Pakistan Economy - News & Updates - Archive

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Govt allows WAPDA to set up power plants ​

ISLAMABAD: Federal government has allowed Water and Power Development Authority (WAPDA) to set up 600MW to 1000MW coal based power plants in Thar to overcome the gap between power demand and supply, sources told Daily Times on Monday.

Sources said that Economic Coordination Committee (ECC) of the Cabinet headed by caretaker Prime Minister Mohammedmian Soomro has also hinted the approval in this regard after withdrawing the ban on public sector for setting up thermal and coal based power plants. At present, the total power generation of Pakistan stands at around 10,000MW plus against the demand of 11,500MW per day.

Sources said that ECC has approved public-private partnership concept under which over 7,927MW power would be added to the existing power generation of around 10,000MW power by the year 2009-10.

ECC has allowed WAPDA to set up coal based power plants but National Electric Power Regulatory Authority (NEPRA) has failed so far to announce the upfront tariff for the investors to set up coal based power plants in Thar.

Following the directions of President Pervez Musharraf, water and power ministry has forwarded a summary to NEPRA containing the observations on indicative upfront tariff for coal based power plants to review the proposed 7.65 cents tariff by NEPRA so that the reservations of Sindh government could be addressed.

Sources said that Pakistan Electric Power Company (PEPCO) has been allowed to set up the thermal power generation plants of 2,450MW by 2010 to overcome the power shortage crisis. Sources said that PEPCO would complete the projects by 2010.

Sources said that 450 MW power would be added by Nandipur power project and 500MW electricity would be achieved from Chichokimalian. Sources further said that a project of 600 MW would be completed by July 2008 and 550 MW project would be completed by December 2008. Sources further said that PEPCO has been allowed to complete the project of 1000 MW on fast track basis by December of the current year.

Sources also noted that 309MW would enhance the capacity of current existing power generation system during December 2008.

They said that the private sector would set up 15 independent power plants (IPPs) by the year 2009-10 that would generate 2,868MW electricity. At present 16 IPPs are operational in the country that were set up under the power generation policy 1994. Since that time no new investor has made investment to set up IPP. Current IPPs are generating 3,700 MW to 4,500 MW against the generation capacity of over 5,700 MW.

Daily Times - Leading News Resource of Pakistan

 

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TDAP sets $500m export target for stationery products​

KARACHI: Trade Development Authority of Pakistan (TDAP) has set $500 million export target for stationery products and a committee has been formed to suggest ways and means to achieve this target.

This was decided in a debriefing meeting, which was chaired by Chief Executive TDAP and Minister of State Tariq Ikram and attended by stakeholders of stationery sector.

The meeting was held on Monday to review the progress since the participation of stationery industry in ‘Paper World China, Shanghai’ exhibition in November 2007.

Discussion revealed that almost all industries, which participated in the exhibition booked significant orders from not only the buyers in China but also from Turkey, Egypt, North Africa, USA, Europe and various other countries. Almost 1,500 exhibitors and a large number of buyers from all over the world were present in the exhibition. Discussion revealed that apart from stationery items of paper, Pakistan’s stationery industry was producing world-class products of almost the entire range, which is quite large.

Also those international quality standards such as EN71, BS7272, BS5665 and ISO 11540 were being complied with by most leading stationery manufactures in Pakistan. International laboratories have granted these certifications.

It was reported that Pakistan does not have any standards of its own and therefore, international standards were being complied with and in terms of environmental compliance, Pakistani products were not using any hydrocarbons nor xylene or toulene based products. There is no child labor involved and therefore, the industry is socially compliant as well.

Based on the discussion Tariq Ikram formed a committee of seven persons from the industry and tasked them to develop a strategy paper to raise exports from $5 million to $500 million in 5 years, which the industry felt was achievable.

He asked the committee to develop a directory of manufacturers and exporters of stationery items, a seven minute CD of the industry and a brochure of Pakistan’s stationery products reflecting the wide range of items along with specifications.

He encouraged the industry to consider joint venture with international companies to be able to produce branded goods with buy back arrangement of the leading stationery brands of the world and reminded the industry to take advantage of the TDAP’s scheme to support branding, opening of offices abroad and the warehouse for penetrating African market.

