Pakistan Economy - News & Updates - Archive

[Neo]

Budget likely to be delayed​

KARACHI, May 12: The timely presentation of federal and provincial budgets is now in serious doubts after a formal announcement by the Pakistan Muslim League (N) to quit the coalition government.

Finance Minister Ishaq Dar of the PML-N is tendering his resignation with his other party colleagues on Tuesday to the prime minister.

June is the month when budgets are announced. It begins with the presentation of the federal budget, normally in the first or second week, followed in quick succession by the four provincial budgets.

But before the federal and provincial finance ministers present their respective budgets, there is a pre-budget drill.

The annual development plans for federal and provincial governments are discussed and debated in the Annual Plan Coordination Committee, and are finally approved by the National Economic Council.

Just a day before the federal budget, the federal finance ministry releases economic survey of the outgoing year.

But much before all these budget and pre-budget exercises begin, the stocktaking of available resources (domestic and foreign) is done, which are lined up, and there is a hectic consultation with all stakeholders to discuss the strategy of the next fiscal year’s budget.

It is not only the presentation of the budget in June, but there are two other events in July which are of vital economic importance: trade policy for the current year and half-yearly monetary policy which is supposed to be in close coordination with the fiscal policy which is spelt out in the budget.

In fact, the monetary policy is a credit plan for implementation of development programme, and it stipulates monetary expansion, credit allocation for various sectors and most important projects inflationary expansion that is to be in line with overall national growth in the economy.

Soon after taking over as finance minister, Mr Dar found many discrepancies and distortions in 2007-08 which in terms of hard cash had an impact of more than Rs500 billion.

He found budget deficit close to nine per cent, which he promised to bring down to six per cent by June when he presents the next year’s budget.

As part of an effort to narrow down 2007-08 budget, a senior officer in the finance ministry is reported to have invited a few top bankers to give an informal ‘advice’.

According to a senior banker, the officer, who is now no more in the finance ministry, asked the bankers to pick up deficit of about half a dozen public sector enterprises.

“The amount was roughly Rs100 billion deficit,” the banker recalled and said the officer wanted them to extend this facility without any ‘formal’ government guarantee.

“It is a typical financial engineering done by intelligent accountants the world over to window dress the balance-sheets of losing concerns,” he said.

The only bad part of the ploy was transferring deficits of government-run concerns to monetary system of the country.

Ishaq Dar is reported to have lined up $3.3 billion resources in Madrid, on the basis of which State Bank of Pakistan Governor Dr Shamshad Akhtar recently took measures to check falling exchange parity value of the rupee with the dollar.

“In 2008-09, we are behind schedule of all these calendar dates,” said a senior and seasoned banker now engaged in teaching.

He wondered how the budget-makers would go ahead with their task when for the first time the budget deficit is almost equal to total revenue collection.

The government recently brought down revenue projection for 2007-08 to Rs990 billion from Rs1,025 billion announced in the budget. But there is doubt the revenue would be even Rs900 billion by the end of next month.

The budget deficit is also more or less equal to this amount.

“Expectations are high, but resources are limited and in fact, diminishing,” warned a banker-turned-businessman who wondered as to why politicians are not able to settle quickly the constitutional and legal issues so that enough attention is given to ‘real, hard economic problems.”

“Pakistan is likely to face the consequences of rising international prices scenario, the impact of previous follies and growing expectation from the population to test capabilities of the new government,” Sheikh Amjad Rasheed, a global food businessman and chairman of Federation of Pakistan Chambers of Commerce and Industry’s Standing Committee on Banking Credit and Finance, wrote in a detailed presentation to the prime minister.

Amjad Rasheed proposed setting up of a task force, to be headed by the prime minister, on essential commodities.

It can have four sub-committees for assessment of domestic resources, monitoring and coordination with provincial governments, periodical forecast for each commodity, an year-wise plan for the next five years.

He proposed establishment of a food surety fund to support a minimum food inventory.

He wants the government to seek commodity grants and financial assistance from international agencies.

Assistance should also be sought from the well-to-do to help the disadvantaged and poor sections of population.

Proposals and suggestions are said to have been given by trade bodies and other individual businessmen, but the government as represented by politicians and bureaucrats has not sit across with business leaders to discuss and work out a strategy for the next budget.

A private TV channel quoted PPP leader Asif Zardari as having said to keep the ministry slots vacant after the PML-N leaders quit the federal cabinet. But there are speculations that either Mr Naveed Qamar who is serving as the minister of privatisation or Shah Mahmood Qureshi who holds the charge of planning and development with foreign affairs may be asked to look after the finance ministry for some time.

Businessmen and bankers say that the job to take such hard decisions would have been relatively easy for a coalition government, particularly when it would have come from a PML-N minister who represents the mercantile community of central Punjab.

The PPP is considered to be a representative of rural gentry that is shy to tax big agriculturists.

