Pakistan Economy - News & Updates - Archive

[Neo]

Pak fails to boost exports ​

Tuesday, April 15, 2008

ISLAMABAD: Although Pakistan was signing Free Trade Agreements (FTAs) with various countries of the world for boosting its exports, unfortunately, it has failed to achieve the desired results, said Muhammad Ijaz Abbasi, President of Islamabad Chamber of Commerce & Industry (ICCI).

He was speaking at a seminar titled “Exploring Pakistan’s Export Potential in China and Malaysia in the context of the Free Trade Agreements” here on Monday. After signing the FTAs, Pakistan’s imports have increased immensely, while exports have not increased to the desirable level. He added that the current total volume of trade between China and Pakistan has crossed $6 billion, but the balance of trade is heavily tilted in favour of China.

He said Pakistan’s trade gap is increasing gradually, which is a matter of concern. He stressed that Pakistan should devise a comprehensive strategy to bridge the gap between the imports and exports, for bridging the trade deficit.

The seminar was held here in ICCI, in collaboration with the World Trade Organization (WTO) Cell, Trade Development Authority of Pakistan (TDAP) and Foreign Trade Institute of Pakistan (FTIP).

After 60 years of independence of Pakistan, total exports are hovering around $18 billion, which does not reflect Pakistan’s existing potential. He emphasised that before signing the FTAs, stakeholders should be consulted, for productive results of the agreements.

Abbasi said that the business community was not consulted well before the time of signing the agreements; consequently, desired results were not achieved. Pakistan is already under great economic pressure and increased imports in many sectors may badly harm the local industry. He emphasised that attention should also be given towards the development of the infrastructure for the growth of industries and the acceleration of exports and road network from the farm to the market, should also be improved for the speedy transportation of goods.

At this occasion, Majeeb Ahmed Khan, Head WTO, Cell Trade Development Authority of Pakistan said that China is the fourth largest economy with its GDP being US$2644.6 billion and the third largest exporter in the world. Identifying a potential of $5 billion available in China, he said that exporters should pinpoint those issues, the resolution of which could help increase Pakistan’s exports to China. He said that there exists a huge potential to increase Pakistan’s exports and stressed for the involvement of regional chambers for collaboration with the TDAP, WTO for better results.

Pak fails to boost exports

 

[Neo]

Reserves at year-end will be enough for 4.3 months import ​

ISLAMABAD: The amount of foreign exchange that the country will have at the end of the current fiscal year will be sufficient to cover import bills only for 4.3 months.

Recent estimates for foreign exchange reserves show Pakistan will have $13.689 billion foreign exchange reserves at the end of the year even after receiving some inflows from abroad during the remaining months of the fiscal.

Latest data released by the State Bank of Pakistan showed that the total liquid foreign reserves held by the country dropped by $142 million to $13.133 billion on April 5, 2008.

The country's foreign exchange reserves were $17.697 billion, which were enough to finance 6.4 months imports at the start of the current fiscal year 2007-08.

However, during July-February period these reserves have witnessed a decline and amounted to $14.059 billion and were able to finance 4.7 months imports of the country. The projection suggests that the country's foreign exchange reserves would decrease further and may touch $13.689 billion by the end of current fiscal and would be able to finance 4.3 months imports.

According to the estimates the current account deficit during the current fiscal year was estimated at $9.671 billion. However, during the period July-February current account deficit has already crossed over to $10.024 billion against the annual budgetary projection of $9.671 billion. Rising current account deficit is expected to touch $14.955 billion and would cause a hit to the tune of over $4 billion to the foreign exchange reserves of the country till the end of current fiscal year 2007-08. The current account deficit would be $5.284 billion more than the anticipated deficit $9.671 billion at the start of the fiscal year 2007-08.

Pakistan's oil import bill, which was estimated at $10 billion at the start of the fiscal year, has now been projected to be around $12 billion due to skyrocketing oil prices in the international market. In Pakistan, fuel imports represent more than 20 percent of its total merchandise imports.

Shortfall in wheat production is also feared and the initial estimates suggest that wheat production of the country to stand at 21.8 million tonnes as against the target of 24 million tonnes set for the current fiscal. Economic Coordination Committee (ECC) in its last meeting has postponed the further wheat import option till the availability of final estimates of the wheat production in the current fiscal.

Possible decision for the import of wheat in the month of May would add more burden on foreign exchange reserves, current account deficit and finally the trade deficit by the end of the current fiscal, a senior official said. Donor community has already highlighted the importance of increase in foreign exchange reserves and pointed out that in Pakistan foreign exchange reserve import cover has been estimated as relatively comfortable for 4 months, however, cautioned that foreign exchange reserves are on a declining trend and suggested that further adjustments are required.