He also offered that the industry could benefit from the TDAP’s scheme of bringing in world class consultants for any aspect of business development including design, production, marketing and training. TDAP has an agreement with BESO of UK where from world class consultants can be sourced at a cost of only British pound 3,000 per consultant which would be shared 50 percent by TDAP.

Ikram advised the WTO cell of TDAP to work with the stationery industry and develop proposal for the Ministry of Commerce to include stationery items in the FTAs, RTAs and PTAs that have been already signed or are to be signed in the future. It was noticed that none of the existing FTAs benefited the stationery industry.

Ikram advised the stationery industry to develop application for ensuring that exports are zero rated which would enable the industry to obtain duty and tax refunds on their exports. The industry complained that the existing refunds did not cover the actual duty and tax element. TDAP chief provided the deadline of 30 days for the development of strategy paper on the stationery industry along with the brochure, director and CD. Based on the findings of the strategy paper, Ikram agreed to consider the inclusion of stationery item as one of the developmental sector in TDAP’s export strategy. It was also agreed to include stationery in the Export Turnaround Plan of TDAP along with the core and developmental sector to be presented to the major buyers such as Wall Mart, Sams Club, and Target.

Daily Times - Leading News Resource of Pakistan

 

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‘Road, rail links be set up for Gwadar’​

ISLAMABAD: Road and rail links with the Gwadar Port must be developed and completed speedily along with other facilities to realise its full potential particularly with regards to facilitating exports so that it could emerge as a major economic hub in the region, observed the Senate Standing Committee on Ports & Shipping, which met at the Parliament House under the Chairpersonship of Senator. Gulshan Saeed on Monday.

Senate Standing Committee on Ports and Shipping on Monday constituted a 3-member Committee to act as an intermediary between National Highway Authority (NHA) and local population / influentials to develop road and rail links with the Gwadar Port. Senator Dr. Abdul Malik heads the committee

Other members of the sub committee include senators Dr. Muhammad Ismail Buledi and Mir Israrullah Khan to sort out issues with the locals especially regarding acquisition of land and security problems in Balochistan to develop road and rail links for Gwadar Port.

They called upon the Government to accord the highest priority to the project.

The Chairman NHA, in his briefing to the Committee, stated that road connectivity with the hinterland is key to market the Port for transit trade with Afghanistan, Central Asian Republics and China.

The road linkages to Gwadar comprise the following sectors; Gwadar-Turbat-Hoshab-Panjgur-Nag-Basima-Surab (N-85) links Gwadar to N-25 RCD Highway at Surab. The NHA has awarded contract for up-gradation of this federalised road to the FWO. This road shall connect Gwadar to N-85 & N-25- RCD Highway at Khuzdar and N-55 Indus Highway at Ratodero.. This road links Gwadar to Quetta and Chamman through N-25-RCD Highway.

The Senate Committee was also given a presentation on development of Rs. 100 billion Gwadar-Quetta Rail-link project and the reasons why it was stalled. The Committee took a strong exception to the provincial Government’s violation of the ban on sale of state lands imposed by the federal Government in Balochistan.

The Government/Railway prized land was allegedly sold by the unscrupulous elements in the provincial administration to private housing societies / land developers at throw away prices.

The same societies, it was alleged, are now demanding millions of Rupees from the railways to provide land for construction of Container Yard.

Daily Times - Leading News Resource of Pakistan

 

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Engro, Algerian firm set to join hands​

Karachi, March 10: Engro Pakistan Limited confirmed on Monday that it was interested in forming a joint venture with Ferphos, a National Iron Ore & Mining Company of Algeria, setting at rest weeks of speculation on whether the Pakistani fertiliser-to-food manufacturing giant was setting its sights on Algeria, the second largest country in Africa.

Ruhail Mohammad, vice-president Finance and Admin Services at Engro, talking to Dawn from Italy on Monday evening, said that the majority holdings in the joint venture company would be that of Engro and the cost of project to develop the proposed Phosphatic Fertiliser Complex could range between $1 to 1.5 billion.

