Rs 1475.909 billion and total expenditures at Rs 1874.672 billion.
The government has been missing the projected fiscal deficit all the way from the first quarter to onwards. In terms of GDP, the budget deficit in first quarter ballooned by 1.6 per cent of GDP against the projection of one per cent.
The principal reason behind the widening deficit - dwindling current expenditures because of high administrative cost, domestic debt servicing and subsidies provided on oil, electricity and some of the food items.
Recently the caretaker government raised oil and electricity tariffs by over nine per cent citing soaring budget deficit. However, many economists raise questions over the duplicity of official economic management. On one hand the government shifts the burden of oil prices and other key household items onto common people while the Presidency spends Rs 2 million on per night stay in a luxurious hotel in London.
“There are millions of poor chaps here who do not have three times meal despite ‘the unprecedented economic growth of the past eight years”, says an angry common man.
Of the total expenditures, the government spent Rs 756.2 billion on current expenditures and spending for the development purposes stood at Rs 221.2 billion. The federal share from the total expenditures of Rs 981.92 billion was Rs 559.17 billion while remaining Rs 196.97 billion were the provincial portion.
A break-up of the current expenditures depicted that a major chunk of Rs 208.79 billion was utilised for servicing of domestic debt. The government has fixed an amount of Rs 318.2 billion in the budget for domestic debt servicing. In addition, an amount of Rs 28.93 billion spent on servicing of foreign loans.
The government incurred expenditures of Rs 22.8 billion on allowances and pension, Rs 45.3 billion on grants and Rs 47.62 billion on other General Public Services. Under the head of Economic Affairs an amount of Rs 50.95 billion was utilized.
These two heads, Grants and Economic Affairs, indicate towards subsidies. The government allocated Rs 37.9 billion for grants for the whole year but surpassed the estimate in just six months.
The second major chunk of the current expenditures utilised for Defence. An amount of Rs 131.82 billion was spent for Defence Affairs and Services. The total Defence budget is estimated at Rs 275 billion. On Public Orders and Safety Affairs the expenditures stood at Rs 11.82 billion.
The bifurcation of revenue showed that of the total Rs 625.6 billion, an amount of Rs 450.7 billion was of tax collection and Rs 174.9 billion of non-tax revenue. The federal share in tax revenue stood at Rs 432.52 billion out of which the FBR contribution was Rs 431.8 billion.
In order to fill the budget deficit, the government borrowed Rs 286.65 billion from the domestic sources and an amount of Rs 68 billion got from the external sources. The contribution of privatisation proceeds was Rs 1.65 billion. Of the domestic borrowing Rs 228.6 billion were obtained from commercial banks and Rs 58 billion from non-bank sources.

The Nation

 

[mujahideen]

Demutualisation to deepen stock market

JAVED MAHMOOD talks to Muhammad Sohail Dayala, CEO, Invest and Finance Securities Limited to look into the current trend and future of Karachi Stock Exchange and its demutualization
Q: What would you suggest to further deepen stock market?
A: The demutualization process of stock exchanges should be completed as soon as possible. The [a1]Members of Karachi Stock Exchange are keenly waiting for the demutualization of the KSE. Because the demutualization of KSE would help the Members [a2]to attract more investment and deepen the stock market.
Q: What benefit KSE brokers would get from demutualization?
A: Each and every Member[a3] of the KSE would get shares keeping in view the evaluation of the KSE Membership[a4]. The demutualisation plan allows the Member[a5]s to offer 40 per cent shares against this Membership [a6]of brokerage [a7]t[a8]o foreign strategic [a9]investors and can also off-load 20 per cent shares in the shape of the Initial Public Offering. The sale of shares to foreign investors in the wake of demutualization would pave way for easy cross-border listing, adopt the new products [a10]especially at Dubai and other international stock exchanges.
Q: What is the latest status of the demutualization plan?
A: The Demutualisation Ordinance is lying with President Pervez Musharraf and we are hopeful that after the formation of new government, the required legal formality for the demutualisation would be fulfilled.
Q: What next benchmark do you foresee for the KSE?
A: After recent elections the Karachi Stock Exchange has been performing well. The elections proved peaceful against the speculations of attacks, bombings and clashes and this development has infused a new spirit into the stock market.
Another positive development for stock market is that the foreign investors are once again investing at market. After the gruesome murder of Benazir Bhutto on December 27, 2007, the foreign investors pulled out their investment from the Special Convertible Rupee Account (SCRA) which turned into negative. But after elections the country’s stock market is again receiving the portfolio investment. Resultantly, the KSE-100 index had set a new record by excelling 15,000 points barrier on Tuesday. I believe that the prices of most of the equities are still far below their earnings[a11] depth [a12]and potential. If the coming government continues the business and investment friendly policies, the KSE-100 index has potential to hit 17,000 to 18,000 points benchmark. Because the PE ratio in Pakistan is still much lower than other[a13] the[a14] regional Stock Markets countries stock markets[a15].
Q: What is the proportion of foreign investment at stock market?
A: During the past few years the foreign investors have invested a huge amount of 10-12 billion dollars at stock market through Foreign direct investment and Special Convertible Rupee Account [a16]. This investment is not being reflected through the Special Convertible Rupee Account (SCRA), [a17]but the total foreign investment at stock market is within the said range.
Q: Does foreign investment make any impact on stock market?
A: During the past few years a chain of mutual funds and other investment institutions has strengthened the local investment capacity and deepened the stock market. Had the chain of mutual funds not been in place, the stock market could have faced the worst-ever crisis after the gruesome murder of former prime minister Benazir Bhutto. Although the foreign investors ejected their portfolio investment, but the local investors continued to maintain their stake and took fresh positions when equities prices became attractive.
Q: What would be the benefit of future trading of KSE index?
A: The future trading of KSE index would be another important and interesting option of trading at stock market for speculators and it would increase the depth of the market. There is a dearth of derivatives products at the stock market. For example, the Islamic financial institutions do not have products to offer at the stock market.
The SECP and the KSE are working on some derivatives products to be introduced for trading at stock market in future. I think the future trading of the KSE would be a good omen for the stock market and it would separate the speculators and the investors.
Q: What would be the new CFS limit?
A: The Securities and Exchanges Commission of Pakistan is introducing CFS M-II from April this year. The CFS M-II would pave way for the availability of an unlimited amount of money. At present the upper CFS limit for KSE is Rs 55 billion and whenever the CFS hits its upper limit, the Karachi Stock Exchange experiences a slowdown in trading volume and investment. However, after the implementation of the CFS M-II from April, the stock market is expected to experience a new lease of life with the abundant availability of investment by the financial institutions.
Q: What is your assessment about the margin financing?
A: I will hold banks and some brokers responsible for the failure of the margin financing scheme. The banks strict procedure of documentation flopped the scheme as the small brokers are unable to fulfill the documentation requirement.
Q: You advice to investors!
A: Before buying shares of any company, the investors should carry out research about the pros and cons of the company, where they want to invest their hard-earned money. Instead of seeking ‘tips’ and making investment on speculations, the investors should go deeper and find out the fundamentals of their selected companies that would save them from sustaining losses and ensure some financial benefit.

