Pakistan Economy - News & Updates - Archive

[Neo]

MoF will ask new government to review projects ​

ISLAMABAD (March 09 2008): The Finance Ministry will recommend to the new government to review 'Juma bazaar of projects' initiated by the Planning Commission without keeping in view their benefits and financial constraints, reliable sources told Business Recorder.

The sources said that the Planning Commission, which has rehired almost all the retired officers was backing those projects which were not of national importance but they do not know if the government would be in a position to start these schemes.

The sources said that the new government would be asked to shelve some projects that the Finance Ministry considers unnecessary, that have been recommended by the Planning Commission and the Higher Education Commission including construction of eight new universities, costing Rs 40 billion each.

The federal government has suffered a budget deficit of Rs 356.321 billion during the first half (July-December) of FY08 against whole year's deficit estimate of Rs 399 billion.

The government was forced to finance through borrowing Rs 68.029 billion from external resources and Rs 288.292 billion from local institutions. On February 4, President Pervez Musharraf had directed the Deputy Chairman of Planning Commission to prepare a list of non-starter development projects as well as those on which initial work was in progress.

When this correspondent contacted at least five or six officials of the Planning Commission, the Finance Ministry and the Water and Power Ministry, to have their views that which projects were being axed in the light of the President's directives, the officials said that they did not receive any list from the Planning Commission so far.

The sources said that Public Sector Development Programme utilisation of Rs 109.5 billion during July-December, 2007-08 has been achieved against Rs 87.5 billion for the same period last year showing 37 percent of utilisation against 35 percent in the same period last year.

The strategy focused on saving financial resources without hurting or slowing down the pace of projects. The strategy indicated that the new projects would not be included in PSDP 2007-08. Budgeted projects, not yet started, would remain on hold during the second half of the current fiscal year. Expenditure to be incurred during May-June, 2008 on slow moving projects may be delayed until July-August, 2008.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Punjab may see Rs 56 billion budget deficit ​

FAISALABAD (March 09 2008): The medium-term budget framework (MTBF) and medium-term development framework (MTDF) of Punjab have shown that the budget deficit would reach Rs 37.3 billion (about $622 million) in FY2008 and further to Rs 55.9 billion ($932 million) and Rs 42.8 billion (about $714 million) in FY2009 and FY2010, respectively.

Over the medium term, the Planning and Development Department sources said that the sustained growth in Punjab and pro-poor spending put immense pressure on financial resource mobilisation. The government's financing needs will be significant if it is to sustain its target of 7 percent economic growth, create over one million new jobs each year, and raise spending in the social sectors.

According to official sources, the surplus in the net public account in FY2008 somehow relieves the financing pressure, but the overall financing requirement from FY2008 to FY2010 remains significant, averaging around $890 million per year. Absorbing the proposed disbursement of about $300 million yearly will not impair fiscal sustainability. The World Bank estimates show that the net present value of provincial public debt as a percentage of provincial GDP will decline from 1.9 percent in FY2006 to 1 percent in FY2010.

Effective public resource management is a key contributor to economic efficiency, broad based economic growth, employment creation, poverty reduction, and social progress. Reforms in all the four core policy areas of the Punjab Government Efficiency Improvement Program (PGEIP) are essential for providing good governance, creating fiscal space, reducing waste, improving value for money in public finance, and improving public service delivery. Reforms under the PGEIP are crucial in sustaining development in the Punjab, and the opportunity cost of not undertaking reforms will be very high, sources said.

The Planning and Development Department sources said that the financial and economic costs associated with the reforms are expected to be substantial, given the scope of the reforms. Political costs are considerable, as initiatives such as civil service reforms, will significantly shake up the vested interests that benefit from weak governance.

Direct adjustment costs include the following: (i) capitalisation of Punjab Pension Fund (PPF) and General Provident Investment Fund (GPIF), (ii) implementation costs to improve public financial management systems, (iii) increased wage costs as civil service reforms bring compensation more in line with the market rate, (iv) costs to leverage reforms that may face resistance through consensus building, and (v) reduced revenue to the government due to lower compliance costs. While there are costs associated with reforms in the short run, the eventual economic benefits will greatly outweigh the costs in the long run.

Sources said that Punjab Government has laid down an ambitious 'Vision 2020' aimed at doubling per capita income over the next decade. This will require sustained broad-based economic growth, which in turn demands large efficiency improvements in both private and public sectors, accompanied by better public resource management.

Through the Asian Development Bank (ADB)-supported Punjab Resource Management Program (PRMP), implemented during November 2003-August 2007, the Punjab Government has introduced wide-ranging reforms in public resource management. It has enhanced revenues, rationalised expenditures, improved planning and budgeting, and developed the private sector and the civil service.