Any proposal that would bring in tax net stock exchange brokers, real estate dealers and captains of services sector while ignoring rich and mighty landlords, will not only be opposed but resisted in the cities.

“It will not be an easy sailing for the PPP though it may be having a majority support in the National Assembly,” a business leader said.

The only ray of hope is that the PPP leaders announce to continue their dialogue with PML-N.

The PML-N promises to continue to support the government “on issue to issue basis” and it will not sit in the opposition at least till May 20.

Budget likely to be delayed -DAWN - Business; May 13, 2008

 

[Neo]

Dollars to start pouring in soon: Pacts with donors​

KARACHI, May 12: Agreements with multilateral donors will start pouring dollars in a few weeks that will settle the supply-demand dynamics in the market, said the State Bank of Pakistan on Monday.

SBP Governor Dr Shamshad Akhtar issued a statement which carries central bank’s efforts to stabilise exchange rate, explaining its position in the highly destabilised exchange rate scenario and blaming the speculative forces for a steep fall of the rupee against the US dollar.

The governor stressed that ‘we need fully to understand what is really happening’ behind the volatility in exchange.

“The inter-bank and kerb markets’ behaviour has not been in line with market fundamentals but reflects distortions created by trading and speculative practices which often do creep in under circumstances like this,” said the SBP governor. In discussions with multilateral agencies and other sources, there is a broad agreement for their support which should be able to bring in quick disbursement of foreign exchange inflows,” said the SBP.

The government is looking at other options to attract foreign inflows.

“We are optimistic that these inflows will start pouring in the next few weeks which should settle the supply and demand dynamics more sustainability in the markets,” the central bank said.

Pakistan is committed to exchange rate stability, said the SBP, adding there is no doubt that demand pressures have been high in the economy as manifested by the high fiscal and external current account deficits.

Since Pakistan has a managed floating exchange rate regime, the demand and supply of foreign currency sets the market exchange rate, explained the SBP.

Over the last few weeks, there has been a slowdown in inflows relative to outflows. Central bank has been supporting the oil payments and other obligations of the government as well as providing necessary support to the market as and when required. “The central bank is not in businesses of distorting markets by setting one level of exchange rate,” said the SBP, adding its interventions have to be calibrated in line with the level of volatility.

The SBP came under severe criticism by the newly-elected government and especially by the new high-ups in the ministry of finance holding the central bank responsible for the current destabilisation of exchange rate which eroded the rupee value against the greenback.

In just four months, rupee lost over 13 per cent value against the dollar, making it more difficult for the country to borrow from international market or purchase from the local market.

The country, which depends over 90 per cent on imported oil for its energy resources, has been facing double negative impact of the oil price-hike which reached $126 per barrel on Monday.

While the oil import bill soared to record high, the dollar itself became an all time high against Pakistani rupee, thus forcing Pakistan to borrow dollars, face record trade deficit and watch helplessly the melting reserves of foreign exchange.

The SBP said it has been working closely with the government to set in place a macroeconomic framework to ensure its sustainability.

“In addition, we are taking concrete steps to ensure effective supply of foreign inflows.”

“We have been and are ready to supply the necessary liquidity and lubrication to the markets through calibrated intervention,” said the SBP.

“We have enhanced our vigilance of the inter-bank and kerb markets. This vigilance is unearthing some issues which are being addressed,” it added.

Dollars to start pouring in soon: Pacts with donors -DAWN - Business; May 13, 2008

 

[Neo]

Four million families to get income supplement grant: Dar ​

ISLAMABAD (May 13 2008): The government has decided to give an income supplement cash grant to four million poor families and the finance ministry has been tasked to make all necessary arrangements for collecting/ascertaining the required data from all the districts.

This was stated by Finance Minister Ishaq Dar while speaking at the launching ceremony of first-ever annual report of Institute of Public Policy of Beaconhouse National University, which was launched here on Monday.

The minister said that the government might reintroduce wealth tax possibly in a revised form in the next budget to have a space for providing subsidy to poor. He said that the government was likely to review the levy of general sales tax on fertilisers and pesticides.

"I think it is a wrong policy because agriculture is an important sector and the policy must be done away with," he stated. The number of poor families to be benefited from the income grant could be extended further with the passage of time.

The minister asked the international donors to help the government construct $8.5 billion Basha dam. Basha is viable and important project. The initial cost must be high, but the project has the capacity to return the investment, he stated. The Asian Development Bank, the World Bank and other donor organisations should come forward and invest in Pakistan's infrastructure sector, said the minister.

The minister said the government could not afford to subsidise petroleum products, as the total subsidy on oil would touch more than Rs 153 billion at close of the current financial year. He warned that if the current rising trend in oil prices continued next year, the developing countries would be facing serious trouble. To provide subsidy on essential food items to poor, the government would continue to pass on the benefit of price differential to consumers, he said.