The Nation

 

[mujahideen]

‘Maintenance of law and order and good governance must for the industry’

ASHRAF JAVED talks to Iftikhar Ali Malik, country’s leading businessman, and Former President of Federation of Pakistan Chamber of Commerce and Industry
As the top political parties are actively holding joint meetings across Pakistan to farm a coalition government to resolve all the disputes, to make the institutions strong and independent and to strengthen the democracy in Pakistan, the business community is expecting a safe and business-friendly environment in Pakistan to boost the country’s economy.
The businessmen want good governance, better law and order situation and security of infrastructure in Pakistan as according to them the political instability always leads to economic turmoil. Mostly the industrialists and businessmen consider Feb 18th elections as free, fare and transparent and hope that holding of elections in peaceful atmosphere in the country will lead to economic stability.
Money Plus talked to Iftikhar Ali Malik, country’s leading businessman, and Former President of Federation of Pakistan Chamber of Commerce and Industry (FPCCI) and asked what would he suggest the new government to improve the country’s economy?
Mr Iftikhar Ali Malik, who is also Vice President of SAARC Chamber of Commerce and Industry, was very hopeful that the new government has the potential to pull out the country from the ongoing energy crises. He also demanded that the policymakers must take all the stakeholders into confidence during policymaking.
Mr Iftikhar Ali Malik, who is the Chief Executive of Guard Group, says that the country is passing through a very crucial period. A number of irking problems are at national horizon. All the political parties should burry their differences, and ensure harmony to reach a consensus. Let all the organizations; give the opportunity to work within their prescribed legal framework without any interference or hindrance. Army, judiciary, news media, parliament and senate all should be made to work with due regard to the national interest, solidarity and harmony.
He said private sector consists of experienced, well-travelled, well-educated, committed and reasonable businessmen. They are the real ambassadors of the country. They earn through foreign trade by spending finances from their own pockets. He was of the view that synergies of this sector should therefore, be used to develop economy through soliciting their views, honouring their suggestions and making policies by taking them into confidence.
He said that the private sector gained confidence through the support of trade bodies — which are democratic institutions of Trade & Industry. It is therefore suggested that trade bodies be invariably involved in the process of formulating economic and trade policies particularly about imports & exports and industrial development.
Our country is facing an acute shortage of energy this time. Load Shedding adversely affects the production activity. Unless energy sources are developed, manufacturing cannot work to its capacity. Energy from coal could be produced because Coal is abundantly available in Pakistan and these sources should be explored, as is being done in USA, Germany and India. Gas is equally important. Import from Iran should be finalized on urgent basis and further exploration activities should be encouraged. Hydro-electricity is cheaper and in this regard, the construction of new dams should be given top priority.
He argued that the institutions, which could impart technical education according to the international standard, should be encouraged. And there is a dire need to establish such more institutions to fulfil the requirements of the industrial sectors. This can be done very easily because Pakistan is a land of opportunities, Ali Malik added.
There is an argent requirement to upgrade these institutions as well along with setting-up new institutes, which could prepare skilled manpower to operate modern high-tech plants.
Our present transportation system is inadequate and expensive as well. It is estimated that the imported consignments carry less shipping freight as compared to the freight from Karachi to Northern parts of the country. Present transport system must be streamlined and updated on fast and economical lines. New roads should also be developed as the economy expands. Good roads save the wear and tear of the long vehicles and save transportation time. The increase in population and the migration of labour from villages to cities also demands that the Railways should be modernized and its network should be extended to industrial cities. Agriculture in Pakistan has extensive scope to feed the population and add to export.
The Agriculture so far has been our mainstay. The majority of the population is residing in villages and is also dependant on agriculture. It is therefore suggested that comprehensive planning should be made keeping in view the yield per hectare of all the crops, which should be increased by introducing mechanized farming, certified seeds varieties.
The water supply should also be ensured and the forthcoming water shortage should be met through improved irrigation. The Agro-based Industry should be developed to add value to the agriculture produce both in grains, fruits and vegetables. He also said that smuggling of food grains to Central Asian countries must be checked.
Mr Iftikhar Ali Malik said that textile industry is still contributing over 60 per cent to exports. Textile sector is again our mainstay in exports but the value addition in this sector is low as compared to the international standards. It is heartening to note that the Government and Textile Industry are endeavouring to bring improvements. However, the development of ancillary industry could support the textile sector in many ways, for example our garments have a share of 1.5 per cent in the international trade, which is at the bottom even among the Asian countries. The percentage of exports by Bangladesh is over 3 per cent and by India over 5 per cent. “We should concentrate on adopting the brand names and new designs through franchise or joint ventures in garments industry and other textile products,” Mr Ali Malik maintained.
He said that the industry in Pakistan is easy to spell but difficult to develop. The poor law and order always scares the foreign investors. Moreover, political uncertainty could not attract the investors in the industry having long gestation period.
He said that in order to boost the industry to create new employment opportunities and to enhance the ratio of value addition some innovative steps are needed, which could attract technology and investment. To me personally, he said, the brand culture should be encouraged because without this culture the stability and continuity in exports cannot be achieved. The assemblers of auto vehicles are not patronizing the Local Vendor Industry. They generally resort to imported parts although these could be manufactured locally according to the quality required by the assemblers in Pakistan. It is true that the Deletion Program cannot be implemented in the wake of TRIMS, however, assemblers could be advised to patronize the Domestic Vendor Industry of the host country on moral grounds and facilities available. Vendor Industry has invested billions of rupees on capital and labour. It should not go waste. Smuggling and under invoicing must be checked in this regard.
The Industry cannot work without power/energy. The Government should make immediate arrangements to add new sources of energy to the present system in order to meet the increasing requirements of energy for the Industry. Now there is no room for slackness.
Deficit is our permanent feature of fiscal policies for the last years, he said. Pakistan has always been subject to budget deficit, trade deficit, investment deficit and low savings. Therefore, all efforts of improvement have failed. The main reason seems we do not work on war footing to resolve the problem. Trade deficit cannot reduce unless we concentrate on export of non-traditional items, export of value added items and diversification of markets.
Exports cannot be increased until we produce more to export. Increase in industrial production besides other factors depend on electricity. “Have we developed energy resources sufficient to meet domestic demand, he questioned?
Our leaders kept on crying but they never took the initiative to add to the existing energy resources. New energy resources should be developed without further delay.”
Iftikhar Ali Malik further suggested that food governance is vital not only for administration and maintaining public order but also for business as well.
The good governance always enhances the efficiency of government departments and ensure peaceful environment for conducting business. It should be the order of the day, providing freehand the people to adopt professions of their own choice and pursue economic activities fearlessly. Main emphasis should be on maintenance law and order and removal of public grievances as regard to various government, semi government departments and cooperation.

