Pakistan Economy - News & Updates - Archive

[Neo]

Rain, rivers inflow improve water situation ​

LAHORE (May 24 2008): Though the country still faces about 40 percent shortage of water for sowing the two main foreign exchange earning crops, cotton and rice, the water situation slightly improved on Thursday with scattered rains in the Central Punjab and rising inflow in the rivers.

The combined inflow of water in rivers Indus, Kabul, Jhelum and Chenab has reached 0.25 million cusecs mark. The position of the river inflows/outflows at Tarbela, Mangla and Chashma along with the reservoirs levels and the barrages on Thursday was as under:

Rivers: Indus at Tarbela-Inflows 111,100 cusecs and Outflows 100,000 cusecs, Kabul at Nowshera: Inflows 48,900 cusecs and Outflows 48,900 cusecs, Indus at Chashma-Inflows 146,700 cusecs and Outflows 125,000 cusecs, Jhelum at Mangla-Inflows 56,600 cusecs and Outflows 44,000 cusecs, Chenab at Marala-Inflows 35,900 cusecs and Outflows 18,900 cusecs.

Barrages: Jinnah-Inflows 156,100 cusecs and Outflows 150,400 cusecs, Chashma -Inflows 146,700 cusecs and Outflows 125,000 cusecs, Taunsa-Inflows 98,400 cusecs and Outflows 79,900 cusecs, Guddu-Inflows 53,200 cusecs and Outflows 50,300 cusecs, Sukkur-Inflows 42,700 cusecs and Outflows 11,400 cusecs, Kotri-Inflows 5,365 cusecs and Outflows nil.

Reservoirs Level and Storage: Tarbela-level 1380.75 feet, live storage 0.149 Million Acre Feet (MAF) and dead level 1369.00 feet, Manala-level 1110.70 feet, live storage 0.799 MAF and dead level 1040 feet, Chashma - level 643.00 feet, live storage 0,105 MAF and dead level 637 feet.

A Met office report said that during the past 24hours, Sargodha received 26 mm of rains, shorkot=25 mm, Johabad=22 mm, Noorpur Thal=20 mm, Sahiwal=20 mm, Okara=16, Jhang=10, Mianwali=09, D.I Khan=08, and Dir=08 mm.

The report said that westerly weather system is likely to approach upper parts of the country between 22nd to 25th May 2008. Under the influence of this system, rains/thunderstorm associated with strong gusty winds is likely to occur over Upper Punjab, Upper NWFP, Northeast Balochistan, Kashmir, and Northern Areas during the above-mentioned period. Hailstorm may also occur at few places.

Whereas in the other parts of the country that includes South Punjab, Sindh and South NWFP may experience Dust-Thunderstorm at scattered places. This weather is likely to bring some relief to present severe heat wave conditions in the country.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Growth estimates for fiscal year 2008 ​

EDITORIAL (May 23 2008): The news about the growth rate of the economy for the current financial year, though not yet officially announced, are not encouraging. According to reliable sources, the National Accounts Committee, which compiles the growth figures, has estimated that the gross domestic product (GDP) of the country grew only by 5.78 percent during 2007-08 as against the revised target of 6.5 percent, owing to low agricultural and industrial output during the year.

The original target, it may be mentioned, was envisaged at 7.2 percent which was revised downwards later on because of continuous political turmoil as well as load shedding in the country. The major victim was the agriculture sector which witnessed a steep decline, achieving only 1.49 percent growth during 2007-08 as against the envisaged target of over four percent.

The overall industrial growth was also down to 4.63 percent as against over eight percent achieved in the previous year mainly due to severe energy shortages. Within the industrial sector, the large scale manufacturing (LSM) witnessed a massive decline and achieved only 4.84 percent growth as against 8.8 percent in the previous year. The small scale manufacturing showed a respectable growth rate of 7.51 percent but it was still lower than the 7.7 percent recorded last year.

The transport and communication sector was estimated to grow by 4.42 percent as against 5.8 percent during 2006-07. The growth rates of construction sector, wholesale and retail trade and financial and insurance sectors were also lower than last year. However, the services sector was estimated to have achieved a higher growth rate of 8.16 percent compared to 7.96 percent last year. The growth rate of public administration and defence was also higher at 10.8 percent as compared to 6.9 percent during 2006-07. Social sectors also showed a respectable growth rate of 9.4 percent as against 8.5 percent last year.

The latest estimates on growth during 2007-08 are not only disappointing but suggest very clearly that the claims of the previous government that it had put the economy on a higher growth trajectory with marked resilience were not very well founded. The FY07 was the fourth successive year of sustained high growth in the economy, with the average annual growth accelerating to 7.0 percent during FY03-07 period and it was on this basis that policy planners had projected a growth rate of 7.2 percent during 2007-08.