He asked the developed countries to take action against the manipulators who are involved in hedge marketing of oil products. The Opec, according to him, is not the beneficiary of record surge in oil prices, the beneficiaries are actually a few companies, which are operating from the developed world.

Responding to a question, he said that the government would have to cut down the expenditures, the development budget and sensitive expenditure. The minister gave a detailed account as to how the government would tackle various challenges including the widening current account deficit, trade deficit and fiscal deficit.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Many US investors soon to visit Karachi: Kamal ​

KARACHI (May 13 2008): Investors from the United States would visit Karachi in a few weeks to make investment in public-private-partnership in different sectors, like energy, information technology, Karachi Mass Transit System, desalination plants, etc.

This was stated by City Nazim Mustafa Kamal while briefing mediapersons in the Civic Centre on Monday on homecoming from a two-week visit to the United States. "I told them (his hosts in US) that we do not believe in seeking help or loan at all... We want partnership on public-private basis... n areas where we have a competitive edge and attraction for foreign investors," he said.

The Nazim said that Karachi and Houston, both port cities, were declared as sister-cities after signing a memorandum of understanding (MoU), and a delegation from Houston would soon arrive in Karachi for making investment in the metropolis, which is economic and intellectual hub of the country.

Kamal said that, on his invitation, the visit of the businessmen from Houston would be followed by Houston Mayor Bill White's visit. The city nazim said that Karachi and Washington DC would soon sign an MoU on giving the two cities sisters status. He said the proposal came from the Mayor of Washington DC although US administration signs such MoUs with capital cities.

Kamal said his visit to the US was on reciprocal basis during which he motivated the American investors to be engaged in the metropolis as a result of which a delegation of US investors would soon visit Karachi.

Terming recent visit of top American officials to his office and the invitation from the State Department as an honour for Karachiites, the nazim said that developments indicated that the international community had recognised the importance of Karachi as a developing and strategically important city.

The city nazim met with top US officials including Assistant Secretary of State Richard Boucher, US Ambassador to the United Nations Zalmay Khalilzad, congressmen, US think-tanks, mayors and deputy mayors of Houston and Washington DC and other prominent personalities, and termed his visit as successful. Kamal said he had also met the Mayor of Chicago and agreed to promote mutual cooperation in the field of technology transfer and economic development.

To a query that whether the country's political environment was favourable for foreign investment the nazim said: "We are living in a challenging world, facing many hardships, but this should not stop the process of development."

When asked for commenting on the city government's power tussle with Sindh government the city nazim refused to comment and said: "I will repeat my conversation with the Prime Minister that the country is transiting through critical period and we can not afford new experiences any further... we are ready to work with all." Attaching a unique regional and international status to Karachi, Kamal said the Americans were very impressed with infrastructure development, carried out by the city government in Karachi.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Investment in power sector: minister for encouraging private sector ​

ISLAMABAD (May 13 2008): Federal Minister for Water and Power Raja Pervez Ashraf on Monday said that the private sector will be encouraged and their proposals will be considered in order to attract investment in the power sector. He said this during his visit to the under-construction 165-MW Attock General Limited (AGL) power plant, being set up by the Attock Group of Companies at Morgah.

Managing Director PPIB, Fayyaz Elahi and other senior officials were also accompanied him, says a press release. The Minister said that the role of public sector would be minimised and the private sector will be given maximum possible incentives to magnetise their investment in the power sector. He said that all the bottlenecks and hindrances will be removed both for domestic and foreign investors to promote investment in the power sector.

All their suggestions will be properly considered and incorporated before taking any policy decision in this regard. Pakistan is facing energy shortage and the new power plant on fast track basis will help bridge the gap between demand and supply, he said.

Earlier, the Minister was briefed by the CEO of the AGL, Adil Khattak and said that the project will be completed in October 2008, three months before completion. He informed that there would be no foreign exchange expenses involved in the import of fuel because the fuel will be supplied from Attock Refinery. The Minister welcomed the new proposal of the company to further invest in the power sector and said that the domestic investors will also be given all the facilities.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

The outlook for Pakistan's trade deficit ​

ARTICLE (May 13 2008): The excess of imports over export, or trade deficit, has received considerable attention from policy makers. Increasing trade deficit is a natural consequence of fiscal imbalances. As recorded by SBP trade deficit recorded a sharp 32.3 percent expansion during July-November FY08 and reached US $7.2 billion. Trade deficit for the same year during July-February FYO8 recorded a sharp US $3.5 billion increase.

Trade deficit has reached highest ever during the last five years as compared to 3 billion in the year 2003-04. Stunning increase in trade deficit during the five-year period will transfer domestic wealth abroad.

The deficit during the six months of current fiscal year indicates that it will be further enhanced in the current fiscal year. Soaring import is the main reason for imbalance in the Pakistan economy and rapidly increasing trade deficit as well.