In parallel, the Provincial government has also implemented reforms in service delivery, through the ADB supported Punjab Devolved Social Services Program (PDSSP), and in the judiciary, through the Access to Justice Program (AJP).

Having laid down a broad foundation for reforms through these three major ADB interventions and support from other development partners in the governance, education, and infrastructure sectors, the Provincial Government launched its second-generation reforms at the fourth Punjab Development Forum in April 2007. These reforms are centered on creating an effective public sector and fostering a dynamic private sector to achieve the 'Vision 2020' goals.

P&DD SOURCES SAID THAT THE SIX KEY PILLARS OF THE SECOND-GENERATION REFORMS ARE THE FOLLOWING:

(i) efficient public financial management, to increase the fiscal space for higher pro-poor spending;

(ii) a fully funded and well-governed civil service pension system, to support prudent fiscal management and ensure retirement income security for civil servants;

(iii) civil service reforms, for a responsive, efficient, and effective civil service;

(iv) broad measures supporting private sector development, for economic growth, job creation, and poverty reduction;

(v) attainment of the Millennium Development Goals (MDGs) by 2015; and

(vi) improved access to justice, for greater legal and regulatory certainty and enforceability in all economic spheres.

Building on the PRMP and other programs, P&DD sources said, the PGEIP will support the Govt. in realising the long-term goals expressed in 'Vision 2020', through which the government has committed itself to significantly improving the standard of living of the people of Punjab, especially the poor and vulnerable. The PGEIP will improve the overall functioning of the provincial, district, and municipal governments and the quality of public services.

THE IMPROVEMENTS WILL TAKE THE FOLLOWING FORMS: (i) greater performance-oriented planning and budgeting; (ii) a more efficient civil service, with adequate incentives and merit-based appointment and career progression; (iii) a funded and well-managed pension system, which increases the confidence of civil servants and the public, and generates fiscal space for high-priority investments in the social sectors; and (iv) greater private sector contribution to growth and facilitation of public-private partnerships.

As reforms in these areas are complex and would take time to filter through the bureaucracy, PGEIP will be processed as a program cluster comprising three single-tranche Sub Programmes.

This modality provides adequate flexibility to meet emerging reform needs and use program conditions genuinely for policy reform, rather than as rigid prescriptions. ADB's Management and Board will also have greater involvement in recommending measures for future operations within a cluster, in a way that is not possible in traditional multiple-tranche operations.

In order to ensure that all the six pillars of the 'Vision 2020' are in place, Punjab Government has also sought ADB's support for accelerating the attainment of the MDGs and implementation of provincial-level judicial reforms, in addition to the government efficiency improvements under PGEIP.

In line with this request, ADB will also prepare two additional program clusters, namely the PMDGP and PAJP, in an integrated manner along with PGEIP over 2007-2011.

The integrated approach will improve program co-ordination, reduce duplication, minimise inconsistency in policy advice and measures, and focus resources for desired outcomes. The reforms under the three program clusters will accelerate and sustain economic growth, improve the delivery of public services, create more employment opportunities, and reduce poverty.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

New Sindh government to review 2007-08 budget ​

KARACHI (March 09 2008): One of the first step to be undertaken by the new Sindh government headed by chief minister designate Syed Qaim Ali Shah will be review of the Sindh budget for the year 2007-2008 and revision for the last quarter of the financial year in implementation of the declared manifesto of the Pakistan People's Party on the economic side, UPP understands from informed sources.

The priorities in terms of the development programme with stress on projects that benefit the common people in the province would also be undertaken. And in this respect the advise by the co-chairman Asif Ali Zardari will also be obtained.

The new cabinet headed by chief minister designate Syed Qaim Ali Shah will also have to ensure the preparation of a provincial budget for the new financial year 2008-2009 that matches the various points as incorporated in the manifesto of the PPP for the general elections of 2008. There will be stress on drawing up a development programme for the new financial year such that maximum jobs are created and the unemployed youth are given the opportunity of getting gainfully employed.

A number of suggestions have reportedly been made to the chief minister designate Syed Qaim Ali Shah by members of the think tank of the PPP who are well versed with the economic issues specially of the Sindh province.

It is also gathered that the various expenditure undertaken in the Sindh province over the past eight years would also be under the strict security of the new Sindh provincial cabinet headed by Syed Qaim Ali Shah.

Meanwhile the workers cadre of the PPP in said province has high hopes attached to the expected measures by the new Sindh cabinet of the PPP for maximum generation of employment opportunities in the province of Sindh.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

'Huge potential for foreign investment exists in Pakistan' ​

LAHORE (March 09 2008): Executive chairman Wenham Major, Ammar Azam, has said the economic growth in Pakistan is impressive and there is a huge potential for foreign investment in the real estate, telecommunication, power and banking sectors.