The actual developments during the year, however, indicate that their optimism was largely misplaced. Also worrying is the fact that commodity producing sectors like agriculture and industry which generally contribute to higher level of employment, reduce the poverty level as well and drive forward the activities in other sectors of the economy, have performed very poorly this year.

A lower growth rate also explains the difficulties in other areas of the economy. Of course, price pressures are bound to intensify, trade deficit is going to widen and the revenues of the government are likely to be lower if growth rate turns out to be lower than the target. This is exactly what has happened in Pakistan with all the major indicators having nose-dived. Non-achievement of the growth target also indicates the need to be more objective and level-headed while projecting the future.

It is true that some of the exogenous factors like abnormal increase in international oil prices have contributed to the slowdown in growth rate but some of the indigenous constraints, including a very low level of investment, have always been there to hamper the realization of a higher growth rate on a consistent basis. Some of the independent analysts, including this newspaper, have always been trying to point out the fact that long-term prospects for growth in Pakistan would always be dim unless and until investment rate is enhanced to around 25 percent of GDP, political stability is restored and energy shortages are successfully overcome.

In the absence of these favourable factors, it would not be possible for the economy to yield high growth rates on a consistent basis which is essential to improve the standards of living of the people in the country. While on the subject, we would also like to advise the powers that be to instruct the bureaucracy to be as realistic as possible in estimating the growth of various components of GDP in order to avoid the bitter experience of the past. Bloating of figures for the sake of expediency induces complacency and usually leads to poor policy responses.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Fighting inflation ​

EDITORIAL (May 24 2008): These are difficult times for central banks of oil importing countries. Faced with the unusual phenomenon of skyrocketing oil and food prices impacting adversely their economies in a number of ways, they are forced to adopt highly restrictive measures to perform their primary function of ensuring price stability.

The State Bank of Pakistan (SBP) on 22nd May, 2008, responded to the deteriorating situation by announcing a series of monetary tightening measures and explaining their rationale and background in order to pre-empt unnecessary criticism on its move. The policy measures announced by the SBP were wide-ranging and encompassed almost all areas and instruments of credit and monetary control at its disposal.

The policy discount rate was increased by 150 basis points to 12 percent, Statutory Liquidity Ratio (SLR) and Cash Reserve Requirement (CRR) for deposits up to one year maturity were hiked by 100 basis points to 19 and nine percent respectively, and all banks were required to pay a minimum profit rate of five percent on saving/PLS products. The L/C margin of 35 percent was imposed on all imports except for oil and selective food items. These strong measures were meant to tame inflationary pressures in the economy by increasing the cost of credit, encouraging savings and draining off excess liquidity from the system as well as reducing import demand with a view to improving the balance of payments of the country and countering the weakening of the Pak Rupee.

The State Bank this time has not stopped at prescribing these stringent measures but has also advised the government to sterilise the expected foreign inflows by using them to settle its obligations to SBP, retire its MRTBs to help reduce the reserve money growth, and amend the Fiscal Responsibility Debt Limitation (FRDL) Act of 2005 for incorporating appropriate provisions to restrict debt magnetisation.

The reasons given by the SBP for adopting this highly restrictive approach are quite convincing. A considerable deviation of Pakistan's macro-economic outcome for FY08 from the original projections, according to the State Bank, has necessitated re-examination of the monetary policy framework that was based on different assumptions related to fiscal and external account deficits as well as output growth and inflation. "The slippages in the twin deficits and borrowings of the government from the SBP have grown persistently every month. Equally concerning is steady rise, but now a sharp spike in year-on-year indicator of food inflation.

These trends have reached a proportion that are now unsustainable and without corrective actions carry risk of creating more macro-economic complications". The immediate monetary policy tightening was necessitated by some unprecedented pressures on the economy.

External current account deficit has increased at a pace that is difficult to sustain given the slowdown in financial inflows, complications in financing of external current account deficit coupled with speculative positions in the domestic foreign exchange market, which have put enormous pressure on the exchange rate; budget deficit is projected to be significantly higher relative to the original budgetary estimates for FY08, private sector credit has grown consistently and has outpaced last year's growth despite monetary tightening in January and the combination of these developments has raised the headline inflation to an alarming level, doubling in just four months from December, 2007 to April, 2008.

More disturbing was the trend of food inflation, which has also doubled, spiking to 25.5 percent from 12.2 percent during the same period. There is absolutely no doubt that, like most other central banks, this is testing time for the State Bank and it has to take unusually tough decisions to counter high inflationary pressures in the economy and protect the solvency of the country.

Most of the oil importing countries are now registering a slowdown in their economic growth and witnessing exceptional rise in inflation which is emerging as the biggest challenge and Pakistan is no exception to these developments. In fact, while record oil and food prices in the international market are a source of great stress for almost all the countries, Pakistan's problems have been exacerbated by political uncertainty, lower foreign investment, and the unwillingness of the government to adapt its fiscal strategy to the unfolding events.

