Pakistan Economy - News & Updates - Archive

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Dubai’s interest in KSE termed a good omen​

ISLAMABAD, March 12: The reported interest by the Dubai Stock Exchange to take a 40 per cent stake in the Karachi Stock Exchange (KSE) would ultimately prove a good omen for the both.

Under the planned acquisition, members of the Karachi Stock Exchange would become shareholders in the stock market once a key presidential ordinance is signed to allow the change in the ownership provisions. If the deal with the Dubai Stock Exchange is firmed up, the two markets stand to gain.

For the KSE, this would represent not just an expanded ownership by a premier stock exchange, but also the recognition which goes with that change.

For the Dubai stock market, the acquisition helps it establish formal ties with a stock market close to home at a time when the Middle East region as a whole is benefiting from the robust flow of oil money.

For the moment, there are no indications of high petrol prices going into a reverse gear, in spite of clear signs of a global recession.

In fact, oil prices will hold on to their present trends and contribute to the continued flow of revenue to oil producing countries in the Middle East.

With oil prices at an all-time high comes the prospect of a continued flow of revenue to the region surrounding Dubai.

One benefit of the KSE’s tie-up with Dubai would also be the brighter prospect of attracting more Gulf investors to the Pakistani market.

Dubai’s investment in the Karachi Stock Exchange would also bring in much investment inflow for the local equity management and stock brokering community.

Injection of funds at this crucial moment essentially brings investments to perk up the local Pakistani business scene.

But going into the future, a follow-up to this investment will have to be built up by two important measures. These will include encouraging the inflow of world class management and research values at a time when the KSE is in need to modernise further in many ways.—APP

Dubai’s interest in KSE termed a good omen -DAWN - Business; March 13, 2008

 

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Trading troubles​

STAGNATING exports and soaring imports have widened the trade gap to dangerous proportions. That, in short, is the woeful story contained in the trade figures released the other day by the Federal Bureau of Statistics. Exports are stagnating because our textile and clothing sector has been under-performing over the last two years, and also because the list of exportable surpluses has remained static for several years. So has the list of export destinations. Imports are soaring because of escalating international oil and food prices and also because of the insatiable appetite of our rich for luxury items. By the end of the current year, the trade deficit is expected to reach a record level of $15bn.

There are no simple solutions to the looming trade problem. With limited exportable surpluses and low quality manufactured items there is no way one could improve export earnings. And there is no way one could add to exportable surpluses or improve the quality of made-ups without improving the performance of our manufacturing and agriculture sectors. Similarly, it is impossible to curb imports without proper economic prioritising and innovation to encourage import substitution. The international prices of food items have doubled in the last one year while freight costs have also increased sharply on the back of rising fuel prices. The food prices are rising on a mix of strong demand from developing countries; an increasing global population and the biofuel industry’s demand for grains.

Given this situation and the fact that the production of wheat, rice and sugarcane grew by a yearly average of 1.23, 0.59 and 1.87 per cent respectively during the seven years from 1999-2000 to 2006-2007, the most immediate task of the new government is to review the procurement prices of the next crop, especially of wheat. At the same time, it should undertake and promote massive investment in the rural areas with prudent incentives to attract private and private-public partnership in infrastructure and agro industries for producing exportable surpluses of quality. This should be done even at the cost of over-shooting the budget because fiscal deficit resulting from expenditure on productive areas does not cause any harm to the economy. Meanwhile, in order to bring inflation under control immediately, the new government could allow the duty-free import of all food items as a short-term measure and keep wages globally competitive. Simultaneously, it must increase taxes on non-productive areas or include those not under the tax net to reduce deficit, cut taxes on productive sectors to boost investment, production and exports, eliminate guaranteed profits to oil companies to lower or minimise increase in domestic oil prices and immediately undertake the exercise of rightsizing the government. Fiscal incentives and lower energy costs would give a shot in the arm to the industry to increase exports.