Daily Times - Leading News Resource of Pakistan

 

[Neo]

Pakistan seeks energy supplies from Qatar​

ISLAMABAD: Pakistan seeks energy supplies from Qatar Liquefied Natural Gas for Sui Southern Gas Company (SSGC) Limited terminals in order to meet with the pressing energy demand and to overcome the energy shortage.

Syed Naveed Qamar Federal Minister for Privatisation, Investment, Ports, Shipping, Industries and Production placed this request during a meeting with Hamad Ali Al-Hinzab, Qatar’s Ambassador to Pakistan who called on him here on Monday.

The minister appreciated the role of Qatari investors towards contributing in Pakistan’s economy and said that any investment from Qatari Business Groups/ investors in Pakistan would be fully supported by the people of Pakistan in view of the strong brotherly relations between both the countries.

It would also provide an opportunity to the business groups of both the countries to identify new avenues for enhancing the existing economic relations who required exchange of investor groups, he said.

Qamar informed the envoy regarding Pakistan’s privatisation policy. He said there was a need to accelerate our efforts to further transform and strengthen our close relations into commercial interaction. Pakistan is the most promising area in the region for the local and foreign investors for business activity in almost all the sectors. Pakistan would continue to provide new investment avenues with remarkable incentives for the private sector in the region, he added.

The minister assured maximum support both at federal and provincial levels for materialising the investment projects of Qatari investors on fast track basis and also to remove all sorts of bottlenecks in the process. Hamad Ali Al-Hinzab said the government of Qatar shares an excellent rapport with the government in place and intended to expand its cooperation both on economic and political fronts for mutual growth and benefit of both the countries.

He apprised the minister that the Qatar government’s cement project was at initial phase and a delegation has recently visited Pakistan to discuss and finalise important matters and modalities with Sindh government in this regard. Pakistan has vast resources and potential for investment activity and Qatari Business groups/ Companies were keen to take part in the privatisation process of Pakistan and to focus on the investment opportunities such as the Live Stock and milk processing sectors of Pakistan, which would generate job opportunities at home, he said.

The Qatari ambassador expressed his complete satisfaction over the on going Qatari investment projects in Pakistan and appreciated Board Of Investment (BoI’s) support and facilitating them in this regard.

Ahmed Waqar, secretary Investment Division & BoI, and executive director general, Maj (R) Iqbal Ahmad along with other BoI officials were present during the meeting.

Daily Times - Leading News Resource of Pakistan

 

[Neo]

‘Chinese investors to generate employment by investing in Pakistan’​

BEIJING: President Pervez Musharraf has called upon the Chinese Investors to contribute maximum to the industrialisation of Pakistan to generate employment opportunities that would help curb the menace of extremism and terrorism.

Addressing the Pakistan-China Business Forum here Monday, the President pointed out that Pakistan offers great opportunities for investment in various sectors including joint ventures with a win-win situation for both sides.

He said that he personally feels that the environment in China and Pakistan “is very conducive for creating business opportunities.”

The President said that Pakistan is a big market with a population of 160 million. For the last five years the Pakistan economy has grown at the rate of over 7 percent while the GDP has more than doubled, he said, adding when the demand-supply gap reduces the profitability is increased.

President Musharraf told the gathering that more than 600 companies in Pakistan were earning a very high-level of profit.

He said that he knows that many companies are making profits in double figures and most of are earning profit of 20 per cent and above.

“This is the kind of profitability available in Pakistan,” he noted.

He said that Pakistan offers lot of opportunities for Chinese investors and the people of Pakistan love the people of China from the core of their heart.

The geo-strategic location of Pakistan, the President said, is also very important as it is located at the cross-road of West Asia, Central Asia, Central China and South Asia. He said that Pakistan offers shortest route for trade and business among all these countries and the Gulf.

The President said that Pakistan is developing its communication system and the construction of Gwadar Port is one of these measures while expansion of Karakorum Highway is in progress.

Pakistan, the President said also offers cheap labour and is working on improving the quality of manpower by establishing engineering universities with the assistance of foreign countries.

“We are equally paying attention towards vocational and skill training for the labour force.” The President said that Pakistan offers numerous incentives for the Chinese investors and lauded those who are already doing business including China Mobile and Hair-Ruba.