Based on current trends, the average headline inflation for the entire FY08 is forecast to be over 11 percent - almost double the target of 6.5 percent - and the situation has the potential to explode in hyper inflation if the State Bank does not watch the situation carefully and take highly pro-active measures to manage domestic demand pressures to avoid further and steeper rise in inflation.

In our view, the measures announced by the State Bank including increase in the discount rate, SLR and CRR would raise the cost of credit, reduce the credit creating capacity of the banks and be very helpful in containing the growth of liquidity in the economy. The rise in deposit rates almost across the board would encourage saving habit and shift a part of currency holding by the public to their deposit accounts.

All of this will reduce demand pressures in the economy and tame the emerging inflationary pressures; though in a volatile and uncertain situation the country is facing at present, it is difficult to quantify the net positive impact of the measures announced by the SBP. The reduced import demand coupled with higher L/C margins and relatively better return on rupee deposit accounts will also be helpful in improving the current account of the country.

However, government and businessmen are expected to be critical of the State Bank's measures for obvious reasons. We feel that the State Bank has done well to point out openly the inevitability of the measures in the current economic situation and by reminding that the real lending rates in Pakistan would still be one of the lowest in the world.

It needs to be highlighted, however, that the success of monetary tightening measures would depend critically on the fiscal strategy of the government. In its statements and documents, the State Bank has all along been urging upon the government to reduce the budget deficit to sustainable levels and finance it from sources other than the State Bank in order to soften its inflationary impact.

Upward revision in NSF rates, enhancing the attractiveness of prize bonds scheme and holding a series of PIB auctions to tap corporate savings need to be focused on to retire the T-bills holding of SBP. So far, the government has not listened to State Bank's advice and complemented its tight policy by adopting the necessary contractionary measures with the result that monetary policy is becoming increasingly hostage to the expansionary fiscal strategy of the government.

It is apparent that the government has to seek a waiver from the parliament for missing the fiscal conditionalities under FRDL Act, 2005 during 2007-08 because of much higher level of fiscal deficit than the prescribed target. While the need for fiscal prudence and a close coordination between monetary and fiscal policies to achieve the desired results is obvious, it is not clear why the State Bank has advised the government to amend the FRDL Act.

If excessive borrowings from the SBP are to be discouraged, the purpose could be served by invoking Article 9A of the State Bank Act which states that its Central Board could "determine and enforce, in addition to the overall expansion of liquidity, the limit of credit to be extended by the Bank to the Federal Government, Provincial Governments and other agencies of the Federal and Provincial Government for all purposes..." Even otherwise, we would advise the State Bank to be a little cautious in its approach and remember that its hard-won autonomy could be rolled back through a revision in its Act by a Parliament that does not like its posture and is wary of its interference in managing government accounts.

Business Recorder [Pakistan's First Financial Daily]

 

[UnitedPak]

Karachi Fish Harbour to be modernised


ISLAMABAD, May 23: The Centre and the Sindh government have agreed, in principle, to evaluate a suggestion by the Competitiveness Support Fund for bringing in an internationally renowned fish harbour management through a competitive bidding process to upgrade the Karachi Fish Harbour.

The CSF -- a joint initiative of the United States Agency for International Development (USAID) and the Ministry of Finance -- would provide technical assistance to the Ministry of Food, Agriculture and Livestock and the Sindh Fisheries Department for a better management of the harbour.The harbour has faced problems regarding fish quality and maintenance of sanitary and hygienic standards.

Last year, the CSF had conducted an analysis of various stakeholders’ needs and management options and it was agreed that the cost of interventions would be split between the Centre and the province.

As part of its assistance to Balochistan, the CSF is also preparing a brief for the fisheries department concerned on development of fish exporting and processing industries, particularly in Gwadar and Pasni regions.

The support for CSF is part of the $1.5 billion in aid that the US is providing through USAID to Pakistan over five years to improve economic growth, education, health, governance and for earthquake reconstruction.

Pakistan has a fish and seafood industry worth approximately $1.2 billion and exports alone were worth nearly $200 million while more than 800,000 people rely on the industry for their livelihoods.

The industry, however, is suffering from over-fishing that is reducing the resource base and yields, and from poor quality control that is reducing the catch value.

Karachi Fish Harbour to be modernised -DAWN - Business; May 24, 2008

 

[Bushroda]

Send him over.

Only on one condition

Once accepted, cannot be returned

 

[Neo]

Budget 2008-09: FBR intends to offer concessions to local industry ​

ISLAMABAD (May 25 2008): The Federal Board of Revenue is making comprehensive changes in the SRO.565 (I)/2006 to exempt customs duty on the import of raw materials, sub-components, components and assemblies (not manufactured locally) to facilitate the local industry in the budget 2008-09.