Azam told Business Recorder here on Saturday that Wenhamn Major is one of the leading financial and business advisory firms in the Midlands and also ranked as the 23rd UK biggest accountancy firm.

He said both Pakistan and India are emerging economies and the economic commentators spoke of spectacular economic growth and development, and dynamic and increasingly accessible markets, with the 21st century being described as Asia Pacific's century.

He said liberalisation of the economy continued apace with trade barriers largely removed and privatisation programmers gradually reducing the still-significant role of the public sector in the production and consumption of goods.

"We have established our office in Lahore and also planned to set up one in India this year. We have encountered a global economic hub, which has opened up new opportunities both for our own business to trade with economies, such as Pakistan and India, and for our clients to break into markets in the Asia Pacific rim," he said.

He said dynamics of business had changed altogether in the globalised competitive business environment. "Wenham Major has the resources base to assist the Government of Pakistan in delivering economically sound citizen-centre services to the nation, ensuring greater levels of transparency and sustainable economic development," he added.

He said his group helped its Pakistani investors in making international investment decisions by providing investment expertise. "The Major real estate has developed a separate Non Resident Pakistani division for investment advisory at its UK and Dubai offices for the best facilitation of its expatriates clients," he said.

He said there was a huge scope of promotion of SMEs in Pakistan. By providing solid base to the SMEs sector, Pakistan's economy could achieve a significant growth. But he was critical of high rate of interest in Pakistan. He said high interest rate for SMEs left a negative impact on the growth of SME.

Business Recorder [Pakistan's First Financial Daily]

 

[Bushroda]

Pakistan Economy Remains Resilient Amid Crisis
Despite being at a political crossroads, strong fundamentals keep the economy buoyant

By Rafi-uddin Shikoh and Zainab Mansoor
Dinar Standard, NJ
March 6th, 2008

Media coverage of Pakistan has been dominated by its political crisis and the now unfortunately regular spate of suicide attacks including the assassination of the prominent opposition leader Benazir Bhutto.

It would then seemingly defy conventional wisdom that two leading Silicon Valley venture capital firms, ePlanet Ventures and Draper Fisher Jurvetson (DFJ) - funds that helped create companies like Hotmail, Skype and Baidu - would recently invest in a Pakistani Internet company - Naseeb Networks.

Or it would seem unlikely that a new $158 million private-equity fund, by the JS Group, would close on Dec 31st 2007 to invest solely in Pakistan.



Or that in a year (2007) when the country experienced the highest levels of political turmoil and security breaches, its largest stock exchange, the KSE with 670 companies listed would be up an impressive 40% and that the average dividend yield of its stocks would be 6%.

Undoubtedly, for such investor confidence, the fundamental attractiveness of an economy has to be solid while the impact of any crisis limited. In Pakistan not only does this seem to be true but its potential remains severely untapped -- offering tremendous opportunities to both domestic and foreign businesses.

Domestic demand driving economy

With a large and growing population of 160 million, its real GDP (Gross Domestic Product) has grown at almost 7.0% for the last 3 years and is expected to be at 6.5% for 2008. Meanwhile the most recognized indicator of a nation’s prosperity – its GDP per capita, is expected to cross US$1,000 this year – and US$2,000 by 2014, according to local financial services firm BMA Capital. Similarly, middle class incomes are rapidly growing and consumer spending consequently growing above 10% CAGR for last 3years.


[FONT=Verdana, Arial, Helvetica, sans-serif]Image: Emaar Pakistan [/FONT]

At the same time, a Feb 2008 report by the World Bank points out that Pakistan suffers from a dearth of infrastructure in the water, irrigation, power, and transport sectors. With its water infrastructure in poor condition, the report argues that Pakistan has to invest around US$1 billion per year in reservoirs and related infrastructure over the next five years. In the energy sector, the country will face severe power shortages of around 6,000 megawatts by 2010. Similarly, inefficiencies in the transport sector cost the economy between 4-5 percent of GDP each year. To overcome these constraints, Pakistan has tripled its annual infrastructure investment from an average of US$2.5 billion to US$7.3 billion, but increased involvement of the private sector will be needed to meet the gaps.