DAWN - Editorial; March 13, 2008

 

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Rs 14 billion non-development expenses slashed: departments told to save public money ​

ISLAMABAD (March 13 2008): The government has cut down non-developmental expenditures by Rs 14 billion to save at least some money to narrow down the budgetary deficit, and has asked all ministries, divisions and corporations to follow a policy of saving the public money to help it take the big hit of the growing subsidies.

Talking to Business Recorder on Wednesday, sources said: "We are facing very difficult time at this point in time when subsidy on oil is making it next to possible for the government to fulfil expenditures and the only option left with the government is to cut down developmental and non-developmental expenditures to keep the budgetary deficit within controllable limit.

The policy makers said that except defence, government employees' salaries and debt servicing all other heads are currently being reviewed to cut down expenditures for saving whatever amount is possible to keep domestic borrowing within a reasonable limit.

The government departments have been instructed, in writing, by the Finance Division not to spend funds on any kind of procurement or other needs which could be avoided so that non-developmental expenditures could be curtailed as much as possible, and this policy of saving public money would be strictly followed for the remaining months of the current fiscal year.

The unchecked rise in oil prices in the international market has created extraordinary situation for the government and it seems determined to take extraordinary measures including cutting down of budgetary allocations to keep the house in order.

The government is, at the same time, struggling to minimise overdraft by paying back to the State Bank of Pakistan (SBP) some of borrowed money to bring domestic debt within a limit given in the Fiscal Responsibility Law.

Following the same policy strictly, the government retired Rs 18 billion to SBP, which it had received in dollar terms from the Saudi government as budgetary support. Early this week, the Saudi government gave Pakistan a grant of $300 million to help it offset pressure on its economy as a result of rising oil prices in the international market.

The policy makers said: "The government will follow the policy of retiring as much as of borrowed money to the SBP to give it a clear signal that the economic managers of the government in Islamabad are fully aware of the negative effects of borrowing beyond a limit and its impact on food inflation to further add to the prices of edible and other than edible items."

Business Recorder [Pakistan's First Financial Daily]

 

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PSDP-GDP ratio slid during PML-N, PPP governments: Planning Commission says... ​

ISLAMABAD (March 13 2008): The Planning Commission has blamed the previous governments of Pakistan Muslim League-Nawaz and Pakistan People's Party, of taking ad hoc decisions that resulted in sharp reduction of Public Sector Development Programme and GDP ratio from 7.8 percent to 2.6 percent.

"In the past ad hoc decisions resulted in sharp reduction of PSDP/GDP ratio that went down from 7.8 per cent in 1991-92 to 2.6 per cent in 1999-2000," said a spokesman of the Planning Commission, Asif Sheikh who is also the Joint Chief Economist, looking after the job of Chief Economist after Dr Pervez Tahir.

Dr Tahir claims that he was transferred on challenging the poverty statistics but the insiders say, he did not honour his commitment before applying for ex-Pakistan leave at the time of budget exercise last year.

Asif Sheikh, in a press release said that Pakistan, being a resource-constrained economy, needs special care for efficient utilisation of resources. He was of the view that there was also a need to invest more in social sector, especially education, Science and Technology, and health to improve quality of life of its people.

He further said that the projects/programme were approved by DDWP, CDWP and Ecnec, depending on the cost of project, with representation of the Finance Ministry at senior level, after technical and economic analysis.

Business Recorder [Pakistan's First Financial Daily]

 

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Asean offers $13 billion pharma market to Pakistan ​

KARACHI (March 13 2008): Fourteen companies from Pakistan are participating in a three-day conference held in Kuala Lumpur, Malaysia, aiming to boost the Pakistan's access to regional medicine trade opportunities in the market of the Association of South-East Asian Nations (Aseaan) worth 13 billion dollars a year.

The conference on the theme of "Asia Healthcare 2008" held under the auspices of Malaysia External Trade Development Corporation (Matrade) and the Geneva-based International Trade Centre (ITC) was inaugurated in Kuala Lumpur on Wednesday.

The event will provide an opportunity to the Pakistani pharmaceutical companies to link across national borders to open new avenues for growth by interacting with 120 participant companies from 13 countries and to enter into one-to-one buyer - seller arrangement, joint sourcing and joint ventures, complementary production, concerted marketing, exchange of know-how and collaboration to improve operational performance.