President Musharraf also mentioned the mega projects Pakistan has awarded to China, including expansion of Karakoram Highway and the Neelum-Jehlum hydropower project. He said that during his meetings with the top Chinese leadership he has proposed laying of railway line to connect China with Pakistan and investment in energy sector, while the tow countries are already cooperating in nuclear energy field.

The President said that the 21st century is the era of geo-economic and therefore the focus ought to be on the economic, trade, commercial and investment cooperation and joint ventures.

He said that Pakistan and China have already signed a Free Trade Agreement and to make it more comprehensive both the countries are in the process of signing such accord in the services sector as well.

This, he said would further increase the trade between Pakistan and China.

The level of bilateral trade now stands at $6.8 billion dollars, but he said that “we can not rest as we are targeting to raise it to $16 billion dollars by 2011.” This is a big target, but with the joint contributions, and with the wish and resolve of both the sides from the private sector he was very confident that this target is achievable.

Referring to the establishment of the Pakistan-China Joint Investment Company, the President said that it would facilitate business cooperation for the mutual benefit.

“We also have a 5-year Joint Economic and Trade plan and call upon the business sector to avail all these advantages.”

The President said that during his stay he held very useful and constructive talks with the Chinese leaders and there was complete consonance on all regional, international and bilateral issue. “The base of our friendship is very large,” he said.

Earlier, Ambassador Salman Bashir said that the visit of President Musharraf reflects the great tradition of close friendship and partnership that so happily exists between Pakistan and China.

The Chinese Minister of Commerce, Chen Deming, said that the leadership of the two countries in the 21st century is visionary and they have established closer strategic partnership.

He said that the cooperative partnership has further promoted the in-depth development of Sino-Pak cooperation.

The minister said that during the past five years the Chinese economy has been growing at the rate of over ten percent per year, while Pakistan for the past few years has witnessed growth rate of 7 percent per year. “Pakistan has become one of the fastest growing economies in the world,” he said. He said that with the strong support of the leadership of the two countries as well as the business community the China-Pakistan trade and economic cooperation has been surging continuously. app

Daily Times - Leading News Resource of Pakistan

 

[Neo]

Musharraf pushes China to build IPC oil, gas pipelines​

* President vows security for Olympic Torch relay
* Seeks Chinese and Russian help on stability in Afghanistan​

BEIJING: President Pervez Musharraf said on Monday that he was lobbying Beijing to build oil and gas pipelines linking Pakistan with western China, as the two longtime allies expand commercial ties.

China is sharply increasing oil and gas imports to fuel its booming economy, and Musharraf said he hoped it would see Pakistan as an “energy and trade corridor” to the Middle East.

“Pakistan is very much in favour of a pipeline between the Gulf and China through Pakistan, and I have been speaking with your leadership ... about this,” Musharraf told a student audience at Beijing’s Tsinghua University.

“I’m very sure in the future – Inshallah – it will happen,” he said. He acknowledged the challenges of building a pipeline that would have to cross soaring mountain passes up to 15,000 feet high.

“Technical experts thought it might not be possible at such heights,” he said, adding, “But experts say [an] oil and gas pipeline could be pumped upward up to the border, and that the larger distance in China would be down flowing. So technically it’s very feasible.”

Olympic torch: Musharraf condemned protests that have marred the Beijing Olympic torch relay and vowed to maintain security when the flame arrives in Pakistan on Wednesday. “There is no one in Pakistan, not one man, who would like to do anything against the interests of China,” he said.

The relay’s European and US legs were marred last week by protests in London, Paris and San Francisco, directed mainly against China’s ongoing crackdown on violent unrest in Tibet.

Musharraf reiterated his position that Tibet was a part of China and an internal affair that should be handled by Beijing, free of foreign interference.

In an interview with the China Daily on Sunday, Musharraf accused Western leaders and media of politicising the Olympics by criticising China’s human rights record and crackdown in Tibet, CNN reported.

“First of all, we consider Tibet an inalienable part of China ... [If] anyone is harbouring or abetting the separatists, we condemn that,” he said.

“You cannot superimpose the human rights and democracy environment of a Western country onto other countries,” Musharraf said, adding, “That is the error that the West and the Western media makes. This does not work at all and this must stop.”

Afghan stability: Musharraf said he would welcome a Central Asian grouping that includes China and Russia working alongside NATO to bring peace and stability to Afghanistan. “In a joint cooperative effort, if the SCO [Shanghai Co-operation Organisation] can do something, yes indeed it should come forward and co-operate toward the security of Afghanistan ... I’m for it,” the president said.

But, he added, “If the SCO can come along, then we would need to ensure that there is no confrontation with NATO.”