The Nation

 

[Neo]

Entertainment sector gets industry status ​

LAHORE (March 02 2008): The federal cabinet has granted status of industry to the Entertainment sector comprising studios, production and animation houses. Federal Caretaker Industries, Production and Special Initiatives Minister Salmaan Taseer said in a press briefing held here at the Small and Medium Enterprises Development Authority (Smeda) on Saturday.

Federal Industries Secretary Shahab Khawaja, Smeda CEO Shahid Rashid, Jamshed Zafar, Usman Peerzada, Ms Shireen Pasha, Mekal Hussan, Noorul Hassan and a number of the stakeholders from the entertainment sector were present on this occasion.

The minister said the cabinet, on a recommendation by the industries ministry, had allowed duty-free import of the equipment to be used by entertainment industry. The ministry, in consultation with the stakeholders, would prepare a list of such equipment that would be submitted with the Federal Board of Revenue (FBR) to get a formal SRO released in this connection, he added.

Taseer also said the government will facilitate the entertainment sector to build necessary infrastructure, conduct focused research and expand the skill base through training and house incubation facilities, and power tariff of the entertainment sector would also be taken up separately with Nepra to reduce the cost of entertainment business.

The minister regretted that country's entertainment industry had been plagued by a number of ills, most of them chronic in nature and difficult to eradicate in short run. Given the significance of the sector both in the context of promoting much needed social tranquillity and economic well being of the people associated with it, he said the federal government stands committed to playing a facilitating role in developing the entertainment sector.

Salman Taseer said in 2006, the entertainment industry stood at an estimated $1.45 trillion with a Compound Annual Growth Rate (CAGR) of 7.3 percent to reach $1.9 trillion by 2009. He praised Smeda for conducting a series of meetings with stakeholders of the entertainment sector to prepare phased short to long-term Entertainment Industry development strategy.

It identified several growth barriers with a detailed course of actions to overcome the challenges. Several consultative sessions with the industry key stakeholders were held recently, he said, adding that the proposals emanating from the consultations were presented to the Economic Co-ordination Committee (ECC) of the Cabinet on January 12, 2008.

The ECC has granted approval to the first set of proposals presented by the Ministry of Industries, Production & Special Initiatives, which include declaring the entertainment sector an industry and allowing zero-rated import of the equipment to be used by this industry.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Challenges for the new government​

The new government’s economic managers may hold the key to its success or failure. Inflation, energy crisis, and stagnant exports would need immediate attention. While there is a tendency to look at the economic issues in isolation from politics, the economic policy would need heavy engagement from the new leadership. It will need to demonstrate that it has the capacity to take bold and imaginative decisions.

The new leadership may not have the luxury of any honeymoon period and is likely to face not only a rough ride but also the risk of the bureaucracy or former World Bank types would drive its policy and ensure its failure.

Pakistan’s major economic issues are usually cited as inflation, energy crisis and the growing current account deficit. This is deceptively simple. While energy crisis is a huge issue and no quick fixes are possible (except import of electricity and oil from the Gulf countries and Iran at favourable terms), inflation and current account deficit represent symptoms not causes.

Low agricultural productivity, narrow tax and export bases, trade policy distortions, and big governments non-development expenditure are among the major reasons why the government has not been able to address these issues for a number of years. While the media, government and the opposition talk a lot about inflation, there is little discussion on its causes and remedies. One reason is the absence of quality research in our business and academic institutions and lack of meaningful and substantive debate in public forums.

Take, for instance, the issue of food inflation. The last year’s GDP growth of seven per cent was helped by a five per cent growth in the agriculture sector, which accounted for 20.9 per cent of the GDP. However, the growth in the crops sub-sector (which accounts for only 47.9 per cent of the agriculture sector, the livestock’s share being 49.6 per cent) masks the fact that the (i) 7.5 per cent growth in major crops was from a low base as prior year’s growth was negative and (ii) the minor crops grew by only 1.1 per cent during 2006-07.

However, going beyond a single year’s production data, the last seven years’ record indicates more fundamental and structural problems with the growth trend of the agricultural crops. The production of cotton, wheat, rice and sugar cane grew by a yearly average of 1.63, 1.23, 0.59 and 1.87 per cent respectively during the seven years from 1999-2000 to 2006-2007 and was below the estimated average population growth of 2.2 per cent or so during this period. An examination of a sample of the production of other agricultural produce reveals similarly low and volatile rates of growth.

The government needs to pay immediate attention to food crops’ production. The international price of rice and wheat has doubled in the past year while freight costs have also increased sharply on the back of rising fuel prices. International food prices are rising on a mix of strong demand from developing countries; a rising global population; more frequent floods and droughts caused by climate change; and the bio fuel industry’s appetite for grains, analysts say. Soya bean prices on February 22nd hit an all-time high of $14.22 a bushel while corn prices jumped to a fresh 12-year high of $5.25 a bushel.

Given the soaring food prices worldwide, the most immediate decision it may have to make is about the issue of procurement price of the next wheat crop. The caretakers have fixed a price of Rs510 per/40 kg but this is too low and should be at least Rs800/kg otherwise this may not be enough to encourage the farmers to grow more wheat due to escalating prices of food crops and inputs.

Another issue is rural poverty - an area where the PPP would need to deliver to keep its vote bank. It is a common misconception that the improvement in agriculture alone holds the key to lift rural population out of poverty. Not entirely! Let see why? Rural population accounts for 70 per cent of the total and 80 per cent of Pakistan’s poor live in the rural years.

Agriculture (including both crop and livestock production) accounts for only about 40 per cent of rural household incomes and the poorest 40 per cent of rural households derive only about 30 per cent of their total income from agriculture.

The new government must undertake massive infrastructure, particularly in water and transportation, investments to benefit the rural areas besides taking steps to solve high quality seeds, fertiliser and related issues to attack poverty and increase incomes in rural areas. A key to improving crop yields would be modern technology with a special emphasis on growing high-yielding varieties of grains by encouraging free flow of technology transfers and investments from countries such as the United States, China, India and Mexico.

Massive infrastructure investments in the rural areas may sound counter-intuitive to some but the fact is fiscal deficits are not necessarily harmful. However, they can be deadly if they are used to finance wasteful spending rather than productive investments. We have been guilty of big government and wasteful spending. This brings us to the most immediate and pressing issues of inflation and fiscal deficit. The situation calls for a holistic approach involving a comprehensive reorientation of fiscal and trade policies:

(a) from protectionism and big government to fair competition and less government in areas where it is least effective or non-productive; and (b from consumer-led growth to exports-led growth

To rationalise the fiscal regime, the government must (i)allow duty free import of all food items to lower inflation as a short-term measure and make increase in crop yields a top priority, (ii) increase taxes on non-productive areas (such as imports of cars) or those not under the tax net to reduce deficit, (iii) cut taxes on productive areas (e.g. manufacturing) to boost production and exports, and (iv) eliminate guaranteed profits to oil companies to lower or minimise increase in oil prices, and (v)last but no less important, undertake rightsising of the bureaucracy.