The conference will provide the Pakistan healthcare companies the new venues to export their low-priced and high quality medical products to the growing and expanding market of Asean countries to meet the regional demand for low-cost drugs and traditional medicines.

The 10-country Asean has identified healthcare as a priority sector in which to accelerate regional integration because of Asia's strong comparative advantages in natural resources, labour skills and cost competitiveness.

The conference will also discuss the issues such as rules and regulations governing trade in pharmaceuticals and intellectual property rights, biotechnologies and quality assurance and safety in drug production.

More than 100 enterprises are participating in the conference, representing countries such as Pakistan, Malaysia, Bangladesh, Cambodia, China, India, Laos, Myanmar, Nepal, Philippines, Singapore, Sri Lanka, Thailand and Vietnam.

Business Recorder [Pakistan's First Financial Daily]

 

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Plan to develop urban transport system chalked out ​

KARACHI (March 13 2008): The federal government has chalked out a plan to develop the urban transport system and infrastructure with a view to providing fast, reliable, safe, and affordable services to the urban population.

At present, the transport service and infrastructure had not kept pace with the growing demands of urban population, sources in Sindh regional transport department told Business Recorder on Tuesday.

Lacks of proper management of transportation setup, urban areas are suffering from poor road condition, accidents, high-level maintenance cost of public transport, traffic congestion and air pollution, they said. Urban population is compelled to travel in overcrowded and unreliable public transport, besides poorly regulating it by concerned departments, they maintained.

Despite the rapid increase in private vehicles, which are being flooded on roads with more than 50 percent increasing ratio every year, no effective policy has been evolved yet to develop the proper road infrastructure for catering to the need of growing population, they said.

Answering a query, they said the government had designed a comprehensive and effective plan to overwhelm the need of more transport infrastructure with modern maintenance system, besides inviting the private sector to participate in it.

"Condition will not be changed unless the private sector will co-ordinate with government concerned departments in making comprehensive and high quality urban transportation system to cater to the need of growing demand of urban areas", they said.

Accordance to jointly surveyed report by the National Highway Authority (NHA) and the World Bank (WB) that 47 percent of national highways have been deteriorated and only 28 percent of the network is in good condition.

"Due to insufficiency of highways, 30 to 35 percent of agri produce is being spoiled before marketing, which causes huge loss to national exchequer, besides growing inflation due to its shortage, hence, the government has decided to convert inferior roads into high quality roads, they said.

They said the government is striving to generate funds for maintenance and up-gradation of facilities such as traffic signals, roads, sidewalks, intersections, parking spaces and drains aimed to provide better transport infrastructure to urban population.They said the authority concerned is pondering the proposal for restoring mass transit system in different cities, including Rawalpindi, Islamabad, Lahore, Gujranwala, Sialkot, Faisalbad, and Karachi.

They hoped that mass transit system would be restored soon in these cities with a view to minimising the excessive burden on public transport, besides facilitating people by safe, reliable, fast and entertaining transport service.

Business Recorder [Pakistan's First Financial Daily]

 

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ADB pledges $0.6 million grant to develop energy efficiency plan ​

FAISALABAD (March 13 2008): The Asian Development Bank (ADB) is helping Pakistan craft, a comprehensive energy efficiency policy and investment programme to meet the growing energy demands of an expanding economy and population. ADB is also providing a $600,000 grant to fund the preparation of the Sustainable Energy Efficiency Development Programme.

According to ADB sources, the activities will include a comprehensive study on the energy efficiency market and build awareness in the country of the need for energy efficiency. It will also draw up a strategy for launching a sustainable long-term national energy efficiency programme and design suitable investment projects.

Rapid economic expansion and population growth in Pakistan have substantially increased energy demand, as the country continues to industrialise and standard of living improved. Pakistan's Medium-Term Development Framework 2005-2010 sets out an 8 percent annual gross domestic product growth target, and to achieve this, energy consumption is forecast to expand at an average rate of 12 percent annually, more than double the rate between 2000 and 2006.