He said that the exact modalities would be determined later as the company was still waiting for official confirmation of its selection as Ferphos’ partner from the concerned government authorities of Algeria. “This decision is expected within the next few weeks after the resolution of some issues regarding the exact location of the project site”, he informed. The company had earlier endorsed this view in a statement in Karachi.

Engro announced that the fertiliser complex in Algeria would constitute a 3,000 tons per day unit of DAP; three 4,500 tons per day units of sulphuric acid, three 1,500 tons per day units of phosphoric acid and the associated utilities facilities.

The company stated that the project was expected to be constructed in a period of around four years after the completion of successful feasibility study by the joint venture.

Engro had participated in an open and transparent international tendering process that took place in May 2007, the company stated and added that it had secured “top position” as Ferphos’s preferred partner for creation of the joint venture.”

However, the official communication of the position had not been made as certain approvals from the government of Algeria were awaited. “In Feb 2008, the Algerian Council for State Participation (relevant Algerian government body for taking decisions on foreign investments) approved the creation of the joint venture between Ferphos and a foreign partner (as evident from the local Algerian print media); however, the name of the foreign partner has not been disclosed at this stage,” Engro said.

Mr.Ruhail said that the production from the Algerian complex would be predominantly for exports.

Amal Haider, analyst at Elixir Securities Pakistan commented that the investment in the project was expected to further boost Engro’s bottom-line growth due to the heightened DAP demand. He expressed positive outlook on the company “on the back of diversified portfolio basket, urea expansion and now investment in a DAP plant”.

Engro, Algerian firm set to join hands -DAWN - Business; March 11, 2008

 

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Immediate plans to end energy crisis urged​

LAHORE, March 10: The government needs to tap alternative energy resources and devise an immediate plan to keep the industrial wheel running.

Lahore Chamber of Commerce and Industry President Mohammad Ali Mian stated this in a statement here on Monday while expressing concern over shortage of water in dams.

“India has constructed a number of new water reservoirs while Pakistan is facing a big energy crisis,” he said, adding, “Pakistan will not be able even to ensure water for irrigation and what to talk of hydel power generation due to construction of dams on the Indian side.”

He expressed apprehension that load-shedding would be of more than six hours in the coming days.

He said that it would be wiser to evolve a short-term strategy in consultation with private sector for utilisation of alternative energy resources.

Ali Mian said that during the winter season, the industry suffered heavily due to shortage of gas and now the power crisis was haunting the industry.

All long-term projects, he said, would take at least eight to ten years to complete and there is no short-term project which would be able to start power generation before two years.

He said proposed constitution of a committee, comprising members both from public and private sectors, to cope with the situation.

He urged the government to finalise Pak-Iran gas pipeline deal as early as possible.—APP

Immediate plans to end energy crisis urged -DAWN - Business; March 11, 2008

 

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Textile tycoons shifting capital to Dubai​

KARACHI, March 10: Huge outflow of capital from the country has found its way into real estate business in Dubai, where many Pakistani developers have entered into joint ventures with their local counterparts to reap windfall profits, business sources said.

The boom in construction industry in the Gulf emirate has attracted Pakistani entrepreneurs to avail the opportunity at a time when the textile industry, country’s biggest industrial sector, has been passing through a crisis for the last over two years.

Since Dubai has become the world business and trade hub, many Western and Far Eastern multinational companies have set up their offices from where they interact with their counterparts around the globe.

There is an increasing demand for housing as well as commercial centres, which has generated a construction boom attracting investors from around the globe.

The textile exporters after loosing hope of getting any support from the government for ensuring their viability and competitiveness at the global level are winding up their establishments and moving out their capital to Dubai to make easy money in real estate, a textile tycoon requesting anonymity told Dawn.

“The greatest advantage in Dubai is the stable cost of inputs and un-interpreted supply of power with no hassle to deal with large number of government agencies and departments,” lamented a leading businessman, who flew back after entering into a big real estate deal in Dubai

He further said that there were no apprehensions about the law and order or political instability and the business organisation only have to worry about their business deals and transactions.

Contrary to this, he said that when doing business in Pakistan every person became ‘parasite’ including the government departments.

Giving details of the construction industry boom in Dubai, he said, on booking a property a huge margin is earned within couple of weeks and these funds could be again invested in another property.