Sources told Business Recorder that the board intends to offer concessions to different local sectors on the recommendations of the Engineering Development Board. The on-going budget exercise is contemplating massive changes in SRO.565 (I)/2006 to put in place a concessionary regime for the local manufacturers. There is possibility that either new items would be incorporated in the notification or scope of existing exemptions would be extended to other industries specified in the SRO.

Sources said that the SRO.565 relates to the exemption of customs duty on the import of raw materials, equipment and apparatus used in the manufacture of specific goods by the local industry. The notification covers a wide-range of local sectors, availing concessionary rate of customs duty on the import of inputs used in the finished products.

However, concessions would not be extended to items "not manufactured locally" under this notification. These are goods, which are not included in the list of locally manufactured goods, specified in the relevant Customs General Order (CGO) or declared as such by the FBR or EDB.

The FBR is consistently following a policy to encourage the development of indigenous dusting. Presently, 116 industrial sectors and sub-sectors are enjoying either total exemption or reduced rate of customs duty on their inputs, sources added.

In last budget, exemption regime was extended to sectors like air-conditioners, deep freezers, refrigerators, evaporators and condensers, alkyd resins, CNG dispensers, wire and cables, diesel generating sets, disposable syringes, disposable infusion sets, dyes stuff and chemicals, electric meters, paper and paper board, printing ink, telephone sets, viscose staple fiber and gypsum board.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

'Black economy has no future': proposals to put in place documented regime under study ​

ISLAMABAD (May 25 2008): The government is examining budget proposals to convert black economy into formal documented regime for discouraging undocumented business and transactions from next fiscal year. Talking to a select group of reporters on the conclusion of Annual Plan Co-ordination Committee (APCC) meeting on Saturday.

Revenue Division Secretary General M Abdullah Yusuf said that the upcoming budget might have some proposals to convert underground economy into formal economy, as the black economy has no future. The sectors in the informal economy should voluntarily come forward as they can develop and grow more when they are part of the formal economy.

The department is making serious efforts to formalise informal economy and encourage existing sectors as well as the informal sectors to come forward and disclose their incomes under Universal Self Assessment Scheme (USAS). He said there is a possibility that some proposals might surface for the annual budget to convert black economy into formal economy and the government might consider such points for growth in economic activity.

He said undocumented economy is the main reason behind the growth of black and under ground economy, some decision are needed to convert cash-based economy into documented economy to provide level playing filed to every one. The FBR chairman said the system and procedures have been streamlined and facilitation measures are in place for conversion of informal sector into the formal sectors.

Responding to a question, he said that there is around 20 percent annual growth in increase in tax base and the board is making efforts to maintain this momentum. It is necessary to increase revenues according to the increase in tax base.

Replying to a question on making no change in income tax and sales rates in the budget 2008-09, he said that it is a budget related issue, which would be made public when final decision would be taken after final review. A number of proposals are under consideration, but it is premature to say that which proposal would be made part of the budget.

The economy is facing pressure due to POL prices, which would impact electricity and gas prices besides increasing the cost of doing business. We need to examine the correlation among all these issues while increasing the tax base and tax revenues in the next fiscal year.

However, the government would try to reduce the cost of doing business. The country needs financial resources for the development and the required growth in revenues is a must. However, while aiming at growth in revenues, we should also keep rising inflation on mind, Yusuf added.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Zong to invest $7 million in Pakistan ​

LAHORE (May 25 2008): Zong, a Chinese mobile company, Chief Executive Officer Qian Li has said that the Chinese mobile company has invested $721 million in telecom sector in Pakistan during 2007 and it would further invest $7 million in Pakistan this year.

He disclosed this at meeting with Punjab Governor Salmaan Taseer here on Saturday, says an official. Zong Chief Operating Officer Zafar Usmani besides telecommunication experts Li Ludang, Babar Ali Sayed and Nasir Khan were also present on this occasion. The head of the delegation Qian Li informed the Governor that 2000 transmission towers of China mobile are already working in Pakistan whereas 350 new transmission towers of China mobile will be installed in Pakistan this year.

Welcoming the Chinese investment in telecom sector, the Governor said at present 61 million people in Pakistan are taking benefit from mobile technology of telecommunication. He also said Peoples Republic of China is one of our best friends and promotion of relationship in every walk of life with this neighbouring country is an important feature of foreign policy of Pakistan. "We wanted to further expand the scope of technology transfer between China and Pakistan," he added.

The Governor expressed the hope that the huge investment in Pakistan by China mobile will leave positive impact on Pakistan's economy. He termed it a good omen that this firm wanted to establish regular service center for telecom network coverage at Punjab University. "A suitable site will be provided in Punjab University for this purpose," he added.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Interest rate rise to hit economic growth: Saifullah ​

PESHAWAR (May 25 2008): Senator Salim Saifullah Khan has criticised the increase in the rate of interest by the State Bank of Pakistan, saying that it would further plummet the growth of national economy. Talking to journalists here on Saturday, he said that unwise measure of increase in bank rate has been taken at a time when global and national economy is faced with financial crises.