BMA Capital is amongst the leading financial groups in Pakistan and was the advisor to Etisalat (the UAE based Telecommunication company) on their successful acquisition of a 26% strategic stake in Pakistan Telecommunications Company Limited (PTCL) for US$2.6 billion, the largest M&A transaction and foreign direct investment in Pakistan’s history. In BMA’s 2008 outlook for Pakistan, it highlights the key economic drivers as the role of domestic demand, relative insulation from a US recession, insensitivity to domestic politics, tight monetary policy and high oil and commodity prices. The firm projects earnings growth of Pakistan’s publicly listed companies in FY08 at 12.2% and FY09 at 18.0% and projects that the FY09 P/E ratios will move up from the current 9.7x to the historical average of 11.4x.

BMA is certainly benefiting from its own advice. Speaking to DinarStandard, Mr. Shehryar Ahmed, Senior Vice President & Head of Marketing and Investor Relations at BMA Capital Management commented that, “In 2007, BMA’s Pakistan Opportunities Fund, the country’s first and only offshore country fund generated 28.5% in the midst of assassinations and emergencies. I think this is illustrative of the opportunity that Pakistan offers and the international investor is willing to look behind the headlines. Even in an unstable political terrain, Pakistan has posed a great investment opportunity.”

Speaking on the current economic environment he further added, “Government spend has increased substantially on infrastructure and other development areas over the last few years and that trend is expected to continue, given the large projects already in implementation and in the pipeline. In 2008, now that elections are behind us, and a new government is to be formed, we are optimistic of the country’s growing economic prospects."

Local Entrepreneurs Bullish

Given that the elections were conducted harmoniously and no apparent political upheavals appear in sight, the major players in the local market are hoping for a further boost in the economy.

Naseeb Networks is a leading provider of a portfolio of websites including ROZEE.PK and Naseeb.com. ROZEE.PK is Pakistan’s largest and fastest growing job website delivering over 1.4 million applications to jobs posted by 8,800 employers that include Mobilink, Nestle, Oracle, McDonalds, United Bank Limited, Microsoft, GlaxoSmithKlein, Engro Foods, Proctor & Gamble and others.

Its CEO and Founder Mr. Monis Rehman, is looking forward to aggressively expanding its Pakistani presence given the recent cash infusion from its Silicon Valley investors. Speaking to DinarStandard he said, "Investments continue to happen because the fundamentals are strong. Pakistan has a population of 160 million consumers. 70 million of them now have mobile phones. Over $1 Billion has been invested in broadband and WiMAX infrastructure. While there is a lot to be concerned about, there is also a lot to look forward to."

Commenting on the viability of its new media venture in Pakistan, he said, "Pakistan has a rapidly growing 7.5% internet penetration rate compared to India's 4.5%. None of the top 10 sites viewed from within Pakistan are local, which suggests a huge opportunity for creating local content. Online advertising is also at its infancy and with the current market dynamics, is poised for strong growth."

Similarly, major players in the telecommunication league think no different. Zuhair Khaliq, CEO of Mobilink, the subsidiary of Egypt-based Orascom, when asked to comment on the company's future plans in Pakistan said "We are envisaging sustainable growth in Pakistan. With mobile penetration still at around 43%, the room for growth is immense. The growth is not only limited to mobile telephony, as there are huge opportunities in other fields like broadband (optic fiber, DSL, WiMax), LDI etc. This coupled with the enabling environment being provided by the Pakistan Telecommunications Authority ensures an excellent future for this sector.”

Meanwhile, the outlook for banking which serves as the back bone to an economy also seem bright for 2008, as the Central Bank Governor Dr. Shamshad Akhtar announced the country's "extraordinary growth" of financial sector assets which grew to $180 billion or 125% of the Gross Domestic Product (GDP) in 2007. Fitch Ratings also recently reported that the Pakistani banking system, over the last decade, has gradually evolved into an active private sector driven system with the private sector controlling nearly 80 percent of the system assets, as opposed to the early 1990s when 90 percent of the system assets were controlled by the government.

Another growth driver is the growth in Islamic Finance. In Pakistan there are currently six dedicated Islamic Banks with a total of 186 branches along with 102 standalone Islamic Banking branches of conventional banks. According to Meezan Bank, the first IF bank in Pakistan, their total deposit base is over US $1.98 billion while the overall Islamic banking assets are worth $2.83 bill.

‘Easier to do Business’ than in China and India?

The World Bank annually releases an Ease of Doing Business ranking which provides objective measures of business regulations and their enforcement across 178 countries. Its 2008 report showed Pakistan’s ranking (#76) as better than the emerging markets of China (#83) and India (#120). It was also identified as one of the leading reformers during 2005-08 and within OIC member countries was only behind Egypt in terms of the number of new business friendly reforms.

An example of such a business reform noted by the project is that customs clearance at the Karachi international container terminal has dropped from 10 days in 2004 to 4 hours in 2007.