He said an apartment booked at a cost of around Rs10 million was disposed of at Rs10.10 million in a matter of two weeks time.

Similarly, he said there were many avenues in indenting and trading business, where quick money is made without entering into the hassle of running an industrial set up. Even on setting up an industry, he said, there are fixed rules of the game and every entrepreneur knew about his cost and profit margins.

He said that some leading Pakistani developers were already engaged in construction projects with locals and were involved in big housing and commercial projects.

He said during the tenure of former prime minister Shaukat Aziz only banks made windfall profits followed by the telecom industry. The biggest ‘crime’ of his government was that it converted the country into a consumer society and also widened the gap between the haves and haves not.

Last year, he said banks made profits of Rs68 billion and this year’s profits were Rs76 billion, which indicates the robust financial health of the banks.

Textile tycoons shifting capital to Dubai -DAWN - Business; March 11, 2008

 

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Riyadh offers $300m to offset effects of high oil cost​

ISLAMABAD, March 10: Saudi Arabia has offered a one-time $300 million budgetary support to Pakistan to help bridge the fiscal gap caused by constantly rising oil prices.

A finance ministry statement issued here on Monday termed it a goodwill gesture and said the Saudi government decided to provide the grant following a request made by President Pervez Musharraf to King Abdullah to help Pakistan in offset the effects of high oil costs.

The statement termed the Saudi government’s decision ‘very timely’ and said it will help Pakistan in meeting the budgetary gaps effectively and (help) promote macroeconomic stability in the country.

Finance Minister Dr Salman Shah said the grant would help the new government to avoid any massive increase in prices of petroleum products.

Denying that the caretaker government planned to increase oil prices before handing over power to the new government, he said: This is good that the new government will not have to go for excessive oil price increases in the second phase. The caretaker government had raised power charges by 9 per cent and increased petrol and diesel prices by Rs5 and Rs3.5 a litre on Feb 29.

Asked if the Saudi government had restored an old facility, the finance minister said that it was a one-time budgetary support.

Riyadh offers $300m to offset effects of high oil cost -DAWN - Top Stories; March 11, 2008

 

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Riyadh offers $300m to offset effects of high oil cost​

ISLAMABAD, March 10: Saudi Arabia has offered a one-time $300 million budgetary support to Pakistan to help bridge the fiscal gap caused by constantly rising oil prices.

A finance ministry statement issued here on Monday termed it a goodwill gesture and said the Saudi government decided to provide the grant following a request made by President Pervez Musharraf to King Abdullah to help Pakistan in offset the effects of high oil costs.

The statement termed the Saudi government’s decision ‘very timely’ and said it will help Pakistan in meeting the budgetary gaps effectively and (help) promote macroeconomic stability in the country.

Finance Minister Dr Salman Shah said the grant would help the new government to avoid any massive increase in prices of petroleum products.

Denying that the caretaker government planned to increase oil prices before handing over power to the new government, he said: This is good that the new government will not have to go for excessive oil price increases in the second phase. The caretaker government had raised power charges by 9 per cent and increased petrol and diesel prices by Rs5 and Rs3.5 a litre on Feb 29.

Asked if the Saudi government had restored an old facility, the finance minister said that it was a one-time budgetary support.

Riyadh offers $300m to offset effects of high oil cost -DAWN - Top Stories; March 11, 2008

Pakistan gets $300 million Saudi grant ​

ISLAMABAD (March 11 2008): Saudi Arabia has extended $300 million budgetary support for Pakistan to help it in easing the growing pressure on its economy. An official announcement made here on Monday said.

"In a goodwill gesture for support for the people, Saudi Arabia has given a budgetary support grant of $300 million to Pakistan. The grant will help Pakistan bridge the fiscal gap in Pakistan that arose due to high global prices of oil and petroleum products."

Pakistan, after nuclear tests in 1998, had enjoyed for three years the facility of oil supply from Saudi Arabia against deferred payments. Pakistan was looking for 1998-like financial support from Saudi Arabia to offset pressure on the economy. The announcement of $300 million for budgetary support seems much less than expected financial help in Islamabad.