ADB project study revealed that the Pakistan economy has grown at an unprecedented rate in the past 5 years. Coupled with the rapid population growth, this economic expansion is causing energy demand to increase sharply as Pakistan continues to industrialise and standard of living improved.

The Government's Medium Term Development Framework 2005-2010 sets out a challenging program to achieve 8% annual growth in gross domestic product (GDP). To meet this target, energy consumption is forecast to grow at an average rate of 12% per annum, more than double the rate between 2000 and 2006.

This will increasingly strain Pakistan's primary energy supply sources. Rising oil consumption and flat domestic production once again will trigger a rapid increase in oil imports, while declining domestic natural gas reserves-in the absence of substantial new discoveries-will require the country to import gas for the first time in its history, through both pipelines and liquefied natural gas shipments.

Electricity consumption projected to grow an average of 8% per annum until 2015 (although recent experience suggests much higher demand growth), will similarly require large power generation capacity additions.

Higher energy demand and imports will also require massive investments in associated port terminals, storage facilities, refining capacity, pipeline and transmission networks, and surface fuel transport infrastructure. During 2001-2006, primary energy supply increased 5.4 percent per year.

Business Recorder [Pakistan's First Financial Daily]

 

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Wind IPP signs up Chinese wind turbines ​

BEIJING (March 13 2008): A letter of intent (LoI) has been signed between Win Power (Pvt) Ltd (A First Dawood Group Company) and GOLDWIND Science and Technology Co Ltd of Urumqi, China in presence of the Economic Counsellor of the Embassy of Pakistan in Beijing.

The LoI is for supply of latest German technology gearless wind turbines built in China, for a 50 MW wind power project, to be located in Gharo, Sindh Pakistan. Win Power (Pvt) Ltd (WPPL) is one of the leading Wind IPPs which has worked diligently for the last three years to bring this highly popular form of alternate energy to Pakistan.

WPPL intends to exploit the natural wind corridor available to our beaches near the Indus Delta south east of Karachi. WPPL already has an approved feasibility and tariff from Nepra for this project and is planning for a financial close by June this year. The planned COD for the wind farm would be December 2009.

After signing the LoI, Win Power team also visited the GOLDWIND 50 MW wind farm, 100 KM out of Beijing, specially erected to supply "green" energy to the Olympic Village. Summer Olympics 2008 are due to take place this year in Beijing in June/July. Wind turbines used in this Olympic Village wind farm are the same as the one being ordered by WPPL for Pakistan, which are the gearless machines of 1.5 MW production capacity each.

Business Recorder [Pakistan's First Financial Daily]

 

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Pakistan's forex reserves rise to $14.142 bln​

KARACHI, March 13 - Pakistan's foreign exchange reserves rose by $79 million to $14.142 billion in the week that ended on March 8, the central bank said on Thursday.

Reserves held by the State Bank of Pakistan rose to $12.030 billion from $11.924 billion a week earlier, however those held by commercial banks dipped to $2.112 billion from $2.139 billion.

Pakistan's foreign exchange reserves hit an all-time high of $16.486 billion on Oct. 31, 2007, but then fell sharply, mainly because of outflows from the stock market after President Pervez Musharraf imposed emergency rule on Nov. 3.

The emergency was lifted on Dec. 15, but foreign investors remained cautious after the assassination of opposition leader Benazir Bhutto on Dec. 27.

However, after a relatively smooth election last month, foreign exchange inflows have started steadying again.

Pakistan's forex reserves rise to $14.142 bln - Yahoo! Malaysia News

 

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AMI-Partners: SMBs in Pakistan Spent US$1.5 B on ICT in 2007​

Thursday March 13, 2008

Small and medium businesses (SMBs, or companies with up to 999 employees) in Pakistan invested more than US$1.5 billion on ICT (info-communications technology) in 2007. This spending has been fueled by a surge in the number of SBs (small businesses, or companies with up to 99 employees) as evidenced in the latest study by New York-based Access Markets International (AMI) Partners, Inc.
"SMBs in Pakistan are adopting basic technologies rapidly," says Nilanjana Mitra, Research Analyst at AMI Partners. "Most of Pakistan MBs (medium businesses or companies with 100 to 999 employees) have already attained high usage levels in deploying PCs, printers, basic productivity software tools, antivirus solutions and using the Internet. All of Pakistan's MBs currently use a PC to run their business and almost all of them are connected to the Internet."