Separately, the Chinese defence minister, Chinese Exim Bank president, China Investment Corporation chairman and the China International Investment Corporation CEO met Musharraf and assured him of China’s support in the ongoing and future ventures in all areas.

Musharraf later arrived in Urumqi on the last leg of his visit to China. agencies/daily times monitor

Daily Times - Leading News Resource of Pakistan

 

[Neo]

FBR working to impose taxes on luxury goods, services ​

ISLAMABAD (April 15 2008): The Federal Board of Revenue (FBR) is chalking out a new policy to impose taxes on luxury goods and services used by the elite class. Sources told Business Recorder on Monday that the new tax policy is being focused on consumption items of the rich segment of the society.

The board is actively going through the list of luxury items consumed by the rich for analysing the ratio of taxes paid on them. In the case of poor, the basic expenditure is on food items, but the situation is entirely different for the rich class of the society. They comparatively spend more on non-food items.

For example, treatment like cosmetic surgery and hair transplants could only be offered by the rich people. The use of luxury vehicles, over 1600cc, import of items like Spanish tiles in newly constructed bungalows and travel packages and vacations in Dubai and other foreign countries are other examples of luxurious lifestyle. There are extraordinary expensive schools, clubs, etc, which could only be afforded by the elite class.

Therefore, taxation of luxury items is on top priority under the new tax policy, sources said. They said that it was difficult to tax professional service providers like doctors, lawyers, chartered accountants etc. Nobody demands receipt from specialist doctors charging over Rs 1000 per patient. Without documentation, the FBR could not get anything even after bringing professional services into the tax net. On the pattern of sugar mills, it is impossible to depute sales tax officials at a doctor's clinic.

However, the FBR is satisfied with the current pace of revenue collection from banks, air travel, insurance and franchise services, etc. The revenue from services including international air travel (IAT), non-fund services (NFS), franchise and insurance have gained prominent position in the overall Federal Excise Duty (FED) collection.

The share of this new head has increased from 7 percent in the first half of 2006-07 to 15.5 percent in half of 2007-08 in the domestically collected FED revenue. Within services, 69 percent of collection has been realised from IAT, followed by insurance (16 percent), NFS (13 percent) and Franchise (2 percent). In absolute terms, Rs 5.1 billion had been collected during first half of 2007-08, against Rs 1.9 billion in the corresponding period of last year.

It is worth mentioning that the half-yearly collection has exceeded the target by Rs 600 million and, if this trend of revenue realisation continues, it is expected that the annual revenue target from services would be achieved.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Great move to impose tax on luxury goods. It will not only boost FBR revenue but also make imports of such items more expensive.

 

[Neo]

Breaking the jinx of Gwadar port ​

ARTICLE (April 15 2008): Gwadar Port Project is beset by a 'comedy' of errors (or is it a "tragedy of errors")? A press report says, "Gwadar Port finally made history by beginning its cargo handling from March 15, 2008."

Once it is fully operational, and all its facilities and infra-structure in place(in complete working order after due testing and trial runs), Gwadar has the potential to be a much more lucrative port than Karachi or Port Qassim, for several reasons:

1) Its geographical and strategic location at the mouth of Strait of Hormuz, and as a deep water open sea port, an advantage not enjoyed by Dubai, Khark Island or Kish (in the Gulf) for instance. There may be competition with Chahbahar port in Iran, but certain political and economic constraints of Iran tend to negate the prospects of Chahbahar in comparison with Gwadar. As a gateway to the landlocked states in Central Asia, and China, Gwadar has no peer.

The advantages of Dubai as a free port, and a tax-free regime, can be overcome by declaring Gwadar also, as a free port for entrepot trade.

2) Climate: Though Gwadar is terribly hot during summer, it does not suffer from the "boiler-room" humidity of the ports in the Gulf, so comparatively, it is a more salubrious place for its inhabitants. Of course, Dubai is far more developed as a really cosmopolitan city and international trade centre, with a fairly long history of trade relations. It is more so because of oil, and the ostentatious display of immense wealth, which Pakistan will take years to emulate. Probably this factor can also work into Gwadar's favour as a much cheaper place and a better locale for cost of doing business, as well as a much better educated and sophisticated human resource powerhouse.

3) It is true that Pakistan is no match for UAE or Iran or other Gulf States in terms of financial strength. However, the backing it receives from China, and the in-built advantage of direct access to nd from Central Asian States (and through them by overland routes to Russia and Europe on one hand, and Korea and Japan on the other), offers to Pakistan a unique opportunity to cash in on its fortunate geo-strategic locale. In years to come, particularly when Balochistan is fully developed and its natural resources harnessed to the optimum, there are good chances, in the not too distant future, to achieve a degree of prosperity rivalling the oil producers.