Falling export and staggering trade deficit of the country has reached alarming levels. Even with complicated conditions in domestic and global fronts, export oriented industries have succeeded to maintain export target at a growth rate of 4 percent. However, the rate of growth in import was much higher - 14 percent- as compared to the four percent growth in exports. If the current surge in trade deficit is not capped, it may hurt the country's economic growth. Inadequate electricity supply given to industrial sector, too, has hampered production, requiring high maintenance cost, which in turn has eroded product competitiveness.

Although, there exists a surplus labour force in Pakistan, the quality of such a labour is relatively poor in terms of productivity. A good quality labour with technological, innovatory and managerial capabilities and organisational competencies is considered to be significant in improving the competitiveness of countries for inward FDI. But there appears to be a lack of such qualities and skills in labour force in Pakistan.

Low return on capital, low productivity of labour and high rate of bank interest, increased wastage of inputs are the other factors which have made Pakistani products more expensive than those from neighbouring countries. The higher trade deficit leads to outflow of capital resources from the country on one hand and indicates the economic dependency on the other hand.

'Import substitutions' and 'export growth' are the two alternative strategies to curtail the trade deficit. The history of trade policies in Pakistan shows that both the measures have been experimented in different political regimes. However, in the era of globalisation and free trade regime, it is not possible for the developing countries to adopt 'import substitution policy'. We cannot stop the import of machinery, high tech instruments, medicines, and oil and food items not being produced in Pakistan.

To control the budget deficit, we will have improve the competitiveness of the domestic industry. This strategy will not only improve the exportability of the industry but also provide substitution of the imported products, as it was observed that a large part of imported products belong to the luxury items.

As the current trend indicates, it seems difficult to post a balance of payment surplus during this fiscal year without borrowing from abroad. Pakistan's trade deficit can be easily controlled but what is needed is concrete planning and remedial measures to enhance exports to control the trade imbalances which are a serious threat to the economy. Investment should be encouraged in the industrial sector where there is lot of opportunities to improve our export. Pakistan is a state with abundance of natural resources, the northern parts of which are covered with lush green valleys. God has blessesd the country with natural sceneries, world's second top most peak which has a natural attraction for visitors.

But it is a matter of great concern that despite the enormous potential and attractive business opportunities in Pakistan, the potential investors did not come out with money at the desired level due to various reasons, especially the unpredictable policies and law and order situation in the country. As the trade rule says, "Investment in any business, any area and any country calls for careful judgement and conducive environment. Recently, the size of the Foreign Direct Investment (FDI) decreased drastically to 2.1 billion (July to January) as compared to the previous couple of years.

Sources in business circles are attaching great importance to the current scenario of economic activity including Chinese investment in the deep-sea Gwadar port, power generating units at Lakhra and hopefully Thar coal fields, and political stability in neighbouring Afghanistan as these two factors have every potential to create infinite economic activity not only for Pakistan but in the entire region.

Business Recorder [Pakistan's First Financial Daily]

 

[sohailbutt]

100-Index gains 256 points​

KARACHI: Fresh buying in Karachi Stock Exchange pushed the benchmark KSE-100 Index by 256 points to 14542.

The market opened in the green territory and the positive trend continued throughout the day.

The market went inoperative near 12 noon remained so for one and a half hour due to some technical malfunctioning during which all the open orders were cancelled. The trading was extended for 30 minutes to cover the lapse and the market closed at 3:45 PM instead of 2:15 as per normal routine.

The trade volume stood at 130 million shares – lower by 55 million shares compared to yesterday’s trading.

KSE-30 Index climbed by 458 points to finish at 17,367.

100-Index gains 256 points - GEO.tv

 

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Prime land ‘gifted’ by KPT to DHA in a murky deal ​

Area leased at throwaway rates as only solution to stop reclamation​

Wednesday, May 14, 2008

KARACHI: Prime sea-front land in Karachi has been given at throw-away rates by the Karachi Port Trust to the Defence Housing Authority in a deal that has raised many eye-brows, The News has learnt. The deal was sealed in 2007 by the current chairman, Admiral (retd) Ahmad Hayat, despite the fact that other KPT chiefs prior to Hayat refused to endorse it as it went against the Trust’s interests.

The News has learnt that nine successive KPT chairmen, both from civil and military backgrounds, refused to endorse the deal on grounds of its questionable clauses. Owing to what KPT saw as its position in the matter, the issue of the reclaimed land has been a bone of contention between the KPT and the DHA for several years. KPT officials claim that the DHA had encroached on 881 acres of KPT land in 1975-76. Several heads of the KPT did not give up their claim on the land but the present KPT administration has finally “settled” the matter.

The matter was finally settled in 2007 with the KPT leasing the land to the DHA for 99 years at a very minimal rate of Rs2.50 per square meter. It was also agreed that 3 per cent of the leased land would be given to the KPT.