Spending on computing and Internet dominates the IT spending pie for SMBs, as they focus on building a strong IT infrastructure. MBs spend a greater proportion on networking compared to SBs, as MBs are eager to enhance connectivity technologies.

"Only 14% of SBs in Pakistan have adopted computers at present," says Ms. Mitra. "Nevertheless, this is more as an opportunity rather than a shortcoming. PC vendors can focus on this relatively untapped SB market opportunity in Pakistan to gain significant returns. PC-adoption plans are quite positive among SBs."

More than one-third of SBs in Pakistan have indicated that they intend to purchase new PCs in the next 12 months. A sizeable proportion of first-time PC buyers are also likely to join in--thus boosting the overall SMB PC market.

"An uncertain economic environment and industry conditions are considered the most important issues hindering SMBs' business growth in Pakistan," says Ms. Mitra. "These factors are pushing SMBs to think of strategies to control costs while adopting newer technologies to keep up with competition."

When looking at the vertical segments of Pakistan based SMBs, the FIRE (financial services, insurance and real estate) and professional services (accounting, advertising, data processing, engineering, legal and photography) are the more technologically advanced. These are followed by the manufacturing vertical segment.

"Together FIRE and professional services constitute 15% of all SMBs in Pakistan," Ms. Mitra says. "About two thirds of these two verticals own PCs, which is quite high compared to a total PC penetration (15%) among all Pakistan-based SMBs. Comparatively, the retail sector represents 55% of all SMBs, but only 8% of the retail sector own PCs."

Related Studies

AMI's 2007 Pakistan Small Business Overview and Comprehensive Market Opportunity Assessment and 2007 Pakistan Medium Business Overview and Comprehensive Market Opportunity Assessment studies highlight these and other major trends in the context of current/planned IT, Internet and communications usage and spending. Products and services covered include established and emerging hardware, software, applications and business process solutions. Based on AMI's annual surveys of SMBs in India, the studies track a broad spectrum of issues pertaining to budgets, purchase behaviors, decision influencers, channel preferences, outsourcing, service and support. Also covered are detailed firmographics and critically important technology attitudes and strategic planning priorities. This data points to key opportunities and messaging hot buttons for vendors and service providers seeking to match their offerings to SMB market requirements.

For more information about this study, AMI-Partners, or our global SMB research, call 212-944-5100, e-mail ask_ami@ami-partners.com, or visit the AMI Web site at AMI-Partners.

About Access Markets International (AMI) Partners, Inc.

AMI-Partners specializes in IT, Internet, telecommunications and business services strategy, venture capital, and actionable market intelligence -- with a strong focus on global small and medium business (SMB) enterprises and extending into large enterprises and home-based businesses. The AMI-Partners mission is to empower clients for success with the highest quality data, business strategy perspectives and "go-to-market" solutions. Led by Andy Bose, the firm has built a world-class management team with deep experience cutting across IT, telecommunications and business services sectors in established and emerging markets.

AMI-Partners has helped shape the go-to-market SMB strategies of more than 150 leading IT, Internet, telecommunications and business services companies over the last ten years. The firm is well known for its IT and Internet adoption-based segmentation of the SMB markets, its annual retainership services based on global SMB tracking surveys in more than 25 countries, and its proprietary database of SMBs and SMB channel partners in the Americas, Europe and Asia-Pacific. The firm invests significantly in collecting survey-based information from several thousand SMBs annually, and is considered the premier source for global SMB trends and analysis.