Fiscal incentives and lower energy costs would give a shot in the arm to the industry to increase exports. The removal of restrictions/lowering of tariffs on food imports would help lower overall inflation through more supplies and perhaps lower costs. Cutting the overall deficit through new (or higher) taxes would also lower government borrowings and interest rates but that effect will not be felt until after 18 months or so.

The areas where tax policy needs a review include: (a) a cut in income tax rates for the public listed companies (excluding financial sector) to 15 per cent, (b) increase in income tax rates for the banking industry, (c) imposition of income tax on trading income from stocks (d) imposition of tax on capital gains from land and property, (e) withdrawal of blanket exemption to all income from agriculture regardless of income level, etc.

The government should also rationalise payroll and sales taxes for public listed companies because levies such as Employees Old Age Benefits do not profit the workers. Instead, the government should encourage stock options and direct cash compensation to allow the benefits to flow through to the employees. In this respect, the government while doing away with schemes that are de-facto indirect taxes, should increase the minimum wage to Rs8000 per month.

In the arena of monetary and foreign exchange rate policies, the government needs to replace borrowings from the State Bank with market instruments, allow the exchange to be determined by market forces and phase-out subsidised lending schemes prone to abuse.

The measures suggested here are just some examples but illustrate and underscore the need for a qualitative change in policies rather than the so-called continuity that has failed to deliver. Agriculture, energy, and exports-led growth should be the top priorities of our economic policy if serious economic disruptions are to be avoided in the coming months and years.

To implement this three-pronged strategy, we need policy changes that would send a clear message to local and foreign investors that the new government means business.

Challenges for the new government -DAWN - Business; March 03, 2008

 

[Neo]

Economic agenda: taking businessmen on board​

CORPORATE Pakistan has found the outcome of elections 2008 somewhat unsettling. Many business leaders were still in the process of digesting the popular mandate. Commenting on the outcome of the polls they dressed their disappointment in a veil of ‘surprise’.

Except for a bunch of private sector notables who have close association with the winners, the big business class was generally apprehensive. They were closely monitoring the post election political developments to fathom the contours of the evolving scene. They have sensed some realignment in power construct and were nervous at the prospects of readjustment and a cost it could entail. For them, it was too early to come forward and take a position.

When contacted most leaders avoided to offer comments off hand. They did come back with their measured responses. Informally they explained that reservations of their community are not rooted in pathological hatred towards a political set-up. It was, they said, based on their past experiences which unfortunately cannot be recounted fondly. Their experience tells them that elected governments are comparatively unstable, unpredictable and less business-friendly.

Some expressed reservations on the credentials of the leadership of political parties and did not see them as honest people committed to what they consider to be the guiding principle of any government: a neutral promoter of trade and business to achieve the growth and development objectives.

”Post-election scenario is not instilling confidence in business. Everything is up in the air. No one knows which way it is going to bend. A lot of people have started shifting their money out for they do not foresee stability under a coalition of unnatural partners”, a young dynamic corporate manager told Dawn on the condition of anonymity.

”The parliamentary system is not suited to our psyche. Many smaller countries in the region (Singapore, Malaysia) do not have parliamentary democracy but they are progressing at enviable pace affording a standard of living that matches with the most advanced developed countries. President Musharraf should have used the time he had to introduce presidential form of government to put all political elements at rest and to allow the space to the private sector to prove its worth”, said another top notch businessman.

”They were banking a bit too much on Musharraf. The business will have to adapt itself to the changing realities. They need to take a long-term view and abandon their habits of looking for shortcuts. They must give the political setup a fair chance”, Sardar Rahim, a businessman and a well known PML-N leader, responded to Dawn.

”The perception of business is largely based on one-sided propaganda. We need to leave our past behind and look forward to meet challenges ahead. The perception that PML-N is inclined towards fundamentalism is incorrect.

”We have come a long way since IJI. Same is true for PPP which no more adheres to Maoist image or the ANP that has nothing to do with Russia or communism anymore. The world has changed and so have we”, he retorted when the business community’s reservations were spelt out.

Iqbal Bengali, the ex-president of American Business Council, a powerful grouping of companies, sounded positive with an effort. “Whoever forms the government has experience of the past and we are hoping that the focus of the next government would be on economy and reforms. Yes, there is a fair amount of uncertainty currently. We will wait and see how the next government turns things around”, he said.

The big boys of business who have been the principal beneficiaries of the last government were more anxious as compared to the average medium and small businessmen. They tried to pretend to be neutral towards PM office. They were not ready to come on record but said that their chief concern was that the change be peaceful and stability and continuity should be ensured.

There were no evidence to back up the impression but some talked of currency transfers abroad over the last few weeks. “You will not be able to find evidence because there is none. The parallel economy is twice the size of formal economy that works totally independent with its own sets of unwritten rules without any book keeping. When the money is not accounted for its transfer can never be traced”, a business leader in know of things told Dawn.

“Politics is not our domain but the last government was accessible. The fear is that given a chance the politicians will again keep us out of their sight and mind”, said another businessman.

No matter how short-sighted and self-centered, the country needs its business class the way it needs its toiling masses and professionals. The political parties would not be able to deliver no matter how hard they try if the huge community of businessmen is not taken on board when deciding the economic agenda.

For development the country needs industrial expansion and boost in commercial activities The next government will need an innovative approach to earn the trust of the entire business community without conceding to the demands of the renter class.

The biggest test of the next government would be how it handles the challenge of distributive justice without scaring away the entrepreneurs.

Economic agenda: taking businessmen on board -DAWN - Business; March 03, 2008

 

[Neo]

Encouraging horticulture in NWFP​

IN spite of immense potentials for horticulture, the area under fruits in the NWFP has not been increased because of lack of incentives and limited technological advancement made so far in this field.

The province has an ideal environment for growing fruits like apple, citrus, guava, apricot, peach, plum, loquat, persimmon, melon etc., which apart from meeting domestic demands, offer great potential for export.

The ecological zoning of the province indicates that every zone has different environment, where different varieties of fruits can be grown. The northern and hilly areas of Malakand region are suitable for high quality apple, peaches, walnut, citrus etc. The plain areas comprising Peshawar valley are ideal for plum, almond, loquat, while the Dera Ismail Khan region is suitable for dates and melons. But the area under fruit is shrinking gradually.

Agriculture Statistics of Pakistan shows that area under fruit in NWFP has shrunk from 47,059 hectares in 1999-2000 to 46,803 hectares in 2005-06, a decline of 256 hectares.

Fruit farmers claim that this has happened mainly because of the government policies revolving around field crops like wheat, cotton etc, with very little attention towards horticulture.