Private valuation puts the cost of the land in billions of rupees. KPT officials privately told The News that the deal is a strange one in which the KPT has given away its rightful property at a very low cost and done away with all the legal work it had painstakingly worked on to reclaim its land.

The case saw some action in 1985, when the KPT filed a Civil Suit (No 240/85) against the DHA over the land in question. But the DHA did not pay heed to this and continued to encroach on this land.

In 1999, the DHA agreed to lease 682 acres of KPT land and gave a written assurance for halting further reclamation work. In this regard a MoU was signed between the DHA and the KPT.† Even after the MoU, the DHA continued its reclamation work and in this regard in 2002 the KPT filed an application before the Sindh High court and pleaded it to stop unauthorised reclamation /allotment of KPT land by the DHA.

The issue was pending for many years and several KPT high-ups did not agree on leasing the reclaimed land to the DHA as it could create great problems for the port area. In this matter in 1998, the DG Ports and Shipping took a serious view of the situation and served notice to the DHA stating that serious problems would erupt in dredging due to silting and reclamation activities of the DHA as this would increase the cost of dredging. However, the complaint was ignored and the DHA continued its dredging work.

The DHA has now said that the land in Phase 8, where the reclamation work was done, is not available so the KPT will be given land in DHA-II, off Super Highway, for the 3 per cent of land the DHA had committed to the KPT. This would be in the shape of residential plots for KPT officers and the KPT agreed to accept the allotment at DHA II Phase 9 without approval of the board and authentication under the KPT Act, official sources added.

The problem does not end there. The allotment of 3 per cent land was meant for permanent employees of the KPT and for those who had completed five years of service according to the KPT rules.† KPT officials privately say that the allotment list submitted to the DHA includes a number of officers who are ineligible under the rules and four plots have been doled out to the high-ups in the Federal Ministry of Ports and Shipping.

According to KPT rules, those who are on deputation, on contract, on probation, or who have not completed five years in service as well as the chairman and trustees are not eligible for the allotment of plots.

However, the allotment lists contains the name of those officials who are not permanent and those who have not been in service for a minimum of five years. The list includes those armed forces officials who are on contract, or on deputation or even not have been in the service of the KPT for five years.

After approval from the Ministry of Ports and Shipping on July 7, 2007, the KPT administration prepared a list of its officers for allotment of plots in the DHA Housing Scheme, ignoring the date of government approval or board resolution and formulated its own criteria without considering the length of service of officers and their service record. As a result of these irregularities, some KPT board trustees resigned as they felt the leasing out the land is not a feasible decision. The trustees who resigned were Wajid Javed, Ali Raza, Wajahat Hussain, and Farooq Rahimtoola.

Pervez Younasi, General Manager Estate and Civil Works of the KPT, when contacted by The News said that it is an achievement on the KPT’s part to resolve the issue which had been pending for the last three decades and the land is on lease for 99 years and the KPT still is the owner and a conflict between two government organisations has been resolved.

He said that the DHA has been reclaiming the KPT limits and the KPT took the issue to court but the DHA continued its plan. However, in the current deal the DHA has agreed that no further reclamation will be done by it and it will give 3 per cent of the leased land to the KPT in the form of residential plots for KPT officers.

Younasi added that the DHA later said that there are no plots available in such quantity on the lease land, so now the DHA is giving the plots at DHA II which is in Super Highway. He, however, said that the KPT did not raised objection on this and accepted the offer.

Regarding the value of the plots of offered land, he said that “when government entities reach any agreement, they do not look into the market value of any property as they are not involved in any sort of commercial deal.”

On the allotment issue, he said that the cut-off date was†May 1, 2007 which was approved by the KPT management and all those who were working from the above date are eligible for the allotment of plots. The KPT official said that any body working for the KPT is entitled to all facilities irrespective whether the person is on deputation or on contract or already has been allotted plots from his or her parent organisation. “However the working duration to be eligible should be five years and those who have not completed five years have signed an affidavit that they will work for five years and that is when they become entitled to the plot,” he added. No board or government sanction has been secured for relaxation of the rules under the Act, The News has learnt.

Younasi said that at present only registration has been done and the list was taken from the computer department of the KPT. He said that proper assessment of all officers had been done and it has gone through the “proper channel” and finalised so there is no irregularity or mismanagement in the deal.

He said that all the rules and regulations have been followed and it has been approved by the board, management and the government. He agreed that usually the KPT leases land out only for 25 years and this practice is still continuing, however, in this deal the KPT has agreed for a 99-year lease.

About the effects of the reclamation, the KPT official told The News that the KPT has done all sorts of testing and in this case, “we have also done model testing and a UK-based company also did the model testing for the KPT.”

He agreed that reclamation is “not good for the harbour and for marine life” but the KPT agreed to the deal as this was the “only solution to stop further reclamation.”