AMI-Partners: SMBs in Pakistan Spent US$1.5 B on ICT in 2007 - Yahoo!7 Finance

 

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Hotel Industry Flourishing In Pakistan: Marriott
GM​

Thursday March 13, 2008

ISLAMABAD, March 13 Asia Pulse - The hotel industry in Pakistan was flourishing with the passage of every day and more development was expected in future.

This was stated by the Clive Webster General Manager Marriott Hotel, while speaking at a news conference here Tuesday.

He said that hotel industry of Pakistan has been recognized at international level while steps taken by the government was luring foreign investors. There was an equal opportunity for the local and foreign investors in this field, he added.

He said that Islamabad Marriott Hotel recently received two International Awards, The Mustang award and Sales Leadership Award during the running year. The ceremony was held in China, last month and the Islamabad Marriott was chosen from 120 full service properties in the Asia Pacific region and 450 full service Marriott International properties globally in 68 countries.

He said that Mustang Award was conferred to the General Manager and his team in recognition of achieving exceptional business results while maintaining high levels of customer satisfaction.

The sales Leadership Award recognizes the expertise of GM and excellent results he achieved under prevailing market and economic conditions he added. He termed this achievement as a great pride for Pakistan.

Hotel Industry Flourishing In Pakistan: Marriott - Yahoo!7 News

 

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UK to introduce long-term visa for businessmen ​

Friday, March 14, 2008

KARACHI: Deputy High Commissioner of the United Kingdom, Robert W Gibson has said that in order to promote link between business communities of the UK and Pakistan, and to facilitate Pakistani businessmen, they will soon introduce new longer term visas. This will enable businessmen to visit the UK whenever required within that period.

In a meeting with the business community at the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), he said that in an effort to increase its support to Pakistan, within the near future nine British trade delegations belonging to different sectors would be visiting Islamabad for exploring the possibilities of expansion in bilateral trade and investment.

FPCCI Vice President Zubair Tufail stated that the government and business community of Pakistan had always attached great importance to the UK, as it was one of the largest investors in Pakistan and had already invested in the power generation, chemicals and pharmaceutical sector.

Tufail further said that Pakistan was in need of further investment in power generation, as the country was facing acute shortage of electricity. He said that Pakistan had very old traditional relations with the UK, adding, “We are maintaining close liaison with different chambers of the UK and members of the business community, but still we need to explore the full potential for expansion of trade opportunities.”

UK to introduce long-term visa for businessmen

 

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Horticultural project launched to identify growth potential ​

Friday, March 14, 2008

LAHORE: The Agribusiness Support Fund (ASF) has launched Participatory Rapid Horticulture Appraisal (PRHA) project with a view to identifying those horticulture crops which offer the greatest potential for growth.

The project was launched in a meeting held here on Thursday by Additional Secretary, Ministry of Food, Agriculture & Livestock, Mohammad Saleem Khan instead of caretaker MINFAL minister who did not attend the meeting due to some reasons, sources privy to the meeting told The News.

The meeting was attended by key stakeholders in the horticulture sector, including officials of the Agribusiness Development & Diversification Project, Pakistan Horticulture Development and Export Board and other public and private sector representatives.

Talking about the objectives of the meeting, they said that the scheme would be a participatory and consultative process and involve all stakeholders, including growers, processors, exporters and technical experts from the private and public sectors.

By the end of the appraisal process, suitable and effective interventions would have been designed and initiated to address all constraints throughout the value chain including inputs, production, post-harvest practices, processing and delivery mechanisms, they said.

Other objectives of the PRHA are to conduct a rapid appraisal of the horticulture sub-sector with an aim to prepare individual crop profiles, identify constraints and opportunities and develop commercially viable solutions for high potential clusters.

Seventeen key horticulture crops would be focused throughout the country. The PRHA’s exercise would strengthen support for the entry of small farmers into the agribusiness sector and commercially-viable solutions would help improve quality and production in the target sectors with the result that growers, processors and traders would compete more effectively, domestically as well as in the global markets.

It had been observed that the agriculture was the backbone of the country’s economy and accounts for almost a quarter of the national GDP. Within agriculture, the horticulture sub-sector offers the maximum growth potential.