4) It is obvious that development of Gwadar as a thriving port, depends on adequate and modern infra-structure in its hinterland, and it is assumed that the authorities are alive to the dire necessity of immediate attention to this aspect.

5) The emerging new oil and gas centres around the Caspian seek outlets for their products and Gwadar offers a two-way outlet to markets East and West, North and South, unhampered by the conflicts in much of the region.

6) Initially some dissuasion is to be expected from the existing port facilities in the region, who would naturally be miffed at emergence of a strong contender, but that will gradually subside when they realise the potential of expanding their own business through these new facilities.

7) One big constraint is financing the project with all its paraphernalia and infra-structure, but the future revenue generation potential of the new port will soon recoup the initial outlay, and much more besides.

8) The boon to employment opportunities and social uplift it will bring about will solve the age-old problems faced by the so-far most neglected province of Pakistan, although it has the largest landmass among all the provinces. The fillip to industries, mining, agriculture, horticulture, animal husbandry, trade and commerce in Balochistan will have a domino-effect on other regions as well, all for the better.

9) The cumulative effect of all the above and other factors too numerous to mention will be the gateway for a prosperous and powerful Pakistan, God willing.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Kabul persuading Islamabad for wheat procurement ​

ISLAMABAD (April 15 2008): The Afghan government is reported to be persuading Pakistan for procuring wheat after the Food and Agriculture Organisation (FAO) has placed Afghanistan on top of the first three countries that would face severe food shortage, well-placed sources in Foreign Office told Business Recorder.

The other two countries are Sudan and Somalia where food riots are feared to erupt in the coming days. Pakistan imposed a ban on wheat/flour export to Afghanistan through private sector after acute shortage of flour. However, it had been decided that any deal for export of wheat or flour to Afghanistan would be at the government level for which Pakistan would sell wheat at the international price.

Sources said that Afghan Commerce Minister Dr Amin Farhang was desperate to meet his Pakistani counterpart Shahid Khaqan Abbasi to resolve wheat price issue. It may be noted that wheat price has increased by 50 percent during the last two-three weeks due to its acute shortage. "Majority of the Afghan population do not enjoy food security, and a significant minority is vulnerable to acute food insecurity," the sources added.

Reports reaching here suggest that there was exchange of fire between Frontier Corps and Afghan security forces at the Chaman border on Monday over flour smuggling to Kabul. Islamabad had recently delegated powers to Civil Armed Forces (CAF) to control smuggling of essential items ie wheat/flour, sugar, edible oil/ ghee, rice and pulses to Afghanistan.

"Food item prices, particularly of wheat, have shot up between 40-50 percent during the last fortnight in Afghanistan," the sources quoted a letter written by Pakistani Embassy in Kabul to the Foreign Affairs Ministry. Sources said the Afghan commerce minister has requested Islamabad to look into the precarious situation in his country and for this purpose, he would like to visit Pakistan.

"Farhang is even willing to visit Islamabad as and when his Pakistani counterpart feels convenient," the sources maintained. Sources said the Foreign Office would dispatch the request for a visit of the Afghan commerce minister to the commerce ministry.

Food insecurity has had a particularly negative impact on rural population, which was at the bottom of the ladder of access to resources. Sources said that both the countries were yet to finalise the wheat procurement arrangements, besides its price as the prevalent international price would hardly be acceptable to Kabul.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Qatar to expand economic ties with Pakistan ​

ISLAMABAD (April 15 2008): Qatar has shown keen interest in exploring upper and lower Sindh for dairy sector investment projects especially along the coastline of Badin and Thatta. The ambassador of Qatar Hamad Ali Al-Hinzab said this at a meeting with the Minister for Privatisation and Investment Syed Naveed Qamar here on Monday, says a press release.

The Qatari ambassador congratulated the minister on his appointment as Investment and Privatisation Minister and appreciated government for holding free and fair elections. Qatar shares an excellent rapport with the present government and intends to expand its cooperation both on economic and political fronts for mutual growth and benefit of both the countries.

He also apprised the Minister that the Qatar government's cement project is in initial phase and a delegation has recently visited Pakistan to discuss and finalise important matters and modalities with the Government of Sindh. The minister reciprocated by admiring and appreciating confidence and trust shared by the government of Qatar with the GoP and also assured maximum support both at federal and provincial level for materialising investment projects of the Qatari investors on fast track basis in Pakistan.-PR

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

'Pakistan will have duty-free access to Chinese market in three years' ​

ISLAMABAD (April 15 2008): Pakistan will have duty-free access to Chinese market within 3 years for industrial products like textile, cotton fabrics, industrial alcohol, leather articles, sports goods, fruits and vegetables, iron and steel products and engineering goods under the Free Trade Agreement (FTA).