They say that public sector institutions responsible for promotion of horticulture are unable to develop new cost-effective varieties of fruits. The problem is further compounded by the lack of modern technology.

A horticulture expert Ikramullah Khan says old varieties of fruits need to be replaced by internationally accepted ones. The need for internationally certified varieties has increased following the introduction of World Trade Organisation (WTO) regime, where every nation has to secure quality certification.

He suggests that a committee of experts be formed to list new varieties of tropical, sub-tropical, and temperate fruit crops and nuts for different ecological zones as well as identify modern nurseries around the globe. Likewise, horticulturists with knowledge of latest technology and field experience be made available to the farming community at district level.

Since land is limited and population is growing, availability of land for agriculture/horticulture is gradually being reduced. Now, it is time to turn to high-density horticultural farming with drip irrigation system. This can save over 50 per cent of available water and enhance the income manifold, he explains.

Model farms should also be established at various places throughout the province in different ecological zones and the government departments should train the farmers with modern technologies.. He also advocates for affordable credit to farmers at the right time and declaring horticulture as “special crop” at least for the next two decades.

Special credit lines should be extended by all banks at exactly half the current interest rate for building cold chain, grading and packing facilities for fruits, and portable equipment for taking out field heat at the farm level. Equipment needed in horticultural development should also be exempted from import duty.

Despite witnessing an overall decrease of 256 hectares, the performance of various fruits has improved.. The total apple production in NWFP was up from 1,01,686 tons in 1999-2000 to 1,26,666 tons in 2005-06. Guava production increased from 30,780 tons to 43,164 tons during this period. Similarly, production of peach increased from 14,489 tons to 51, 591 tons.

Officials and farmers say this happened mainly because of growers facilitation programme launched by the government and international donor agencies particularly in the Malakand region.

The areas which lacked government help had poor crop output. For example, citrus production dropped from 39,693 tons in 1999-2000 to 37647 tons in 2005-06, plum from 39,194 tons to 33,108 tons and apricot from 19,949 tons to 18,311 tons.

Researchers in different public sector organisations have different story to tell, as they advocate a multi-sectoral strategy for promotion of horticulture in NWFP. They say research organisations have produced a number of new varieties and are providing constant guidance to the farming community.

But lack of latest equipment, outdated farm management and poor marketing facilities are the factors which keep the farmers away from investing time and money in the horticulture sector.

Ghulam Nabi, a research officer at the Agriculture Research Institute Tarnab, explains that the research bodies in Frontier Province particularly the Tarnab farm have developed hundreds of new varieties of various fruits.

”It was because of the efforts of researchers and other allied bodies of public sector which had increased the area under fruit from 26,400 hectares in 1989-1990 to 46,800 hectares in 2005-06, and enhanced fruit production from 2,93,500 tons to 5,19,100 tons during the same period,” he says.

However, fruit production improved only in Malakand region where special attention was paid towards apple, peach and apricot production, he said.

The Peshawar valley is ideal for sub-tropical fruits, but farmers here are more interested in field crops, which comparatively involve less labour and are cost effective as compared to fruits.

He says that government has model farm houses at different places, where farmers are trained to produce the developed varieties, but it has been observed that the farmers do not want to invest in new varieties and prefer investment in old ones.

Plantation of new varieties, he explains, needs at least five to six years to mature and most of the farmers cannot afford such a long time to wait and hence their option is for old varieties.

Poor orchard management is also one of the major issues, which contributes substantially to decrease in areas under fruit in NWFP, and the farmers find guidelines expensive because it involves measures to prevent fruit tress from various diseases, he said.

Things can improve if the government pays special attention to horticulture by providing subsidies and facilities for better marketing of their yield.

Encouraging horticulture in NWFP -DAWN - Business; March 03, 2008

 

[Neo]

Viability of the Thar coal mining company​

On February 8, the President gave a fresh go-ahead signal to embark on exploiting potential of huge Thar coal (lignite) resources for power generation, this time taking the government of Sindh on board on the issue of tariff.

Under the new strategy, the government-owned Thar Coal Mining Company (TCMC) has been activated for the purpose of supplying coal to the prospective Independent Power Producers (IPPs).

As early as in April 2006, the government had decided to unbundle Thar coal integrated projects into mining and power generation, and to set up a coal mining company in the public sector. The formal approval to form the company, at a cost of Rs260.70 million, was accorded in September/October 2006. But it was only in February 2007 that an initial paid up capital of Rs250 million was approved for the TCMC.

There was no progress for another a year and the government announced the company formation again in July 2007 for which allocation of Rs241 million was made in October 2007. Sadly, the TCMC is still on papers and nothing concrete has been done to launch it. The government is yet to finalise company’s financial and administrative structure and appoint its chief executive officer.

The proposed company will be responsible for coal mining, handling, transportation and introducing advanced coal mining and refining technology on the basis of the study carried out in 2004 by Rheinbraun Engineering of Germany on a block of 100 square kilometres of Thar coalfields.

In the first phase, a modern mine with an annual output of six million tons of coal would be developed to cater to fuel requirement of a 1,000 MW power plant. The capital cost of developing such a mine is estimated to be around $1 billion, whereas total investment of $4 billion is required to undertake full-scale coal mining at Thar. Nonetheless, the TCMC is being established with an investment of $ 500 million, possibly with public and private shareholding, government’s share of equity being even less than $70 million.

The government is setting up the company on the premise that an integrated mining-cum-power generation project, of the size of 1,000 MW capacity, involves major investment (in the range of $ 1.50 billion) that may not attract the potential IPPs. The fact is that the concept of integrated mining-cum-power generation project has already gained response pursuant to the Power Policy 2002. The Chinese and the American investors were interested to make investments of this size and both made reasonable expenditure to undertake studies and due diligence, though the respective integrated projects of 600 MW and 1,000 MW did not materialise eventually. Lately, two integrated projects, each of 1,000 MW capacity, have been sanctioned and mining lease granted to Pakistani sponsors who are seeking partnership with foreign investors and coal mining companies, while another couple of projects are in pipeline.

Indeed, the development of an integrated mining-cum-power generation project is a complex and arduous process posing a number of implementation issues and technical problems. But establishing the company may not be the solution, due to a variety of reasons. First, to start operations, the company immediately needs capital that may not be made available under the circumstances, as the government is facing financial burden and unable to keep development budget to the required size. Total PSDP allocation for 2007-08 to the projects of the ministry of petroleum and natural resources is said to be Rs928.10 million. Government of Sindh will have minor share holding in the venture.

Funds from the international donor agencies will not be forth-coming soon either, as efforts have not been made to seek funds for which lot of preparatory work is needed on the part of the government and process is time-consuming. China was offered in November 2006 to become equity partner in the TCMC, but there has been no positive response so far.