Indeed, a variety of business friendly measures during the past few years and relative political stability have played a positive role in investor confidence. It’s certainly hoped that the new political structure can only improve upon these measures and resolve the many issues remaining to be addressed.

Opportunities to Invest

The recently created JS Private Equity Fund sees opportunities in both export-related industries such as textiles, leather and medical supplies, as well as domestic-demand related industries such as consumer goods, media and advertising. Speaking to MarketWatch recently, Steve Smith, JS Funds Managing Director, further identified opportunities in inefficiencies within infrastructure, transportation and logistics, as well as agriculture and horticulture.

The JS Private Equity Fund has already made two investments. The first is for a controlling stake in Optimus, the Hertz franchise in Pakistan, which specializes in long-term vehicle contract-leasing to businesses. The second is a minority investment in Engro Asahi Polymer & Chemicals, the only Pakistani producer of PVC resin.

Meanwhile, BMA Capital sees the biggest investment opportunities in energy & power, refinery, gas distribution, fertilizer, autos, banks, cement, fmcg (fast moving consumer good), telecom, and textile sectors.

Overall, the horizon for prosperity and growth seems lustrous for Pakistan. The general sentiment is undimmed and is driving the masses to believe that change for a better economy & a better future is within their sight. Despite being considered a politically unstable terrain, Pakistan as an economy still has a lot to offer and is rightfully called by Mark Matthews of Merrill Lynch as "the greatest information-arbitrage opportunity in the world.”

 

[Neo]

Excellent read Happyfeet, thanks for sharing

 

[Bushroda]

My Pleasure

 

[ejaz007]

First ship arrives at Gwadar port​

LAHORE: A ship carrying 72,000 tonnes of wheat arrived at Gwadar Port on Monday – the first to come to Pakistan’s largest deep-water port since its inauguration last year. Dawn News television channel reported that a private company had chartered the ship, which came from Russia and arrived in the evening. Earlier, the Gwadar port administration had asked the Karachi Port Trust and the Ministry of Ports and Shipping for help in handling the ship. According to the channel, the port authorities and the shipping company had not decided until Saturday on how to handle the cargo. The port administration had arranged three tugs instead of the usual two, the channel said. It said the port would initially be used as captive cargo for trans-shipment purposes only.

Daily Times - Leading News Resource of Pakistan

 

[Neo]

Trade deficit widens to $12.43bn ​

Tuesday, March 11, 2008

ISLAMABAD: The country’s foreign trade deficit during July-February 2007-08 jumped to a record high of $12.43 billion on Monday, which is 39.05 per cent more than the corresponding period of last fiscal ($8.94 billion), the Federal Bureau of Statistics (FBS) said.

Ballooning imports and deflated exports once again returned. The deficit, if unchecked, could further jack up the current account deficit, which is a potential threat to the economy. The economy during the first eight months of the current fiscal pulled in imports worth $24.14 billion while its exports stood only at $11.71 billion. During the same period of last fiscal, imports stood at $19.79 billion and exports at $10.85 billion.

This depicts 21.95 per cent growth in imports while only 7.86 per cent rise in exports. It indicates that the country is marching toward another huge trade deficit in the current fiscal year. More interestingly, during February 2008, exports were up 5.31 per cent to $1.55 billion while imports rose 3.67 per cent to $3.66 billion over January 2008. During February 2008, imports were up 42.25 per cent and exports 22.25 per cent over February 2007.

Each month, the import growth exceeds that of export’s steadily widening the trade gap. It is important to note that previously, in its trade policy for 2007-08, the government targeted imports at $29.6 billion and exports at $19 billion with a trade deficit of $10.6 billion.

Now, during July-February 2007-08, the country achieved 61.63 per cent of exports and 81.55 per cent of imports target. The huge import pressure and low export growth indicates that by the end of this fiscal, trade deficit would reach more than $16 billion that would further aggravate the current account deficit (CAD) that could affect the country’s economic health. Again the country may be confronted with the dilemma of balancing its financial accounts.

Trade deficit widens to $12.43bn

 

[Neo]

Making steel from local iron ore becomes viable ​

Tuesday, March 11, 2008

LAHORE: With the global steel rates rising, it has become economically viable for steel mills to use local iron ore. Even the Pakistan Steel Mills that has used imported ore for over three decades has started using local iron ore.

Local and international investors are studying the possibility of setting up small to medium steel plants that would use locally available iron ore, the News has learnt. Producing steel from indigenous ore was earlier ignored due to high extraction cost and low iron content. However, the soaring steel and ore price in global market has made the idea of extracting steel from local ore feasible.