When contacted, an official of the DHA confirmed that land would be given to the KPT at DHA II as there is no developed land available at the reclaimed area and the KPT wanted a developed land so the allotments will be given at DHA II.

“This will, however, take time as DHA II is in the process of development and there are some issues which need to be settled,” he added.

Prime land ‘gifted’ by KPT to DHA in a murky deal

 

[Neo]

PIA to induct 10 aircraft in 2 years ​

MD says no employee will be laid off​

Wednesday, May 14, 2008

KARACHI: Pakistan International Airlines (PIA) would induct 10 aircraft in the next two years to enhance revenue and ward off the need to retrench employees for saving runaway costs, new Managing Director Aijaz Haroon said on Tuesday.

He also announced rescinding the decision of the previous management to ground eight B-747 aircraft due to excessive cost incurred on the particular model, saying the airline could not afford to lose capacity at present.

“We know they are fuel guzzlers,” he said referring to the grounded aircraft. “But we have to use whatever available capacity at hand. There is no other choice.”

Speaking at a press conference here at the PIA head office, he said it had not yet been decided which aircraft were to be inducted and neither could elaborate on the sources for funding the purchase or lease at a time when the airline was faced with accumulated losses of Rs42 billion.

These aircraft are in addition to seven A320-200 aircraft, which the PIA will start receiving from next year in order to replace the aging fleet of Boeing 737-300. A letter of intent to this effect has already been signed for the lease of the aircraft with Aviation Lease and Finance Company (ALAFCO) of Kuwait.

Despite having no previous experience of heading an organisation unlike his experienced predecessors, Haroon, who is a B-777 pilot, was confident he would be able to steer PIA out of financial crisis.

“I have served this airline for too long,” he said, recalling his own success at the central control and airport services departments. “Three managing directors have failed and I don’t want to fail.”

He criticised the people who were suggesting the PIA to stop serving meals on domestic routes to cut costs, saying they had no aviation background. He, however, did not offer any alternative.

But Haroon minced no word in saying that the national flag carrier would not be privatised and none from ‘common employees’ would be retrenched.

The PIA, suffering from annual losses exceeding Rs13 billion, sank deeper into the quagmire of financial losses during the past 15 months as the top slot of managing director saw three changes and rising fuel prices exacerbated the operational cost. With B-747 included, the airline now has a fleet of 42 aircraft.

PIA to induct 10 aircraft in 2 years

 

[Neo]

Balochistan seeks Sindh’s help: Revenue generation​

KARACHI, May 13: The Balochistan government has sought the assistance of Sindh to increase its tax revenue which currently stood at Rs500 million compared to Sindh’s revenue of Rs9,500 million.

The assistance was sought by Balochistan’s Excise Minister Rustam Jamali during his meeting with his counterpart Mukesh Kumar Chawla in Karachi recently.

Rustum Jamali mentioned the infrastructure cess charged by the Sindh government on imports at the rate of 0.5 per cent.

He said his province had sizeable quantities of imports made through the dry port, airport and through border trade with Afghanistan and Iran.

He said his province was considering levying infrastructure cess on the pattern of Sindh to increase its revenue.

Mr Mukesh offered every possible assistance to his counterpart in generating more revenue.

Director-General Excise and Taxation Asif Marghoob Siddiqui told the Balochistan minister that the Sindh excise department had set up a linkage with the Customs through Pral to collect infrastructure cess at the import stage.

He advised the minister to enact the levy on import and contact the FBR for cess collection. However, the province would also have to make collection arrangements with the Customs posted at the borders.

Rustam Jamali also requested the Sindh minister to allow collection of motor vehicle tax on vehicles registered in Karachi.

The DG Sindh excise explained that under the MVR law, vehicle tax should be paid in the province where it had been registered.

The Balochistan excise department should request the owners of such vehicles to register their cars in the province after the expiry of one year.

The Sindh minister requested Rustam Jamali to bring the rate of excise duty on liquor at par with Sindh so that instances of smuggling could be discouraged.

The Balohcistan minister also expressed the desire to link his motor registration with the Sindh MVR to check fake or double registration.

Mr Mukesh informed his counterpart that the MVR was linked with the central customs computer network which collects data of all vehicles registered at Karachi. The data is already shared with the MVR in Lahore and Islamabad. He advised the Balochistan minister to discuss the issue with the FBR.

The meeting was also attended by Sindh’s excise secretary Naseer Jamali and director-general excise, Quetta, Raza Khan.

Balochistan seeks Sindh’s help: Revenue generation -DAWN - Business; May 14, 2008

 

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Industry revival plan urged in next budget​

LAHORE, May 13: The Lahore Chamber of Commerce and Industry has urged the government to announce a plan in the federal budget for the revival of industry crippled by the unprecedented energy crisis and increase in cost of doing business.