The government also had plans to induct the private sector that has not yet come forward primarily due to peculiar characteristics of the project and risks involved in coal mining. Furthermore, the National Coal Policy is not yet in place, which would govern investment and technology transfer in the coal-mining sector. The policy is under compilation and to be launched earliest by December 2008. Under the circumstances the government may resort to raising loans, but then the company will kick-start with weak financial health and would not be able to deliver.

Second, the company would have to build management and technical capacity and capability over a period of time if international companies are not engaged as partners from the inception, as originally conceived. Reportedly, the National Logistics Corporation (NLC) will be a major stakeholder which in turn will appoint coal geology and mining specialist companies to manage the TCMC. The company is thus likely to prove to be a non-starter since the NLC has no experience, expertise or qualification in the field. The country has no experience of employing advanced mechanised coal mining and lack human resources.

Third, the company has to provide guarantees to the IPPs for regular and continuous supply of coal. This cannot be done unless the company starts its commercial operations that were scheduled by 2012. Consequently, the coal supply agreements between the TCMC and the IPPs cannot be concluded until then.

The most critical aspect of the option will be that of the government or the power purchaser would have to face the risk of failure in coal supply to the IPPs at any given time, as applicable in case of gas- or oil-based thermal power plants. In case the company takes off as planned, it will also have a negative impact on the on-going progress of the two integrated projects already sanctioned. Obviously, the respective sponsors of these projects would like to wait and see what would be most attractive option for them---to develop an integrated project or only a power generation project---depending on price at which the TCMC would market coal. In any case, tariff issue will come up once again. The end result will be further delay in harnessing the Thar coal potential.

It is pertinent to mention that experience of setting up a coal mining company has not been successful in recent past. Lakhra Coal Development Company Limited (LCDC) was established in 1990, with paid up capital of Rs50 million, as a joint venture of the Pakistan Mineral Development Corporation, Wapda and the Government of Sindh, to develop Lakhra coalfields and to supply coal to 150 MW coal-fired power plant at Khanot, District Dadu. After 17 years of its operations the LCDC could develop only 43 coal producing mines out of a total of 149 mines that cover, in total, an area of over 32 square sq. km. with proven coal reserves of 40 million tons.

Support infrastructure including water, electricity, rail/road networks and telecommunication is available in the area since long, and a large number of foreign consultants and agencies were contracted, from time to time, to carry out feasibility studies for mining and/or power generation at Lakhra. The long list of consultants includes the Chinese, the Polish, John T. Boyd & Co, Gilbert Commonwealth International Inc, JICA, USAID and others, who produced voluminous bankable documents.

Yet the company meets optimally 60 per cent of the total current requirements of coal for the power plant that too has been operating at much below its installed capacity. According to the mine design and plan prepared by the LCDC it was to produce 750,000 tons of coal annually, whereas it produced in recent years a maximum of 273,303 tons (in 2001-02) and a minimum of 166,330 tons (in 2006-07). LCDC is already on the active privatisation list and likely to be divested along with Wapda’s power station as a package.

Lakhra coalfields cover total area of 67-sq. km, has total indicated coal reserves of 1,328 million tons and total mine-able coal reserves of 305 million tons. In contrast, Thar coalfields are about 9,000-sq. km. and has reserves of 175.50 billion tons, including 2.70 billion tons of measured reserves. If the LCDC at much smaller scale could not achieve its objectives, how can one reassure the investors that the super mega TCMC would meet their requirements fully and timely?

In final analysis, instead of going for a mining company, it becomes imperative for the government to qualify sponsors with strong technical and financial credentials to develop integrated mine-cum-power generation projects, ensuring economy of scale, mine efficiency and safety, operational reliability, pollution control and advanced mining and clean coal technology. The key world-players like Mitsui & Co of Japan and AES Corporation of the USA are willing to invest to the tune of over $1 billion each to set up the respective 1,000-1,200 MW integrated power plants based on imported coal and developing its related infrastructure. Why then should it not be possible to attract foreign investors to develop integrated power plants based on indigenous coal, which are technically and financially feasible?

The exploitation of immense wealth of Thar coal resources, which may last for centuries, will remain a distant reality if the present pace of work on the Thar Coal Mining Company is any indication. National Energy Security Plan has set a target of adding 19,910 MW coal-based power generation capacity to the existing installed total capacity by the year 2030. In the first phase, coal-based power generation of 900 MW was to be attained by 2010, to be followed by an additional 3,000 MW by 2015. Given the present conditions, achieving these targets seems unrealistic.

Viability of the Thar coal mining company -DAWN - Business; March 03, 2008

 

[Neo]

Economics and voter rationality​

Usually, it is the impact of politics that is gauged on economic outcomes. Elections 2008 in Pakistan demonstrate the impact of economics on politics and electoral outcomes. Since the bulk of the population is poor, the poor and the illiterate have spoken. The previous government did nothing to ameliorate their lot. The low and the middle income classes also spoke. They were also getting poor with a growing sense of deprivation than was the case in the past.

The two segments voted in favour of the opposition parties, regional and ethnic vote notwithstanding. So, other than ethnic/regional considerations, the illiterate and the low-income educated voted pretty much similarly. They voted in favour of parties expected to heed the sighs of the commoners groaning under the pressure of ever-rising price spiral and other economic woes. What were the economic factors that topped the agenda and, amongst other factors, drove voting behaviour this time?

Top of the agenda was the steep rise in the market prices of sugar, wheat, edible oil, milk, and vegetables that, in turn, fed into a price spiral. Consumers had to substitute expenditure on other items with that on inelastic basic food items. Wheat/food price increase also has a ratchet effect on the overall price level. The income effect of rising prices left all those poorer whose wages are either not indexed to inflation or are indexed to the official rate of inflation when actually experienced inflation is higher. While the consumers were getting poorer, suppliers of basic food items with inelastic demand became richer. Increase in food prices cannot be explained away by rising international food prices. There was a dynamic process- very domestic in nature-- that led to the fiasco within the country. Hoarding was reported in both sugar and wheat but could not be nabbed for political reasons. Export of wheat was allowed by the then prime minister Mr Shaukat Aziz on the basis of wheat output claims that were later found to be inaccurate as also accepted by him in a recent interview in London.

Smuggling across the borders could not be controlled. This administrative weakness resulted in a further rise in domestic wheat price and government failure to arrest wheat flow across the borders. Political and administrative handicaps combined as well as corruption left the consumers hapless. As the consumers became poorer, there were tall claims made of poverty reduction that smacked of a rising intellectual poverty.

The above clearly indicates why corruption would not be a differentiating feature in elections 2008. For, many may succumb to it. The disadvantaged cannot, therefore, be held responsible for inducting the former accused or maligned back into the formal system when the system was not free from these tendencies even during the tenure of the previous PML(Q) government. A difference, however, is with regards to its scope and scale.

Under the last government, it was a very wide segment of the population that experienced the effect of corruption and maladministration and on a scale that wholesome food on the mat was virtually and actually snatched away significantly, if not fully. This is a situation very hard for the affluent to comprehend who can see corruption at only the macro level but not at the millions of micro household levels who stood virtually robbed.