The country has ample natural resources which enable the country to produce over 13 million tonnes of fruits and vegetables annually. However, due to lack of knowledge of modern production techniques and post-harvest handling methods it is estimated that over one-third of fresh produce are lost.

Despite ample natural resources Pakistan’s horticulture exports are limited to only around US$140 million out of the total world market of US$80 billion. Furthermore, the country continues to get amongst the lowest international prices for its products because of non-compliance with international standards.

Horticultural project launched to identify growth potential

 

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Italian CNG kit maker to boost production ​

Friday, March 14, 2008

KARACHI: Landirenzo, the leading Italian CNG auto-kit manufacturer, plans to increase its production in Pakistan, CEO of the Landi Renzo Group, Stefano Landi told a press conference here on Thursday.

Production of the kits from LR Pak, the Pakistani subsidiary of the group, will be increased in the next few years from the current 10,000 per month, he added. “Pakistan is one of our major markets,” he said, adding that their increasing sale here was one of the main contributors to the company’s growth.

Out of the total revenue of 164 million euros the company generated in 2007, 30 million euros came from Pakistan. LR Pak Director Francesco Grillo expressed hope that the business won’t be affected if CNG price increased. “Prices of petrol and diesel are not reliable and CNG will always remain relatively cheaper,” he added.

He said that the company has already exported 1,200 CNG kits to China from its assembling plant in Pakistan and more orders were in the pipeline. Landirenzo is also interested in manufacturing LPG kits for cars, provided that auto-gas stations are established, he added. It sold most of the kits to auto-assemblers.

Italian CNG kit maker to boost production

 

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PKR PPP versus USD ​

ARTICLE (March 14 2008): The fall in the purchasing power of Pak rupee is accelerating in the country with no sign of its stabilising at any level on the horizon. Even more worrisome is the fall in its parity rate against US dollar - a currency that is getting a bashing every where else, around the world. That means the rupee is faring even worse against all other major currencies, as our economy is too much tied to the apron strings of USA.

Policies of the US administration, since the turn of the century, have wreaked havoc around the world, particularly so in Afghanistan and Iraq. The US budget deficits and adverse balance of payments are growing at an unprecedented pace, and so is their debt to foreign countries, holding dollars as a reserve currency. If the Opec and other oil producers, together with Japan and China decide to change their dollar holdings for gold or other strong currencies one day, the Fed will have to declare bankruptcy.

The rising oil and gold prices, as well as those of other commodities such as wheat world-wide, worsen the crisis for the US dollar. That explains the falling value of the US currency. In response to the new UN sanctions, at US behest mainly, concerning Iran's nuclear ambitions, Iran has started, since mid-February, an oil bourse, known as the 'Kish bourse', denominated in euros. It is intended to by-pass London's IPE, and New York's Nymex, both of which are effectively controlled by USA.

The intention is to sell crude oil to the international market, in euros, a measure that will further weaken an already ailing US currency. If joined by other Opec, Oman and Central Asian/Caspian oil producers, this could sound a death knell for the greenback and/or the US economy.

We in Pakistan have our own problems, living in the shadows of American grab for power and resources every where, with the added problem of Indian hegemonic tendencies and ingrained hostility towards Pakistan. Additionally, USA and other Western powers are nurturing and promoting India as a counterweight to the growing Chinese might, which will overwhelm them in a few years if left unchecked.

Thus Pakistan finds itself in a squeeze from all sides, friends and foes alike, and the political and social instability, combined with the deteriorating security situation adds fuel to the fire of rising fuel prices, food shortages, budget deficits and adverse balances of payments. So it is not just inflation (increased money supply chasing a very limited supply of goods) that is causing a fall in PPP. It is the psychological factor and nascent flight of capital, combined with a host of other factors that have brought about the phenomenon of rising prices and losing value of money.

An incoming administration has to set things right in a hurry. Even if they succeed domestically (no easy task) the foreign influences and tentacles vitiating the atmosphere are not likely to disappear from the scene soon, and that is where our position in the geo-political scheme of things is most precarious.

Business Recorder [Pakistan's First Financial Daily]