Releasing the budget proposals submitted to the federal government at a press conference here on Tuesday LCCI President Muhammad Ali Mian and Pakistan Industrial Associations Front chairman Mian Abuzar Shad said that the revival plan should include measures to ensure uninterrupted gas and power supply to thousands of industrial units, which have closed down due to shortage of the same.

They said that the government should also allow the industry to import its raw materials free of duty for one year. More than 250,000 industrial daily-wagers had been laid off in the provincial metropolis alone.

They said that that the government should also ensure that rate of customs duty on import of raw material is considerably lower than the rate of duty on finished products.

The industry is experiencing difficulty in marketing its products due to low rate of duty on import of finished products, they added.

The trade deficit had exceeded $16.8 billion because of flooding of markets by imported products. A large number of toys, shoes, plastic and household goods manufacturing units have closed down.

The duty-free import of raw materials could make the products of such unit competitive and help in their revival, they added.

They pointed out that the government should allow duty-free import of power generation equipment and start immediate construction of Kalabagh Dam and 35 small dams in Punjab for generating cheap hydel power.

They also stressed the need for increasing the income tax exemption limit from Rs100,000 to Rs200,000 in view of unprecedented inflation and measures to increase the number of taxpayers from the existing two million (including 63,000 sales tax payers) for increasing revenue generation.

They suggested that the revenue should be boosted by increasing the number of taxpayers through reduction of tax rates instead of recovering more tax from the existing assessees.

The plan for bringing the industrial and commercial units paying over Rs.600,000 in the form of electricity bills in a year into the tax net should be implemented.

Sales Tax rate should be reduced from 15 per cent to 10 per cent without any discrimination between the corporate and non-corporate sector assessees.

They said that 0.02 per cent withholding tax on withdrawal of more than Rs25,000 from banks should be abolished in view of growing risk in carrying cash on account of the law and order situation.

Customs valuation system should be improved to control the menace of mis-declaration and under invoicing, which was causing revenue losses of Rs40 billion per annum on imports from China alone.

Fifteen per cent sales tax levied on computer monitors and printers in 2005 should be withdrawn as it had resulted in increase ian smuggling and was impeding the growth of the indigenous IT industry.

They said that the government should take notice of large scale smuggling of grease. Only one unit was manufacturing 2,000 to 3,000 metric tons of grease annually and the rest was being smuggled from Iran and other countries. Its import should be exempted from excise duty and customs duty.

Three to four per cent value-addition formula prescribed for five sectors, including tyres and tubes, motorcycles, electric appliances, sanitary ware and steel products, adopted on the recommendation of LCCI three years back and withdrawn later, should be restored.

Duty on import of other categories of tyres should be reduced to 5 per cent and withholding tax to 2 per cent. Marble and granite should be cleared on 25 per cent prescribed customs duty rate instead of higher rates as was being done by the customs authorities at present.

Industry revival plan urged in next budget -DAWN - Business; May 14, 2008

 

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Malaysia, Romania to invest in Pakistan​

ISLAMABAD, May 13: Business delegations from Romania and Malaysia have expressed their interest to invest in Pakistan, particularly in infrastructure sector.

A team of Romanian investors headed by Mr Marciel Popa during a meeting with Infrastructure Project Development Facility (IPDF) Chief Executive Aijaz Ahmad here on Tuesday evinced its interest in participating in the energy and construction projects.

Mr Popa, who is also Pakistan’s Honorary Consul General to Romania, said that his country also wanted to evaluate potential for bolstering bilateral trade opportunities in local manufacturing.

Briefing the delegation, Mr Aijaz outlined the government policy on public-private partnerships and the opportunities available in the infrastructure development projects.

Separately, a Malaysian delegation led by Wan Mohamed Yaacob Bin Dato’ Wan Salaidin, Executive Director, Dwitasik SDN BHD, was briefed by the IPDF chief executive on the investment opportunities in Pakistan at a presentation held at the Board of Investment.

The delegation was briefed on the opportunities in the infrastructure sector especially in the housing industry under the public-private partnership model.

The delegation expressed keen interest in the public-private partnership programme and the opportunities available for the Malaysian investors in Pakistan.

Malaysia, Romania to invest in Pakistan -DAWN - Business; May 14, 2008

 

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Tajikistan offers to export power and import cement​

ISLAMABAD: Tajikistan can help Pakistan to meet energy shortfall and we are considering import of cement from Pakistan, Ambassador of Tajikistan to Pakistan, Saidov Saidbeg Boykhonovich, said Tuesday.

During his meeting with President Islamabad Chamber of Industry, Mohammad Ijaz Abbasi, the ambassador said, “electricity price in Tajikistan was very cheap as it is about three cents per kilowatt.” The ambassador informed that 21 hydel-projects were under construction in Tajikistan, including three big high power stations, which would generate great amount of electricity and Tajikistan would export electricity to neighbouring countries. He said Tajikistan had potential to export 1000MW of electricity to Pakistan.