The announcement said that the Saudi support had come after President Musharraf's recent visit to Saudi Arabia, during which he requested King Abdullah to help Pakistan in defraying the cost of high oil prices. It added that the decision of the Saudi government was timely and would help Pakistan in meeting the budgetary gaps effectively and promoting macroeconomic stability in the country.

In the wake of growing current account deficit, the government was desperately looking for some financial support from Saudi Arabia. It had taken up the matter with the Saudi government many times.

In the recent past, Prime Minister Mohammedmian Soomro had raised the issue with King Abdullah and sought oil supply against deferred payment. But, for him, the response from the Saudi Arabia was not up to Pakistan's expectations. Then President Musharraf took the issue with Saudi King during his visit. This time the response from Saudi Arabia has been positive.

This is a question mark as to what extent budgetary support of $300 million will ease the pressure on its economy. Other than seeking financial help from Saudi Arabia, the government is taking different steps at home for setting aside the pressure. These include cutting down Public Sector Development Programme (PSDP) size and non-developmental expenditure for the current fiscal year.

Business Recorder [Pakistan's First Financial Daily]

 

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Industries, manufacturers: monthly production summary made mandatory ​

ISLAMABAD (March 11 2008): The Federal Board of Revenue (FBR) has decided to make it mandatory for certain industries and manufacturers to submit monthly data regarding production, clearance and stocks for improving sales tax collection of the potential sectors.

The board instructed the collectors of sales tax to expand the list of industries, engaged in the filing of production summary. According to the FBR instructions, the collectorates would ensure that all the registered persons file their monthly production reports. They will also recommend names of additional items for production summary in addition to the existing 29 items.

Sources said that an amendment would be made in relevant notification in 2008-09 budget for inclusion of more items to submit the production data. The board would direct the registered manufacturers, making supply of taxable goods to submit details of goods manufactured/supplied and subsequently cleared along with quantitative data.

The details of production, supplies and goods cleared in a month could be used to ascertain actual production for calculating the sales tax. The main purpose for submission of production summary is to analyses the data of potential sectors, which are contributing more to the gross domestic product (GDP). It is an exercise for measuring the economic activities.

The data is being submitted to the Federal Bureau of Statistics for further economic analysis. Sources said that the manufacturers of 29 items, including cars, are submitting their monthly data of production, clearance and stocks to the sales tax department since July 1, 2006.

Presently, the production data has to be submitted by registered manufacturers of sugar, tea blended, cigarettes, aerated waters, cement, motor cars, buses, jeeps, trucks, light commercial/light transport vehicle, motorcycles, air conditioners, refrigerators, deep freezers, washing machines, television sets, paper/paper board, chemicals, gases/acids, flakes/detergent, paints/varnishes, natural gas, liquefied petroleum gas, fertiliser, wires/cables, toilet soap, ceramic tiles and caustic soda to file the "special return."

Sources said that the registered manufacturers, dealing in these 29, items would be required to submit details of production, clearance and stocks on monthly basis. The information so obtained will help the collectorates to identify trends in various sectors and make realistic revenue estimates. The field formations would compare the data with actual market information and accordingly ascertain and investigate the causes of variations.

Business Recorder [Pakistan's First Financial Daily]

 

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Sindh Engineering to set up auto joint venture with China's Dong Feng ​

KARACHI (March 11 2008): The Sindh Engineering (Pvt) Ltd (SEL) is planning to enter into a joint venture arrangement with Dong Feng Automobile Company of People's Republic of China for manufacturing Dong Feng brand of commercial vehicles. Details of the joint venture will be announced here on March 13. SEL is a company of Pakistan Automobile Corporation Ltd, Ministry of Industries.

According to SEL, such arrangements are envisaged at not only expanding the product range of Dong Feng vehicles, currently being assembled at SEL, but also for ensuring transfer of latest automobile technology to Pakistan.

This will also bring in foreign investment in the shape of equity. The joint venture will help produce world known vehicles at reasonable prices. An SEL delegation would be visiting China next week to finalise details of the joint venture. SEL has made arrangements with Faysal Bank for financing Dong Feng vehicles, which will now be included in the 'President's Rozgar Scheme'.