So, the deprived used their good judgment to vote back the ones who never were food snatchers. They actually always took a humane view of the plight of the deprived. Also, the massive job losses that resulted from the previous government’s privatisation policy would swing the vote away from the incumbents to those who attempted to guard the jobs even in the event of privatisation.

The right to eat and the right to work needed to be restored ; something that was not expected of the incumbents as they would always turn a deaf ear to the complaints and the concerns of the ordinary. It is the ordinary whose turn it was to decide at the polling booth. And, they gave a verdict in favour of the ones who had not been so harsh with them in the past. This is voter rationality that needs to be understood in context.

Added to it was the usurpation of a whole bunch of basic human rights that even the dispassionate observers found totally unacceptable. And the voters together turned the tables on the incumbents to reclaim their basic economic and other human rights.

Voting is based on expectations. The party/group voted into office is expected to deliver on the issues faced by the people. They are expected to try hard to live up to the expectations of the people in the interest of their own re-election if not in the true interest of the people. That is why, democracy is considered to be the best bet. According to a Greek philosopher, democracy is not the best form of government but it is the government that works best. According to him, best form of government is intellectual aristocracy. But, the intellectual aristocrats are not inclined to rule.

So, those who are not intellectual aristocrats must put their heads together to decide and let people be the judge of who will decide for them. Worst-case scenario then is a bunch of decision-makers who are self-appointed or manipulated into offices. Such are not the true representatives. They may even put their heads together in virtual isolation of the society. This is the worst case scenario that a relatively fair popular vote saves the people from.

So, knowing the ground realities, it is not the perfect that is sought through the electoral process. But, what is sought is a move away from what is very imperfect to what would be less imperfect. An attempt is made to have the immediate woes, economic and otherwise, redressed. It is thus a shift from a situation in which the woes stood compounded to a situation in which the intensity of the hardships is expected to be reduced.

It is, therefore, also a shift from a government that would not lend its ears to the one that is sure to lend its ears to the most pressing issues as it would be democratically elected. The attempt of the electorate is to have representation, at least, on those serious issues that went entirely unrepresented thus far. Voting behaviour is thus driven by rational considerations. It would be highly irrational to again vote in the incumbents who failed the electorate on more counts than one.

Economics and voter rationality -DAWN - Business; March 03, 2008

 

[Neo]

Pakistan world’s second in developing CNG infrastructure ​

ISLAMABAD: Owing to price differential between CNG and gasoline, the CNG has brought investment of more than Rs 45 billion during the last five years.

According to Oil and Gas Regulatory Authority (OGRA), the CNG sector has shown tremendous growth as more than 1,080 operative CNG stations were set up in the country bringing investment of more than Rs 45 billion. Over 1,450 CNG stations were operating in the country while about 900 were at various stages of completion.

During last financial year, the authority issued an additional 2,218 licences for construction of CNG stations, which means further investment of about Rs 28 billion is in the pipeline. Pakistan has taken a lead role in developing CNG infrastructure and at present, it is second in the world after Argentina.

In 2005-06, total number of operational CNG stations was 965, which increased to 1,450 in last year thus showing growth rate of 50 per cent and similarly CNG vehicles rose to 1,200,000 with growth rate of 20 per cent in the same period.

Daily Times - Leading News Resource of Pakistan

 

[Bushroda]

Pakistan takes baby steps to filmdom
Reverses embargo on Indian films

By PATRICK FRATER
Variety, CA

Pakistani cinema is entering the international age with moves to normalize the country's own movie industry and the reversing of a 43-year embargo against Indian films.
Caretaker minister for industries, Salman Taseer on Saturday announced that the entertainment sector has been granted 'industry status' following a decision by the Cabinet.

Spanning studios, production companies and animation, the status is intended to allow the sector to build infrastructure, conduct research and engage in training schemes.

"Duty-free import of equipment related to this industry will also be allowed," he said.

Industry status may also allow normal financial interaction with other parts of the economy. Neighboring India's granting of industry status eight years ago foreshadowed bank lending and outside financial investments in the sector and a modernization boom.

Taseer said Pakistani entertainment could expect to grow by an annual 7% following the reclassification.

"A notification allowing (Indian) imports is expected anytime," said Jamshed Zaffar, chairman of the Pakistan Film Producers' Assn. Other sources reported that government intends to allow 12 Indian films per year.

There have been signs of thawing in cinematic relations with India. High- level political intervention led to the screenings of "Mughal-e-azam" and "Taj Mahal" (both revolving around Muslim emperors of their shared history) to raise funds for earthquake relief.

And for the past three years Pakistan has allowed limited import of Indian films, such as "Bride and Prejudice" and "Goal," that were principally shot outside India.

"Indian films allowed entry since 2004 were those shot on third-country locales and brought here as foreign films. The new regime will do away with these restrictions," Zaffar said.

Pakistan has its own Urdu-language movie industry based in Lahore, which is inevitably nicknamed Lollywood, and its own stars. But Pakistani cinema has dwindled under pressure from intense piracy, cable TV and lack of investment in theatrical circuits.

Lobbying by exhibitors for a reversal of the 1965 ban on Indian films, is both an acknowledgement that video copies of Bollywood movies are widely traded on the black market and a move to drive revenue through Pakistani turnstiles.

Exhibitors urged Indian rights owners to be cooperative, rather than conquering. Day-and-date releasing either side of the border has best chance of B.O. success, but because of limited screen numbers, releases are unlikely to be wide.

The thawing relations look set to go both ways. The first commercial release of a Pakistani film in several decades is set for March 28. Helmed by Shoaib Mansoor Pic, "Khuda ke liye" (In the Name of God) focuses on the rift between radical and liberal versions of Islam. With a cameo role by veteran Indian thesp Naseeruddin Shah pic was a hit in Pakistan last year and previously showed at the Intl. Film Festival of India. India has 140 million Muslims, the largest religious minority.

 

[Neo]

800MW to be available by year-end: PEPCO MD ​

Tuesday, March 04, 2008

KARACHI: The national power grid would have an additional 6,000MW of electricity by December 2010 to meet the growing deficit but till then the country has to adapt itself to ways of conservation, a seminar on power crisis was told here on Monday.

At least 500MW would be available with WAPDA by the end of this year as rental power plants come online along with 300MW achieved through rehabilitation, Munawar Baseer Ahmed, Managing Director, Pakistan Electric Power Company (PEPCO) informed the participants.

“Private sector has failed to come with any new projects,” he said referring to the lacklustre response of investors to the idea of Independent Power Producers (IPPs). “We could not wait and have decided to set up power plants in the public sector.”

The government finally relaxed its position on keeping the power generation in the private sector and last January signed an agreement for a 450MW Nandipur power plant, the first public sector project in the past 17 years. It had approved setting up of 2,000MW in the public sector.