“International organisations like IMF, World Bank, Asian Development Bank, Islamic Development Bank, European Bank of Reconstruction and Development, European Commission and UNDP were working on energy transmission line project via Phule-Khumri and Kabul areas to Pakistan,” he maintained.

Saidbeg said Pakistan was given proposal for cooperation in high power station projects, but Pakistan did not responded. He said that Tajikistan was also working on liking Tajikistan with Central Asian states and Pakistan for robust economic activity.

The envoy said there is a lot of construction work in Tajikistan and it requires cement from Pakistan, but right now there were illegal exports from Pakistan which needed to be checked and should be channelised in a proper manner. He said that Tajikistan has the potential to export Alluminium to Pakistan . He expressed the desire that both the countries should join hands in promoting agriculture sector as well.

The ambassador said that there is difficulty in getting business visas for Tajik businessmen and Pakistan should relax its visa policy.

Speaking on the occasion the ICCI chief, Ijaz Abbasi, said the trade volume between Pakistan and Tajikistan was extremely low, around $3 million that needs to be increased.

He said Tajikistan was the nearest Central Asian Estate to Pakistan but the trade between the two countries was not up to the mark. Both the government had exchanged high level official visits and signed various agreements to boost trade between the two countries.

Abbasi said that since Tajikistan is a landlocked country so it should take advantage of Pakistani ports to increasing its exports. The ICCI president said that Pakistan was short of electricity and Tajikistan could help Pakistan in energy sector to overcome the energy crises.

Daily Times - Leading News Resource of Pakistan

 

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3.1 million metric tonnes wheat procured​

LAHORE: The government agencies have procured around 3.1 million metric tonnes of wheat so far and hope to achieve the target, the officials said Tuesday. Three government departments including Pakistan Agricultural Storage and Supplies Corporation (PASSCO), Punjab and Sindh Food Departments were given tasks to procure wheat. The PASSCO has procured around 650,000 tonnes of wheat, Punjab accumulated 2 million tonnes and Sindh has purchased 450,000 tonnes. The government has set target of six hundred thousand tonnes for Sindh Food department, 3 million tonnes for Punjab and PASSCO was assigned 1.4 million tonnes of wheat. PASSCO sets around 300 centres in 14 districts including Gojra, Karorpaka, Hafizabad, Gojra, Toba Tek Singh, Okara, Pakpattan, Vehari, Khanewal, Lodhran, Bahawalnagar, Rahim Yar Khan, Muzaffargarh and Layyah for procuring wheat. Out of 1.4 million tonnes of wheat, 60,000 tonnes will be procured from Sindh, 1.33 million from Punjab and 10,000 from Balochistan.

The procurement rate set at Rs 625 per maund. The wheat procurement started in Punjab on April 15th while in Sindh on March 15th. Punjab Food department established 345 procurement centres in the province including the above mentioned districts. Punjab Food Director, Waseem Mukhtar said that the department is hoping to achieve the target, as the response from the wheat growers is positive. Ministry of Food and Agriculture (MINFAL) Development Commissioner for Crops, Qadir Buksh Baloch said, “the ministry is hoping to achieve wheat procurement target and so far the wheat procurement is good.” He said that this year more wheat has been procured as compare to same period in last year.

Daily Times - Leading News Resource of Pakistan

 

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Economic advisory council planned ​

ISLAMABAD (May 14 2008): The government is likely to form an Economic Advisory Council (EAC) for consultation on the economic policy issues, besides taking experts' views on the matters to be presented before the Economic Coordination Committee (ECC) for approval.

Sources said EAC will also serve as a consultative body for the Prime Minister on the key issues of the economy. It will prepare guidelines on different key sectors of the economy such as industrial and agriculture which were not performing up to the government expectations. Sources said the government is considering different names having lifelong experience in different economic fields to appoint as EAC members.

One member of the federal cabinet told Business Recorder on Tuesday that a proposal for setting-up EAC was under consideration, but technical issues like its size will be decided after its formal approval by the competent authority. He said EAC formation will help the government make its working on economic side more transparent and result-oriented.

The PPP government had formed EAC in its first tenure spanning from 1988 to 1990. It was headed by Feroz Qaiser. It used to vet the summaries of different ministries/ divisions before presenting them to ECC. The government deems EAC a useful forum for taking the experienced hands on board for input on key economic issues. This forum is also in place in the United States to provide guidelines to the American administration on the economic issues.

A team of retired bureaucrats is already working for PPP co-chairman, Asif Ali Zardari. It provides him input on technical and financial issues. It's believed that numbers of his team will be inducted in EAC to provide a legal cover to its working. PPP considers EAC forum of extraordinary importance due to its valuable contribution in policy-making on economic issues in its pervious regime ,besides vetting the ECC agenda to make sure that the economic issues get due consideration before a final decision.

Business Recorder [Pakistan's First Financial Daily]