Business Recorder [Pakistan's First Financial Daily]

 

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Pakistan to auction oil and gas fields ​

Bids to be invited in coming months​

Wednesday, March 12, 2008

KARACHI: Amidst stagnant production and rising demand of energy, Pakistan has decided to auction fields for oil and gas exploration under a new petroleum policy, a senior petroleum ministry official told The News.

Incentives offered in Petroleum Exploration and Production Policy 2007 will start having an impact on the country’s energy scene once bids are invited for new blocks in the coming months, Shaukat Durrani, Additional Secretary Ministry of Petroleum said.

“Outcome of the policy would be seen once it is implemented,” he said, when asked if the much talked about policy has failed in attracting investment. “Blocks under the new policy will be put to auction soon,” he added. However, he did not give any details about the number and location of fields to be offered to exploration and production (E&P) companies.

Petroleum policy was introduced last year following hectic negotiations between government and E&P companies. The final document also stipulated a better price for natural gas, which has been feeding the economy as the main fuel for last few years.

However, official statistics compiled in the Energy Year Book 2007 suggest that the trend might be shifting a little too fast due to limited gas production. Citing that data, Umer Ayaz, a JS Global analyst, said that the share of gas in the total energy mix has declined to 48.5 per cent from last year’s 50.4 per cent, replaced by the rising consumption of oil.

“This significant growth in oil supplies was primarily led by increased consumption of furnace oil by power sector, amid gas shortage and limited availability of water for hydro electricity generation,” he said in a report issued here. Heavy reliance on oil, most of which is imported, had a negative impact on the economy, he added.

With oil prices still rising, Pakistan’s trade deficit has surged to $12.4 billion in eight months of the current fiscal year, against $8.9bn recorded in the same period of the previous year. Production of gas has not increased in the last couple of years and is limited at 4000 mmcfd against a demand of 4900 mmcfd. Experts say that import of gas is the most viable solution to overcome the energy shortage, but a concerted effort should also be made to exploit local resources.

Industry officials, however, say that E&P companies had some reservations which should be addressed forthwith, if government was serious about increasing indigenous gas production. First and foremost, they say that the government should stop the practice of introducing a new petroleum policy after every few years. “Consistency in policy,” one of the officials said, “would encourage genuine investment.”

Another official referred to the clause in Petroleum Policy 2007, which allows government to resale leased land after its expiry. The clause is also applicable to leases granted under previous policies of 1986 and 2001.

Acknowledging that this move was meant to ensure that lease holders develop their fields and not sit idle, he said financial damages to be suffered in such cases would be enormous for E&P companies. Another clause regarding the application of windfall levy should be made clearer, he added.

Pakistan to auction oil and gas fields

 

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Bright prospects for Basmati exports ​

Wednesday, March 12, 2008

LAHORE: Punjab Minister for Agriculture Khurshid Zaman Qureshi terming Pakistan’s Super Basmati Rice a unique commodity by virtue of its superb grain quality, has said that the World Trade Organisation (WTO) deserves special attention of all the stakeholders, in designing appropriate agricultural and trade policies to comply with the new trade regime.

He expressed these views while speaking at a one-day capacity building workshop on “International Standards & Quality Requirements for Rice Production & Export”, jointly organised by the Punjab Agriculture Department and the Lahore Chamber of Commerce & Industry on Tuesday.

The minister said that Pakistan had bright prospects of Basmati rice export in the changing scenario of globalisation and hence, could make headway by adopting WTO standards. He said that rice being given high demand in the days to come, improved production technology and appropriate post-harvest operations like thrashing, drying, milling, grading, packing, transportation and storage needed to be encouraged. He, however, urged that there was a dire need to improve the nutritive value of rice grain as well.

He expressed satisfaction that the Pakistani farmers being hard-working; were capable of meeting all the challenges of WTO under able guidance and directions. Meanwhile, he also predicted that Pakistan would gain in rice production and export if all the agreements of WTO would be implemented with true letter and spirit globally.

He said that Pakistan had comparative advantage in producing rice, especially Basmati varieties, stressing that there was a need to translate that advantage into production and export surplus. For that purpose, the farmers and exporters would have to maintain high quality standards and fairness in their trade dealings to attract buyers in the international market, he added.