The developed countries have lowered the rate of interest to avoid the emerging recession in the global economy. He said that United States has reduced the rate of interest, whereas Japan has brought it down to 0.50 percent to achieve high rate of economic growth.

But, on the other hand, the bank rate in Pakistan has been kept at a high level of 12 percent and now an increase of 1.5 percent would badly affect the productivity in the major sectors of economy.

"The interest rate of 14 percent will enormously increase the cost of production and bring a substantial rise in the prices of essential commodities," he argued. He said that enhancement of bank rate would wipe out the already declining margin of profit in small business and discourage trade and industry, resulting in unemployment in the country.

Salim said that Islam forbids interest on loans and it would be appropriate that only service charges of 2.5 percent are levied on bank loans. Disagreeing with the stance that increase in interest rate was necessary to curb the unfavourable trend in the stock market, he said that the problem could be tackled to some extent by imposing tax on stockbrokers, who are earning billions of rupees--for nothing.

He said that raising interest rate for stabilising the stock market was an imprudent monitory policy, which was bound to affect both foreign and domestic investment. It would intensify depreciation of local currency against dollar and other major currencies and accentuate the flight of capital, he added.

He said that the quantum of foreign debt would go up and rise in the import bill on account of import of machinery and petroleum would render the foreign trade gap unmanageable. He said that the government had thrice increased the prices of POL products, which had aggravated the inflationary pressure and the pursuit of imprudent monetary policy would exacerbate the hardships of common man, who is hard hit by the skyrocketing prices of essential consumer goods.

He proposed the formation of a crisis management team under the direct supervision of Prime Minister to constantly monitor the prevailing economic situation in the country. He said that the rate of economic growth was 7 percent last year, but the available economic indicators suggest that it would come down to 6 percent during the current year.

He asked the leadership of political parties to take cognisance of the increase in the interest rate and educate the public opinion about its harmful effects on the poor masses. He urged the government to withdraw the increase in the bank rate, in national interest.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

'Pakistan should attract investors to leather sector' ​

LAHORE (May 25 2008): Persistent economic growth peaked by rising wages in China has forced some global brand shoemakers to consider switching their business possibly to India. In this emerging situation, Pakistan government needs to wakeup with steps to attract these potential investors into Pakistan.

Pakistan produces best quality of leather exports its major chunk to fetch foreign exchange just below US $1 billion. The amount could be increased manifold, if special focus is given to the exports of leather products like shoe, bags, suitcase, lady hand purse and belts.

Industry sources informed Business Recorder that some renowned American and European shoe makers including Bali of Italy, Luis Vatuan of Spain, Gucci of France may wrap their manufacturing units from China. Keeping in view the superb quality of indigenous leather and low wages rate in Pakistan, foreign shoe manufacturers could join the local leather sector by setting up joint ventures with the local shoemakers.

However, the law and order situation always remained a matter of concern for the foreign businessmen and the government should handle the situation on a priority basis, the sources added.

Export of leather and leather products from Pakistan remained encouraging during the three quarters of the financial year 2007-08, has potential to fetch substantial foreign exchange to the country provided, some genuine demands of the industry are met by the government in the forthcoming budget.

Moreover, Pakistani leather sector has so far performed well amidst strong competitors like China, India, Bangladesh and Italy and registered an increase of 26.17 percent during the period of July-March 2007-08 to US $892,185 million as compared to $707.678 million dollars of the corresponding period of 2006-07, the sources added.

The sources further said India is emerging as big importer of Pakistani leather gradually increasing its export volume. Presently, there are only 14 units who had achieved ISO-14001 while only two combined treatment plants are working in Sialkot and Karachi whereas only one tannery has set up secondary treatment plant to comply with the NEQS.

Further, the sources urged the government to help the industry out of the Export Development Fund for setting up of treatment plants. 'The government should provide financial support for research and development to get the latest technical assistance by the tanning industry because of new trends in international markets', they added.

Furthermore, tanners are unable to compete with the world market because of high costs and need the government's support imperatively to arrange professional expertise for upgrading the leather industry. Support can be in kind instead of cash subsidy, the industry sources added.

Infrastructure facilities like undisturbed supply of gas, electricity, water, proper security arrangements, better roads, clean environment, facility for dispatch of export goods are needed for uplifting the tanning industry. This will also attract foreign investment in Pakistan specially in view of shifting of industries from Europe.

The finished leather exporters have been contributing a lot towards Export Development Fund. The government should at least spent a little amount on infrastructure development that was collected from the leather sector.

It should also provide financial assistance to the individual tanneries needing in-house effluent treatment plants to meet the demand of foreign buyers on international standard as well as to meet NEQS and ISO Certification criteria. However, they rejected the government's policy of providing mark-up cost of loan for the said plants up to six percent out of EDF.