The investors are optimistic about safety of their investment as the demand for steel is rising rapidly and the local production is almost stagnant. In 2005-06 the steel smelters and the Pakistan Steel together produced 3.9 million tons of steel products against local demand of 7.3 million tons.

The smelters and re-rolling mills use imported, PSM produced billets or scrap to produce steel products. The PSM continues to increase the rates of steel products in line with the global rates because the iron ore it imports has also become more expensive.

The rates of iron ore from which the steel is extracted in the steel mills have increased sharply in past five years from $27.83 per ton in 2002-03 to $73.45 per ton in 2006-08. The current rates are above $85 per ton. The rates of billets that are the basic raw material for making steel products have increased from $360 per ton in 2005 to $750 per ton in 2007 and are still rising. The rates of steel scrap used by smelters for making billets have increased to $540 per ton.

A study by The News revealed that the major iron ore reserves found in Pakistan amount to 947.5 million ton. The deposits are present in Punjab (Sargodha and Kalabagh), NWFP (Nizampur and Hazara), and Balochistan (Kalat and Chaghi). The ore from these deposits contains 20 to 60 per cent iron. The Pakistan Steel Mills has successfully used local iron ore and is expected to gradually reduce the dependence on imported iron ore.

Over three decades back a plan to establish steel mill at Kalabagh was shelved as the 450 million deposits of iron ore found at that site had iron content of 30-35 per cent. Steel experts state that the extraction of iron from these deposits is now feasible, as the global rates have gone too high.

Another advantage that the investors in steel sector found in Pakistan was the availability of huge deposits of coal that is a main energy source for steel melting. Coal reserves in Pakistan are mainly concentrated in Thar that has got second highest coal reserves in the world. Coal is also found in Punjab and Balochistan and some nominal quantity has also been discovered in Northern areas.

Taking advantage of this situation the Engineering Development Board of Pakistan has chalked out a plan to increase the production capacity of indigenous steel to 10 million tons from the current capacity of 5.190 million tons (the actual current production is lower because some steel melting and re-rolling plants have closed). The Chief Executive officer EDB Almad Hyder is confident that both local and foreign investors would take advantage of the current favorable investment in steel sector in Pakistan. He said a foreign Middle East based group is already installing a unit of the size of PSM at Karachi while some investors have completed their feasibility studies for establishing some units in Punjab and NWFP.

World steel production rose by 49 per cent during 2001-06 reaching 1.3 billion tons in 2007. Global steel experts predicted that the world demand for steel would grow by compound annual growth rate of 4.9 per cent during 2007-2010. The latest projections however suggest that the growth rate in 2008 would be around 6.8 per cent. High growth in India and China is said to have increased steel demand.

Making steel from local iron ore becomes viable

 

[Neo]

IMC plans rolling out 70,000 units per year ​

Investment in expansion, technology transfer, capacity building of local vendors to continue, says IMC Director Corporate Planning and Customer Relations​

Tuesday, March 11, 2008
By Hina Mahgul Rind

KARACHI: Indus Motor Company Limited plans to make investment in enhancing production capacity from 50,000 to 70,000 units per year.

The company has installed an environment friendly Co-Generation Power Plant, an in house Press Shop to make body parts for vehicles while expansions continue in other sections of the plant. IMC has also made large investments in capacity building of vendors to match Toyota’s global quality standards said IMC Director Corporate Planning and Customer Relations Shah M Saad Husain while talking to The News.

The production capacity of the auto assemblers has increased four times in last five years. The gap between supply and demand has already been filled and most of the vehicles are now readily available.

“IMC is continuously increasing production capacity to cater to the market demand. Our production capacity has increased from 57 units per day to 200 units per day resulting in reduced delivery periods. Most vehicles are available on 30-day delivery with some variation due to colour,” he said.

Despite downward revision of the maximum age for used cars from 5 to 3 years they still continue to enter the country. However the reduction is a welcome step for the local auto industry facing importers using false documentation and purchasing overseas Pakistanis information to bring used cars in the country, he said. Unless there is further reduction in age of used vehicle to 2 years, it will continue to hurt the local auto industry.

Used vehicle imports are still about 14 percent of domestic passenger car and LCV production. The import tariff on used cars still remains considerably lower compared to the protection offered to local manufacturers in India, Thailand and other countries through higher duties and non-tariff restrictions, Saad said.

“Our auto policy should provide tariff and non-tariff barriers to protect and allow the indigenous auto industry to grow,” he affirmed. He said that technology transfer is an ongoing process. IMC has a detailed program of Technical Assistance Agreements (TAA) for vendors. Over 60 percent localization was achieved in Corolla and over 65 percent in Coure with major investment of IMC.