He said that maintaining the rice exports at the optimum level seemed difficult, since it involved a lot of awareness and marketing skills, which the Pakistanis still needed to excel in. However, he said that the increasing quantum of rice trade would make the effort worthwhile.

Bright prospects for Basmati exports

 

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Venture capital no more a distant dream for Pakistani companies ​

Wednesday, March 12, 2008

LAHORE: At a time when the country is passing through one of the most turbulent times in its history, it is no ordinary development that a Pakistani Internet company has attracted investment from two of the world’s top 25 venture capital funds.

On January 14 2008, amidst political unrest and bomb blasts, Naseeb Networks secured a multi-million dollar venture capital investment from ePlanet Ventures and Draper Fisher Jurvetson (DFJ), according to its Chairman and CEO, Monis Rahman. These two top Silicon Valley funds, which have invested for the first time in a Pakistani company, are well known for their legendary investments in companies such as Hotmail, Skype and Baidu.

Talking to The News, Monis said that this investment was historic because it is the first time that reputed foreign venture capital funds have invested in a Pakistani company that is targeting the local market. Other companies such as Align Technology raised venture funding in the past, but relied on foreign markets for their revenue.

The investments in these companies were made mainly for the reason that engineering and IT costs in this part of the world are low. But, he said, the case of Naseeb Networks is notably different as it is a company that is targeting its revenue from the local market and has won confidence of venture companies by showing extraordinary results in a very short time.

Monis said that although he cannot disclose the exact amount of the multi-million dollar investment, it was more than he originally wanted. However, top venture capital companies are not content with taking control of only a small share in such cases. “Funding is just part of the equation. The global expertise and experience that our investors bring to our board are invaluable.”

He stated that two venture capitalists from ePlanet Ventures and DFJ are at number 8 and number 23 respectively in Forbes Midas List of top 100 venture capitalists in the world. ePlanet and DFJ have backed companies like Skype and Hotmail, and helped them become what they are now, he said adding, “Their investment in a Pakistani Internet company is a huge vote of confidence, not just for what we are doing as a company, but is also a vote of confidence for the potential that Pakistan has to offer. If we are successful, the floodgates of investment can open for other Pakistani companies.”

Commenting on his company’s rapid growth, Monis told The News that the number of registered users on the company’s job portal, ROZEE.PK, have increased to 650,000 from 300,000 recorded last year. Naseeb Networks maintains websites offering online recruitment, social networking and communication services.

He said that according to different rating agencies, the company’s job portal ROZEE.PK, is the second most visited Pakistani website after that of Jang Group. Secondly, Monis said that Naseeb Networks has been profitable since 2004 and this investment will be used as growth capital to expand his business.

In order to attract venture capitalists to invest in Pakistan, Monis said that it was not enough to just demonstrate his company’s success. He had to sell the potential of Pakistan as a market.

According to Monis, Internet penetration is growing at an exponential rate in Pakistan. Investment amounting to US$1 billion has been made in the country’s Internet infrastructure by companies including Mobilink, Wateen Telecom, and Burraq Telecom. Public access to high speed Internet would grow dramatically due to technologies such as WiMAX being introduced, he said.

“Pakistan’s Internet users are likely to increase in the coming years in the same manner as mobile subscribers have grown from less than 3 million in 2002 to over 70 million in 2008,” he added.

Monis said that 7.5 per cent of the Pakistani population has access to Internet, as compared to 4.5 per cent in India. These fundamentals can potentially make Pakistan as attractive a destination for investors as India, keeping in view that both the countries have very similar dynamics.

Monis has worked with Intel Corporation in Silicon Valley, where he was awarded several patents for his work designing microprocessors and set up his own company there before coming back to Pakistan after 9/11. He tells The News that Naseeb Networks’ job portal, ROZEE.PK, which was launched towards the end of 2005, has helped thousands of job seekers get rewarding jobs. “Over 8,800 leading companies including UBL, Mobilink, Engro Foods and Nestle use ROZEE.PK in Pakistan today to advertise their jobs and hire the best talent. A significant piece of our revenue comes from employers who advertise on our site,” he adds.