Moreover, they pointed out the deteriorating condition of the National Institute of Leather Technology (NILT), Korangi Industrial Area, Karachi stressed the government should provide regular funding to help carrying out human resource development by providing qualified faculty and laboratory of international standard.

Huge funds for running of this institute are needed imperatively that ultimately will help industry to improve, to hire personnel to help increase the production, efficiency and quality of products enabling the sector to use our resources and raw material in a better way, the sources said.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Call for benefiting from Australian expertise in agriculture sector ​

LAHORE (May 25 2008): Punjab Agriculture Secretary Javed Iqbal stressed need to tailor Australian expertise/assistance by providing citrus germplasm according to field requirements in the province. He made this observation while speaking at a meeting about increasing citrus production through improved orchard management techniques with Australian assistance under Agricultural Sector Linkage Programme.

Dr Mubarak Ali, Chief Executive Punjab Agriculture Research Board; Director Orange Research Institute Sargodha, Naseem Ahmad Malik, Director Crop Reporting Service, Rafiq Akhtar, Director Agricultural Information Punjab, Natiq Hussain Chief (Planning and Evaluation) and Australian experts working under Agricultural Sector Linkage Programme in Pakistan attended the meeting.

The Australian experts briefed about objectives / targets of the project meant to improve nursery production practices and to introduce germplasm for extending marketing season of citrus fruits. The Director Orange Research Institute Sargodha told the meeting that 23 citrus varieties and eight root-stocks have been provided by Australia, out of which three root-stocks are new for Pakistan.

The meeting was briefed about raising of containerised nurseries of citrus in screen house at University of Agriculture, Faisalabad. The secretary underlined that special focus should be to produce disease free and containerised nursery production techniques along with enhancing citrus production capacity of Pakistan.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Seafarers' job losses cause $25 million fall in remittances per year ​

Capt. Anwar Shah

ARTICLE (May 25 2008): Pakistan's economy is sagging due to the turmoil of 14 months, causing instability, rising commodity prices and trade deficit which may go up to 14 billion USD. The EAC is striving to overcome the financial crisis. We pray for its success and most importantly implementation of its recommendations, as it has become a culture to avoid implementation on one pretext or the other.

Rice export has stopped due to various restrictions. It is the third largest export earning commodity after remittances of expats and cotton products. Cement exports have done well and may touch 7 mill tons mark by the end of the fiscal year. We have gained access to the Indian market by exporting 6 lakh tons of cement.

The financial managers don't have many avenues except to look for loans/grants/deferred payments and increase in expats remittances. The flow of FDI is nominal, on the contrary money is fleeing out due to harsh statements. The only avenue open is to increase the export of young Pakistani human resource to bridge the gap to some extent.

I know about maritime sector world-wide which is facing serious shortage of trained officers and we must fill the vacuum before India,. China and Philippines seize the opportunity. Indian seafarers remit 1 billion USD, whilst Philippine seafarers are remitting 4/5 billion US dollars. Pakistan is situated in an area, which has been famous for supplying hardworking, competent and efficient seafarers since over 150 years.

It can be said with great pride that our seafarers not only from the coastal belt of Karachi but also from Northern areas had been manning foreign flag ships of reputable companies of various nationalities since long. At present we have around 20,000 registered seafarers.

ADVANTAGES OF EMPLOYING PAKISTANI SEAFARERS Our seafarers meet all the requirements related to qualification and skills. For example, Pakistan is listed in the IMO's 'White List' since the inception of this list. This essentially means that Pakistan has given full and complete effect to the International Convention on Standards of Training, Certification and Watch keeping for Seafarers, 1978, as amended (commonly known as STCW -95).

Pakistan has a well-established system of training, examination and certification of seafarers. There are several training institutes, both in public and private sector, which run government approved training courses. The examination system for the issuance of certificate of competency (CoC) to our officers is in place since the early 1960s.

Pakistani CoC is considered equivalent to those issued by many Commonwealth and other developed western countries. For example, UK issues their Certificate of Equivalence to holders of Pakistani CoCs. Accordingly, holders of Pakistani CoC are in great demand and enjoy considerable respect in the international maritime employment market. We are very proud that our officers hold an upper end market niche in this very competitive market.

Pakistani seafarers also hold a computerised seafarers identity documents, issued to meet the requirements of International Labour Organisation's Convention C-185. Most of our seafarers also hold computerised Seaman Service Book. Pakistani seafarers are also issued with a computerised and machine-readable passport.

All these robust identity documents ensure that the identity of seafarers can be verified and traced without any hassle. Another advantage, which all Pakistani seafarers enjoy, is their ability to communicate in English. Since the last many years English language has become the lingua franca of the shipping industry.

HURDLES IN THE EMPLOYMENT OF PAKISTANI SEAFARERS Despite all the advantages listed above, Pakistani seafarers are gradually losing their share in the international employment market. An estimated 7300 Pakistani seafarers were employed at one time on board during the year 2001.