Challenges faced by the industry in Pakistan are, technological readiness, infrastructure, inefficiency of legal framework, firm-level technology absorption, low penetration of computers and Internet. Other challenges include the imposition of Custom duty on Royalty and Technical Fee being paid under the TAA.

Saad said that for the first time after many years a joint government and industry platform in the shape of AIDP has emerged which has fixed the Tariff Regime till 20011-12. If implemented fairly without changes the AIDP should further increase investment in the local manufacturing of automobiles and auto parts he sai adding, however work on many aspects of the AIDP has not started nor has a concrete implementations plan been made.

It is essential to maintain current industry momentum. For the first time after many years the auto industry sales have declined. He said that the major issues that the auto industry faces include inconsistent policies, used vehicle imports, under invoicing and smuggling of parts, no consultation with the industry while negotiating trade agreements with other countries, 2.5 percent WHT, custom duty on royalty payments, lower depreciation rate on vehicles, documentation of spare parts business and withdrawal of excise duty from franchise services.

Japan is considered to be the 4th largest investment partner of Pakistan with $400 million investment according to the SBP report.The Auto sector is dominated by Japanese multinationals and there has been increased investment for production capacity enhancement. Investment has also been made in upstream industries. Japanese investment in the automobile sector is expected to increase in coming years.

Pakistan Japan Business forum is already active and working on other possible areas of investment which can provide economic and commercial benefit.Some possible sectors in which Japanese firms could be interested are energy, infrastructure development and technical training.

IMC plans rolling out 70,000 units per year

 

[Neo]

Plan to include stationery items in FTAs ​

Tuesday, March 11, 2008

KARACHI: The WTO cell of TDAP has been given a task to work with the stationery industry and develop a proposal for the Ministry of Commerce to include stationery items in the free trade agreement (FTA).

This task was assigned to the WTO cell by the Chief Executive, Trade Development Authority of Pakistan (TDAP), Tariq Ikram at a recently held debriefing of stationery manufacturers who participated in the “Paper World China”, Shanghai exhibition in November 2007.

It was noticed that none of the existing FTAs benefited the stationery industry. The meeting felt that it was necessary to include stationery items in the FTAs, RTAs and PTAs that have been already signed or are to be signed in the future. TDAP chief formed a seven-member committee led by the Chairman of Writing Instruments Manufacturers Group of Pakistan to chalk-out a strategy paper to boost the export of stationery items.

The exhibitors informed the TDAP that almost all participating booked significant orders not only from buyers in China but also from Turkey, Egypt, North Africa, USA, Europe and various other countries.

Plan to include stationery items in FTAs

 

[Neo]

Energy savers can save 1,300MW ​

Tuesday, March 11, 2008
By Jawwad Rizvi

LAHORE: Replacement of one incandescent bulb with a Compact Fluorescent Lamp (energy saver) by each of the 17 million users of power utilities means that people can help WAPDA and KESC save about 1,374 megawatts of electricity during peak hours, said energy conservation expert Engineer Arshad Chughtai.

Giving a presentation on “Impact of energy management on power planning” at Technology Upgradation and Skill Development Company (TUSDEC) head office here, he said that power consumption in Pakistan was presently growing at a rate of 10 per cent per annum, predicting it would double by the year 2015. “The major reason for the steep growth is consumers’ indifference towards saving electricity,” Chughtai maintained.

Quoting an example, he said that incandescent bulbs, perfected for mass use by Thomas A Edison in the late 19th century, were being phased out in several developed and developing countries at the moment and replaced with CFLs, which use only 20 per cent of the energy consumed by incandescent bulbs.

Arshad Chughtai said that the use of CFLs would not only help consumers save a lot of money, but would also lead to austerity at the national level, as at present, generation of each megawatt of energy costs US$1 million.

He said unlike other developed and developing nations, in Pakistan most of the energy ie 43 per cent of total generation, was consumed by domestic consumers while industries’ share in power consumption was just 28 per cent against 63 per cent in China and 43 per cent in India.

He said that Pakistan, with an installed power generation capacity of almost 20,000 megawatts (including that of recently installed two rental power plants), “is presently facing a shortfall of 2,500 megawatts.” He said that different measures including load management, conservation along with generation of more energy could ensure energy security of the country.

The energy conservation expert said that the installation of Time of Day (ToD) and Time of Use (ToU) meters could also encourage the consumers to minimise consumption of electricity during peak hours, as it would change their consumption behaviour. He also suggested the use of low-pressure sodium vapour lamps for street lights and proper adjustment of thermostats for energy conservation.

Energy savers can save 1,300MW

 

[Neo]

Increase in petroleum rates: Prices of kitchen items increased by 20 percent​

LAHORE: The prices of daily use commodities have witnessed an increase of at least 20 percent after an increase in petroleum prices made on 29 February, a survey conducted by Daily Times found on Monday.