This was disclosed by Dr Safdar Sohail, Director-General of Foreign Trade Institute of Pakistan (FTIP) at a seminar on 'Exploring Pakistan's Potential in China and Malaysia in the Context of the Free Trade Agreements', organised by WTO Cell, Trade Development Authority of Pakistan in collaboration with FTIP and Islamabad Chamber of Commerce, held here on Monday. Mohammad Ijaz Abbasi, President, ICCI, was also present on the occasion.

Pakistan and China signed Free Trade Agreement in 2006 which included trade in goods and investments in various sectors. The Tariff Reduction Modality under FTA has been developed to achieve the twin objectives of gradual trade regularisation and providing adequate tariff protection to the existing industry and future investments.

"Elimination of customs duty on raw material and intermediate goods will make Pakistan's exports competitive not only in China but also in the global market while improving its balance of trade with China", Safdar said.

He said that under the agreement China is bound to reduce its tariff by 50 percent on fish, dairy sector, leather products, knitwear and woven garments. "The import of machinery and chemicals from China on reduced or zero percent duty would help the industries to reduce the much-needed cost of production and setting up of the new industrial units while making the local industrial sector more competitive", he added.

Pakistan exported goods worth $1 billion to China in 2006. However, International Trade Centre (ITC) has calculated the potential of $5 billion for all of the Pakistan's exports to China, which after zero-rated access in the Chinese market, would witness an encouraging growth within three to five years, the Director General stated.

Pakistan is the largest trade partner of China in cotton yarn. However, it is worth noting that China has put one item of cotton yarn ie "Cotton, not carded or combed" in the 'No Concession' list despite the fact that China is the biggest importer of this particular item the world over and annually imports this item to the tune of $3 billion.

M Ijaz said that Free Trade Agreement between Pakistan and Malaysia was signed in 2007 that was the first bilateral FTA between two Muslim countries to develop incorporation in trading goods, services and investment.

"Pakistan has given market access to Malaysia on basic raw materials and intermediate goods and machinery while in trade in services, both countries have provided WTO plus market accesses to each other", he said.

In the field of IT related services, Islamic banking and insurance, Pakistan has secured 100 percent equity in Malaysia. "Total indicative potential for Pakistan's export products in Malaysian market has been estimated at $1.17 billion against the present level of only $54 million", Ijaz said.

In reply of a question, Dr Safdar said that there are certain trade barriers that Pak traders have to face while importing or exporting goods from India through Wagah border. "The traders have to face transportation problems in this regard due to the inter-state barriers of India but the matter will be solved soon as we are trying our best to remove these barriers", he added. The participants were informed that the government was making efforts to open a 'trade office' in China.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Budget proposals: KCCI for setting up free-trade zone at Port Qasim ​

KARACHI (April 15 2008): Karachi Chamber of Commerce and Industry (KCCI) has suggested that a free-trade zone be established at Port Qasim or the existing Export Processing Zone (EPZ) be converted into free-trade zone to facilitate trading and warehousing on a international scale.

In its budget proposal for 2008-09, to be submitted to the Federal Finance and Commerce Ministers and to the Chairman, Federal Board of Revenue (FBR), KCCI President Shamim Ahmed Shamsi said that free-trade zone, if established, would help build buffer stocks of raw material and commodities at low prices. Besides, it would create tremendous opportunities for re-export trade, making Pakistan a regional trading hub.

He said that this would also help enhance the image of Pakistan as a favoured destination for investment. It would also provide a trade corridor for Central Asian states, including Afghanistan, China and other countries in the region, and help generate port revenues in foreign exchange, besides creating employment opportunities.

Referring to Dubai and Singapore where re-export trade thrived, he noted that Pakistan had virtually no such facility due to its obsolete policies and procedures. Pakistan' business community was very enterprising and capable of handling such trade and earn huge amounts of foreign exchange. As such, the KCCI President stressed the need for evolving positive policies to optimise benefits from Port Qasim and Gwadar port.

He noted that customs duty, 15 percent sales tax and withholding tax on import of industrial raw material had resulted in substantial increase in the cost of finished products. High prices of consumer goods had badly affected domestic demand, he said, adding that higher prices of Pakistani products were unable to compete with the Chinese, Indian and other countries' products in the world markets, hence the demand for Pakistani products was on the decline, which negatively affected the gross domestic product (GDP) grwoth.