In 2005, this figure was reduced to about 5900. This loss of employment can be easily translated to about US $25 million annually. The data so far available for 2007 is also not encouraging. This is a bad situation and needs to be arrested urgently.

One of the major factors in losing our due share in the international employment market is the difficulty and delays in the issuance of visas to our seafarers, particularly after 9/11.This is no doubt due to negative image problem that unfortunately, all Pakistanis are facing nowadays due to adverse international propaganda.

CURRENT INTERNATIONAL EMPLOYMENT SCENARIO There is a requirement of around 1.2 million seafarers to operate the international fleet, which forms the backbone of international trade.

As per the latest available information, there is a current shortage of around 10, 000 officers internationally. The irony is that we are losing our employment share in a growing market: a very serious issue in terms of marketing.

On the other hand the share of Philippines and India currently stands at around 300, 000 and 60, 000 respectively and this number is still on the rise.

STEPS NEEDED TO INCREASE THE EMPLOYMENT SHARE OF OUR SEAFARERS: It is imperative that the issue of difficulties and delays in the issuance of visas to our seafarers is taken up by MoFA with foreign missions in Pakistan and a viable solution is found as soon as possible. For example, pre-screening and pre-scrutinising of our seafarers, by major foreign missions in Pakistan, which should not be difficult at all.

Marketing efforts need to be made by our missions abroad, particularly in major seafarers' employment centers, such as Greece, Cyprus and Singapore etc. It may also be a sound strategy to send delegations consisting of Pakistani manning companies under the patronage of GoP to visit these places for the marketing of our seafarers.

CONCLUSION It is suggested that the Ministry of Ports and Shipping may pursue the employment of Pakistani seafarers on board Greek flag ships as well as ships owned by Greek and Cypriot ship owners but registered under other flags, of which there is considerable number, with Greece Maritime Authority.

It may be emphasised to Greece Maritime Authorities that Pakistani seafarers, besides the advantages listed above, are also very cost competitive and there had not been a single maritime security incident onboard a ship where any Pakistani seafarer was found involved.

The Government must give a target to the ministry to double the present employment within twelve months, so that remittances on this account may double up to 140 mill dollars with continued efforts to target min 0.5 billion USD. This employment avenue is still wide open and we must take our slice by seizing the opportunity. We will be creating employment and at the same time helping our exchequer.

(The writer is Ex. Additional Secretary & Director General Ports & Shipping, Ex. Chairman Gwadar Port, Member Board Port Qasim Authority, Governor World Maritime University Malmao (Sweden), Member IMO Secretary General's Panel of Experts, London.)

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Balochistan seeks Rs41bn budgetary allocation ​

Sunday, May 25, 2008

ISLAMABAD: The Balochistan government has protested over reduction in the proposed budgetary allocation from the Centre for development schemes to Rs22 billion in the budget for 2008-09 from Rs37 billion in outgoing fiscal 2007-08 during the Annual Plan Coordination Committee (APCC) meeting held here on Saturday.

A representative from Balochistan stated that the sense of deprivation would be aggravated in the least developed federating unit of the country with the existing state of affairs.

Balochistan’s coalition government, led by the PPP, has demanded a share of Rs41 billion from the federal government under the Public Sector Development Programme for the 2008-09 budget.

The government had envisaged a budgetary allocation of Rs37 billion for the outgoing financial year 2007-08, compared to the proposed allocation of Rs22 billion this year, indicating a decline of Rs15 billion in Balochistan’s share.

However, Deputy Chairman Planning Commission Salman Farooqi assured the Balochistan government that the government would jack up its share in the PSDP after getting the approval from Prime Minister Syed Yousuf Raza Gilani during the upcoming NEC meeting, scheduled to be held on May 30.

“Balochistan is among the priority areas for development and its financial needs will be met,” Salman Farooqi told reporters after the two-day APCC meeting ended here on Saturday.

Earlier, Balochistan’s Finance Minister Mir Aasim Kurd told reporters outside the venue of the APCC meeting that that there were 186 ongoing development schemes with a total cost of Rs240 billion in the province. The government has spent only Rs91 billion on the development schemes of Balochistan and if they add Rs22 billion, the total spending would touch Rs113 billion by the end of the next financial year.

He said the remaining amount in the shape of carry-forward, to the tune of Rs187 billion, out of Rs240 billion, would result in escalating the cost and delays in the completion of ongoing projects.

He also said the federal government did not fulfill its commitment to provide Rs8 billion to the flood victims in Balochistan. “We have raised this issue during the APCC meeting,” he added.

He further said that the federal government provided over Rs100 billion to the earthquake-affected areas in the AJK and NWFP, but it remained unmoved in the case of eliminating the miseries of Balochistan’s flood affected.