Rental power plants are a stopgap measure and cannot be relied upon beyond three-year period for economical reasons. Baseer, the former MD of Sui Southern Gas Company (SSGC), said future projections show that reliance on natural gas for power generation would persist. “With IPI pipeline not happening, no work on gas pipeline from Turkmenistan and LNG project stalled, we are in a serious crisis.”

He said policy planning has gone terribly wrong regarding low utilization of coal reserves for power generation. “Regulatory framework is out of focus. Nepra and Ogra should restructure themselves as facilitators.”

Though he stressed that the power shortfall has not assumed status of a crises, advice was for industry and public at large to try conserving sources of energy to avert a crisis. Excluding Karachi, shutting off billboards, unnecessary streetlights and other means was saving 600MW said Baseer.

CEO KESC Mohammad Amjad said that demand for electricity was increasing at a rate of 8 percent per annum in Karachi. “A project of 220MW was coming up at Port Qasim while work on two power projects will start by end of this month and two more in July this year. They will be completed in July 2009.”

He said the utility will likely face a shortage of 300MW in the coming summer, but this will be met with the availability of additional power from KESC’s own refurbished units. Stefan Hatt, Vice President ABB, which had organized the seminar, said that Pakistan needs to go for gas-fired power plants which are economical and needs lesser time for commissioning.

Farhat Ali, CEO of ABB, said power equipments were in short supply the world over and countries like Pakistan were finding it hard to purchase new power plants. Government must also focus on improving the transmission and distribution system, he added.

800MW to be available by year-end: PEPCO MD

 

[Neo]

India agrees to remove hurdles to Pak exports: official ​

Pakistan exported 230,000 tonnes of cement to India in past five months​

Tuesday, March 04, 2008

NEW DELHI: India has agreed to remove obstacles in the way of Pakistan’s exports in a minimum possible time, Pakistan Commerce Secretary Syed Asif Shah said and added cement exports to India have registered manifold increase over the last six months.

Talking to newsmen after the third meeting of the SAFTA Ministerial Council held here on Monday, Shah said during the last five months, Pakistan exported 230,000 tonnes of cement to India which would further increase as India had given clearance to 17 cement manufacturers.

Two more trains to carry cement to India had been added in addition to the existing one train per day while this frequency would be increased to five trains a day, he said and added Pakistan had already upgraded trade facilities at Wagah border with parking facilities to over 300 trucks.

The secretary said Pakistan had provided a list of 20 items to India to facilitate their exports. India assured of taking positive decision in a couple of months. Similarly, the committee constituted by India to remove barriers on exports to Pakistan would also submit its report soon.

He said during his meeting with Indian counterpart Pillai, it was also decided to complete modalities to increase trade volume and to reduce trade imbalance between the two countries. The Indian side had assured that temporary space will be provided for facilitating loading/unloading Pakistani goods on the Indian side at Wagah border. India had planned to invest Rs1,500 million to develop infrastructure at Wagah for which the land had already been acquired.

Shah said on his return he would visit Wagah border to see for himself the existing trade facilities on both sides and what could be done in future. He would submit a report to the government and a copy of which would be given to the Indian side. He said Pakistan had great potential to increase trade volume with India as garments, food items, electric fans, carpets, surgical instruments and pharmaceuticals could find way into Indian markets.

India is expected to hold a Pakistan-specific exhibition “Made in Pakistan” in October here in which Pakistani exporters would exhibit their products. When asked on the outcome of the third meeting of SAFTA Ministerial Council held on Monday, he said there was complete consensus to move forward on the South Asian Trade agreement which was beneficial to the people of South Asia.

The recent initiative to conclude SAFTA Agreement in Trade in Services was a step in the right direction. He said it was decided that member states would forward their proposals to the SAARC secretariat on modalities to be adopted for reduction of the sensitive lists by May 31 for consideration at the next meeting.

The SAFTA Committee of Experts which held its meetings here before the ministerial meeting constituted a sub-group to identify non-tariff measures being maintained by member countries in trade restive manner.

India agrees to remove hurdles to Pak exports: official

 

[Neo]

Bad weather affects 20pc gram crop ​

Tuesday, March 04, 2008

ISLAMABAD: Inclement weather, particularly the frost in February, has affected 20 per cent of the gram crop, reveals an official report.

The Ministry of Food, Agriculture and Livestock (MINFAL) has forecasted a decrease in area and production of the crop by 8 per cent and 20 per cent respectively, according to a report prepared by it and submitted to the Federal Food Committee (FFC) on the latest crop situation in all the four provinces.

The gram production during the year 2007-08 is expected to be around 608,000 tonnes against last year’s production of 838,000 tonnes. The consumption of gram in Pakistan is nearly 550,000 to 600,000 tonnes annually and the Pakistan Agriculture Storage and Supplies Corp (PASSCO) had stocks of 75,000 tonnes from the last crop.

The government had imposed a ban on the export of the commodity to other countries in order to stabilise its prices in the local market, as they touched an all-time high.However, due to the imposition of export ban, the country not only loses international buyers but its prices also fell in the local market.

The report said that an overall decrease of 19.5 per cent is expected in the production of gram in all the four provinces during the harvest of the 2007-08 crops. Punjab, which contributes nearly 90 per cent to the production, is facing a decrease of about 30 per cent.

Sindh is expecting a 22 per cent decrease, NWFP has estimated 10 per cent and Balochistan has anticipated a 17 per cent decrease in the production of gram because of a severe grip of weather during the month of February, it said.

In Punjab, the sowing of gram recorded an increase of 2 per cent in area but the chilling temperature minimized the prospect of the increased area and now the crop is estimated to be around 518,000 tonnes.

The rest of the three provinces are also expecting decrease in their production as Balochistan is expected to produce 25,000 tonnes, NWFP 19,000 tonnes and Sindh 45,000 tonnes during the harvest of 2007-08 crop.

Bad weather affects 20pc gram crop

 

[Neo]

PIA losses shoot up to Rs13.3bn ​

Tuesday, March 04, 2008

KARACHI: Pakistan International Airlines (PIA) on Monday announced that its losses for the first half of fiscal year 2008 increased by 4.7 per cent to Rs13.3 billion from Rs12.7 billion suffered in the same period of previous year.

While net revenues for six months (July-Dec 2007) were stagnant at around Rs70.4 billion, operational cost decreased by 4.3 per cent to Rs66 billion from Rs69 billion, taking up the gross profit for the period to Rs4.2 billion from previous year’s Rs704 million.

Other expenses including administrative expenses increased by Rs1 billion to Rs11.1 billion from Rs10.1 billion, but real battering came in the shape of huge financial cost, which swelled by 51 per cent to Rs7.1 billion from Rs4.7 billion.

Current ratio worsened to 0.2 from 0.4 as current liabilities increased and current assets went down. The results have been approved by the board, chaired by outgoing Chairman Zaffar A Khan who announced his resignation last week.

PIA losses shoot up to Rs13.3bn