The KCCI President proposed that all raw materials, imported for industrial consumption, should have zero rated duty and lower rate of sales tax with a view to reducing cost of production and expanding industrial output. He recommended that taxes other than general sales tax and income tax be phased out to reduce number of taxes and cost of collecting taxes.

He noted that Pakistani ports were most expensive in the entire region, and added that the port charges needed to be substantially reduced to cut the cost of raw materials. He also demanded tax incentives to establish basic industries such as chemicals, pharmaceuticals raw materials, petrochemicals, heavy machinery and machine tools to enhance competitiveness.

The KCCI President also recommended that there should be a single rate of sales tax at 10 percent to encourage tax culture and expand tax base. The reduction would also provide relief to consumers. He said at present existing sales tax rates were 15 percent, 17.5 percent and 20 percent, which were too high, and termed it an incentive for tax evasion and smuggling, and a burden on existing tax base.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Eni starts production from badhra gas field ​

KARACHI (April 15 2008): Eni has started production from its Badhra gas field, located south-east of the Bhit gas field, within the Sindh province in Pakistan, approximately 250 kilometers northeast of Karachi. Eni also completed the commissioning of the third train at Bhit gas treatment plant, which will process gas from the nearby Badhra gas field, following the Badhra Development and Bhit Acceleration Project.

The Badhra Development and Bhit Acceleration Project increases the existing Bhit plant capacity by 17% from 270 MMscfd to 315 MMscfd, and enhances gas sales to the gas utility companies to help fulfil the ever increasing demand of energy in Pakistan. Total investment in the Badhra Development and Bhit Acceleration Project will be approximately US $50 million.

Kirthar Joint Venture, the title holder of Bhit and Badhra gas fields, is composed of Eni Pakistan Limited, a subsidiary of Eni SpA, (40%); Kirthar Pakistan B.V., a Royal Dutch Shell Group company, (28%); Oil & Gas Development Company Ltd (20%); PKP Kirthar 2 B.V., a subsidiary of Premier Oil Overseas B.V., (6%); and PKP Kirthar B.V., a subsidiary of Kuwait Foreign Petroleum Exploration Co (6%).

Eni has been present in Pakistan since 2000 with 12 onshore exploration licences, 5 of which are operated by Eni and 3 operated offshore exploration blocks. The production fields operated by Eni are Bhit and Badhra (Eni 40%) and Kadanwari (Eni 18.42%). Eni also holds interests in producing fields of Sawan (Eni 23.68%), Zamzama (Eni 17.75%), Miano (Eni 15.16%) and Rehmat (Eni 30%).

Eni is the largest foreign gas producer in Pakistan. In addition to its substantial investment and as part of an integrated worldwide strategy, Eni is committed to support sustainable development in Pakistan, through significant community development initiatives.

http://www.brecorder.com/index.php?id=723295&currPageNo=1&query=&search=&term=&supDate=

 

[solid snake]

Great move to impose tax on luxury goods. It will not only boost FBR revenue but also make imports of such items more expensive.

Will this move make video games and game consoles more expensive? But yes, this is a good move as the government can collect more revenue plus it will reduce our trade deficit.

 

[ejaz007]

Beijing keen on pipeline project
Wednesday, April 16, 2008
By Quddsia Akhlaque

ISLAMABAD: With President Pervez Musharraf's emphatic and open invitation for China to become a partner in the proposed $7.5 billion Iran-Pakistan-India (IPI) gas pipeline project, initial indications from the Chinese diplomatic circles are that if the new political government in Islamabad pursues it further, Beijing may review its earlier feasibility study that did not fully endorse it.

"It now depends on the new political leadership in Pakistan. If Chinese leadership gets a strong signal that the new Pakistani prime minister is as interested then Beijing could launch fresh efforts to further explore the viability of the project which could subsequently lead to a joint survey of the area," sources said, adding the first step could be talks between the two relevant ministries where Pakistan side could also share data.

Noting that Pakistan's offer to China to join the project was a "very good suggestion and an encouraging symbol", Islamabad-based Chinese Strategic Analyst Zhou Rong told The News: "China may be interested in conducting a joint feasibility study of the proposed project by technical experts from both sides."

He said Beijing's decision would ultimately depend on technical and financial viability of the multi-billion dollar project. The Pakistan-China Joint Press Statement issued at the end of President Musharraf's six-day official visit to China on Tuesday noted that China "expressed its readiness" to assist Pakistan for the development of the energy sector.