Interestingly, the Caretaker Finance Minister Dr Salman Shah has said that the government made only 9 percent increase in the petroleum products and predicted of 1.5 percent impact. The minister also forecasted minimal impact of petroleum prices on consumer price index (CPI). However, the ground realities are entirely different, as the kitchen items including tea, soap, detergents, milk, pulses, mayonnaise, spices and vegetables have risen by at least 20 percent. Some products have also seen an increase of 40 percent. The major increase was seen in by-products of edible oils.

A 200-gram pack of tea whose price earlier was Rs 55 is now being sold at Rs 66 thus an increase of 20 percent was made. The standard bath soap, which was earlier available for Rs 25, is now being sold at Rs 28. One Kg pack of an A-class detergent that was available for Rs 120 to Rs 125 is now being sold for Rs 145 to Rs 155 while a B-class detergent that was sold for Rs 40 is now available for Rs 48. One Kg pack of mayonnaise, which was sold for Rs 135 to Rs 140, is now being sold at Rs 165 to Rs 170. One Kg pack of tea whitener that was sold between Rs 250 to 255 is now being sold for Rs 265 to Rs 275 while one Kg pack of milk is sold for Rs 290 to Rs 310, earlier it was available for Rs 275 to Rs 290.

The prices of spices, pulses and vegetables also skyrocketed. The red chillies price was raised from Rs 125 per Kg to Rs 140 to Rs 150 thus an increase of around 20 percent. It was the case with black pepper and rest of the spices. Dal Chana price shoot from Rs 38 per Kg to Rs 48 per Kg. The prices of vegetables have also seen same impact with onion and ginger taking the lead.

The shopkeepers and vendors said that the producers and manufacturers, owing to an increase in transportation charges, have increased the prices while an increase in edible oil prices has also impacted the by-products. They said that all the companies made the latest increase in detergent and soap prices on March 03. “We got new supply at higher prices,” said a Green Town wholesaler Haider Ali adding that the salesmen of the companies are saying that the transportation charges have increased and there is no other option but to raise prices. “The detergent and soap prices have been the most affected, as oil is being used in these items,” Ali said.

People said that the increases have made their lives miserable and the new government should help them. “The new government should take such steps that a common man gets relief,” said a banker Sadeed Ather. He said that if the new government is serious in giving relief to the common man then it should de-link the local prices from international prices. He said that the companies are increasing the prices of commodities taking plea of an increase in international market. He said that giving subsidies on raw materials could control the current inflation. “The developed countries are offering subsidies on certain items therefore the government should also give subsidy on the kitchen items, as it would be the best service to people,” he said.

Daily Times - Leading News Resource of Pakistan

 

[Neo]

Niko to invest $32m in oil exploration​

ISLAMABAD: To boost Pakistan’s economy by substituting imported oil and gas with indigenous supplies, a Canadian Company, Niko Resources Limited will invest $32 million for oil and gas exploration over four blocks located in the Arabian Sea. The Company also plans to invest more than $200 million subject to availability of viable structures after conducting seismic survey.

According to details, the government has already granted Petroleum Exploration Licenses with Government Holdings (Pvt) Limited (GHPL) and Production Sharing Agreements with GHPL and Niko Resources Limited (Niko) over four blocks namely (1) Offshore Indus North (No. 2466-7) covering an area of 2466.24 square kilometers, (2) Offshore Indus X (No.2465-3) covering an area of 2482.83 square kilometers, (3) Offshore Indus Y (No. 2465-4) covering an area of 2482.33 square kilometers and (4) Offshore Indus Z (No.2466-6) covering an area of 2489.49 square kilometers located in the Arabian Sea. The execution of the new production sharing agreements forms an integral part of the government’s drive to attract investment in the oil and gas sector and boost Pakistan’s economy by substituting imported oil and gas with indigenous supplies. To meet this objective, the unexplored offshore region is being given special emphasis where an oil and gas discovery can provide a major impetus for attracting new investments significantly affecting exploration landscape of Pakistan.

The government is making all out efforts to enhance oil and gas exploration activities through investment friendly policies. Therefore, in order to provide further incentives, Petroleum (exploration and production) Policy 2007 has recently been promulgated which is rated as one of the best policies in the region. Niko has considerable success in the Sub-Continent being the joint venture partner in a big discovery made in India during 2002 which is expected to commence production of around 2 billion cubic feet gas per day in 2008. The company has multiple exploration discoveries and production in India and Bangladesh.

Daily Times - Leading News Resource of Pakistan