In his concluding remarks, Monis said that investors typically have two competing instincts, greed and fear. “During the past few months, investors have had plenty to fear in Pakistan. We were fortunate that the strengths of Naseeb Networks, coupled with the potential that Pakistan has to offer, tipped the scales in favour of greed.”

Venture capital no more a distant dream for Pakistani companies

 

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LCCI, TUSDEC aim to make industry competitive ​

Wednesday, March 12, 2008

LAHORE: The Lahore Chamber of Commerce and Industry and Technology Upgradation and Skill Development Company (TUSDEC) will work together to make Pakistan’s industrial sector internationally competitive in terms of technology and human resource.

This was decided in a meeting held here between TUSDEC Chief Executive Officer Suhael Ahmed and LCCI President Mohammad Ali Mian. Briefing the meeting, Suhael Ahmed said the TUSDEC was planning to set up an electronics complex and a common facility centre to help in the local production of electronic gadgets and mobile phones whose import was costing billions of dollars a year.

He said the Federal Institute of Materials and Homologation, being established in Gujranwala, would also go a long way in increasing the share of Pakistani products, especially fans, in the international market.

He said China and a number of other East Asian countries had set up their production units in Vietnam whose exports had touched the mark of US$146 billion. Pakistan, he added, could also emerge as a manufacturing hub of the region by embracing new technologies and diversifying the industrial base. Suhael Ahmed said the Gujranwala Tools, Dies and Moulds Centre was being set up to help the plastics and sheet metal industry get access to new manufacturing technologies.

LCCI, TUSDEC aim to make industry competitive

 

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Fiscal deficit likely to touch five percent of GDP ​

KARACHI (March 12 2008): The country's fiscal deficit is likely to touch 5 percent of GDP by end-June due to rising oil subsidy and domestic debt servicing, besides higher development expenditures, economists believe.

"Funds mismanagement and higher development expenditure by the provinces hurt the fiscal deficit in the first half of the current fiscal year, which pushed it to 3.6 percent of GDP. However, these issues can be easily overcome in the coming months," said Muzamil Aslam, an economist at KASB.

The risk to the deficit being higher than the estimate hinges upon delays in government's decision to slash development expenditures and oil subsidy, he said. However, this figure could be higher if the government is unable to pass on the oil price increases and/or cut PSDP targets for the current year, he said.

He said that any rise in expenditure from this point would be linked with rising oil subsidy, driven by higher international oil prices. "The government recently hiked domestic oil prices by 10 percent, which should help reduce the total monthly oil subsidy by 15 percent. However, it is also believed that the new government will be under pressure to decide on the domestic oil price issue", Aslam elaborated in the report on fiscal deficit.

He said that the government has three options: to pass on the higher oil prices to end-consumers; cut the current Public Sector Development Programme (PSDP) targets by Rs 100 billion to stabilise oil prices at current levels; or a combination of the two, where a portion of the increase is passed on to the end-consumer and the rest is adjusted through a cut in PSDP targets. It is quite likely that the government would be happy to implement the third option.

However, even if the government manages to control the oil risk, the risk to a subsidy spike would remain, as the government would likely bear an additional Rs 20-40 billion through wheat subsidy and Rs 17 billion for PTCL VSS subsidy in the second half of the current fiscal year 2008, he said.

Therefore, it is expected that the fiscal deficit would be 5 percent at the end of the current fiscal year, up from 4.3 percent of last fiscal year, he said, and added that it could be higher if the government is unable to pass on the oil price increases, or cut PSDP targets for the current year.

He said that tax collection was low in December due to long holidays and Benazir Bhutto's murder. As a result, tax collection came in Rs 40 billion below target and caused a 0.4 percentage point increase in fiscal deficit in 1HFY08, while non-tax revenues hurt exclusively due to delays in defence logistics payments from the US.

These two trends have reversed in February, resulting in incrementally lower government borrowing from the State Bank of Pakistan in the past two months, he said. Aslam said that high development expenditure is led by provincial development expenditure up 87 percent YoY and development expenditure for the province of Punjab alone in first half surged by 115 percent YoY to Rs 71.6 billion compared to total provincial development expenditure of Rs 104 billion.

Business Recorder [Pakistan's First Financial Daily]