However, with Beijing's current preoccupation and focus on the Olympic games being hosted by China in August, no movement on the pipeline project is possible till the mega event is over, sources maintained.

A feasibility report prepared by the Chinese experts around three years back in 2005 had pointed to 'geological obstacles' in the pipeline that would run from Iran to Pakistan and then on to China through the Karakoram Highway (KKH) via Gilgit in Northern Areas if China joins the project.

According to a Chinese source, experts had cited several technological challenges posed by the rugged terrain of the area through which the pipeline would have to pass. Hence, their conclusion was that from technical standpoint it would be very difficult, making it into a high cost project both in terms of money and time.

While China may be interested in the project it is clear that the key question of whether it will participate or not will be determined purely on technical grounds, a Chinese analyst said. "It is not just an issue of intentions, the political leaderships on both sides may have the best of intentions to back the IPI gas pipeline project but it cannot take-off without the green light from technical experts," the analyst cautioned as he pointed out: "This is not Karachi or Gwadar."

Apparently neither Iran nor India have formally discussed with Beijing the possibility of China joining the IPI project, nor China has directly conveyed its interest in this regard to any of them, sources close to Chinese government maintain.

However, President Pervez Musharraf during his recent meetings with the top Chinese leadership in Beijing did discuss prospects of China participating in the project as he also indicated in his response to questions by students of Beijing's Tsinghua University on Monday.

He declared Pakistan was very much in favour of a pipeline between the Gulf and China through Pakistan and told a student: "I have been speaking with your leadership, the president and the prime minister, about this."

Specifically referring to the IPI project, he suggested that it could be transformed into IPC pipeline ó Iran-Pakistan-China pipeline ó also. However, the Chinese who measure everything very carefully have not so far gone public with their response or position on the offer.

While acknowledging the challenges of building a pipeline that would have to cross towering and rugged mountain passes up to 15,000 feet (4,500 meters) high and admitting that technical experts had thought it might not be possible at such heights, President Musharraf still tried to make a case for it, saying: "But experts say (an) oil and gas pipeline could be pumped upward up to the border, but the larger distance in China would be down-flowing. So technically it's very feasible.'

Some observers believe that the president's proposal could put India under pressure to move fast on the project. Also a hint that if New Delhi continues to drag its feet on the proposed project China may emerge as a potential partner in the 2,600-kilometer gas pipeline originally aimed at supplying natural gas from Iran to Pakistan and then onwards to India.

While both Iran and Pakistan have been pushing for early conclusion of the project New Delhi seems to be employing delaying tactics because it is in the process of firming up a civilian nuclear deal with the US, which is opposed to Indian participation in the project.

China is seen by Pakistan as a viable partner in the IPI project having both the resources and the expertise in addition to the obvious advantages associated with its current status of the world's second-largest economy.

There is a view in Pakistani official quarters that China's inclusion in the project would give it more security and stability. Officials are also quick to point out that KKH is being made into an all-weather road.

Asia Times had reported just ahead of President's current China visit: "China, always on the lookout for new energy sources, has conveyed to Pakistan it would be willing to import 1.05 billion cubic feet (bcf) of gas per day if India opts out of the project, according to reports quoting officials in Islamabad." It added: "Pakistan plans to import 2.2 bcf of gas a day from Iran through the pipeline."

Islamabad has consistently maintained that it would welcome China's inclusion in the proposed project. Last month when foreign office spokesperson Mohammad Sadiq was specifically asked about the prospects of China joining the IPI project his response was: "With or without India, we will welcome it. Pakistan is committed to the pipeline because of its desire to achieve energy security."

The Iranian foreign ministry spokesperson had indicated China's keenness to join the project during a visit to New Delhi earlier in February. He said: "Other countries are eager for implementation of the (IPI) project. China is also applying pressure and wants to join the project. We don't have a lot of time. It is time to expedite the decision-making."

Iran, which is said to have the world's second-largest gas reserves after Russia, has reportedly completed almost 20 per cent of the work on the pipeline. But Pakistan has not started work on a 1,000-km stretch of the pipeline to connect Iran with India.

The Indian petroleum minister and secretary will be in Islamabad next week to discuss in further detail the IPI project and more specifically to sort out the issue of transit and transportation fee that India would also have to pay to Pakistan. The question of China joining the project is also likely to figure in the bilateral discussions at the next meeting.

Meanwhile, reports from New Delhi suggest that since India is concerned about issues related to safety, commercial viability and security of the IPI pipeline, it has been advocating involvement of independent monitors and the Russian firm, Gazprom, as an investor in the project.

Beijing keen on pipeline project