However, sources said that the ongoing development schemes in Balochistan with the existing pace of the allocation of resources required the next 10 years for completing the ongoing work.

Provided, that the provincial government does not initiate a new scheme during this period.

Balochistan’s Chief Minister, the sources said, is likely to raise the scarcity issue of the proposed resource allocation during the next NEC meeting, which will meet with Prime Minister Yousuf Raza Gilani in the chair.

Balochistan seeks Rs41bn budgetary allocation

 

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KSE sees record fall of 1,221 points in a week ​

Sunday, May 25, 2008

KARACHI: The rise in policy discount rate by the State Bank of Pakistan played havoc on Karachi bourse, as KSE 100-share Index tumbled 1,221 points or 8.6 per cent sinking to eight months low at 13,012 points during the week ended on May 23.

This is the largest fall in a single week for 100-Index in KSE history. Historical slump of this scale, but lower than the current one, were either recorded in March 2005 and March 2006 crises.

The free-float market capitalisation based 30-Index sank by enormous 1,608 points or 9.5 per cent on week on week basis and ended at 15,275 points on the weekend.

In line with the overall negative performance of the market, the overall market capitalisation was poured down by about Rs370 billion and stands at Rs4.004 trillion.

The average week turnover in the ready market also shrank to 163 million shares as compared to 184 million shares last week.

Bilal Hameed at JS Research said that weak economic numbers, 150bps discount rate increase and mounting political uncertainty with rifts between the presidency and the government, caused the KSE-100 index to dive down. Moreover, further development on the capital gain tax issue implying its imposition in Budget FY09 also dented market sentiments in the outgoing week, he added.

Foreign capital flies: The country’s current account deficit soared to about 7.3 per cent of GDP during 10 months (Jul-Apr) of fiscal year 2008. In addition, the Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI) numbers showed a decline of 17 per cent and 32 per cent, during the same period, respectively. These economic imbalances and political unrest resulted in S&P and Moodys downgrading Pakistan’s sovereign ratings spoiling investors’ confidence. In addition, media reports on Friday regarding rifts between PPP and the government added to the negative sentiments on KSE, Hameed commented.

During the week, FBR chairman suggested imposing capital gain tax on shares transactions. Moreover, SECP has also proposed to implement this tax on investments held for less than 12 months this further dampened sentiments for investing in the equity market, he added.

Banks lead losers: The imposing of a minimum deposit rates on PLS accounts bodes negative for large banks since they have low cost saving accounts in their books.

This caused major sell off in the banking sector and its market cap decline by 12 per cent on week-on-week basis.

Otherwise, all the sectors in limelight including energy, telecom, fertilizer, cement and textile fell straightaway down.

Those leveraging sectors, which are availing long term financing for their business expansions like cement, fertilizer, automobile and textile also took the brunt of aggressive rise in key discount rate by SBP to 12 per cent from 10.5 per cent with effect from May 23.

The energy stocks are having potential to drive market out from crisis, as hovering of international oil prices near and around peak levels can revive the positive sentiment. But, if psychological sell-off of shares continue in the next week then market has a room for further correction.

CFS rate goes high: With the roll over week starting on coming Monday, the open interest to be settled currently stands at Rs23 billion. CFS investment has fallen to Rs44.5 billion with CFS rate jumping to 17.8 per cent.

Weekly Movement in Blue Chips

Symbols Open (Rs.) Close (Rs.) Difference

on Monday on Friday (Rs.)

DGKC 93.98 80.28 -13.7
ENGRO 316 288.8 -27.2
FFBL 38 34.22 -3.78
HBL 249 220.21 -28.79
LUCK 126.5 110.44 -16.06
MCB 370 320.85 -49.15
NBP 210.1 182.22 -27.88
OGDCL 129.3 126.35 -2.95
POL 418 393.59 -24.41
PPL 265.7 253.65 -12.05
PSO 502 467.89 -34.11
PTCL 43.9 41.27 -2.63

KSE sees record fall of 1,221 points in a week

 

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DI dawdling in telecom sector ​

KARACHI: The foreign direct investment in the telecom sector will not be able to match even half of the total investment in the previous fiscal year figures.

According to the data released by Pakistan Telecommunication Authority (PTA) the FDI in telecom sector has declined during the first nine months of the current fiscal year.

Statistics shows that Pakistan telecom sector has received $1824.3 million FDI during 2006-07.

While this year, in the first nine months, the figures are not impressive at all as in the first quarter of the current fiscal year it was $363.9 million and in second quarter it came down to $290.4 million followed by a further decline in the third quarter with only $156.6 million.

Since 2003-04 the telecom sector is one of the major contributor in brining foreign direct investment in the country. In 2003-04 telecom sector contribute 21.13 percent of the total FDI that further grew in 2004-05 with 32.44 percent.

While in 2005-06 the telecom sector out numbered all other sectors by contributing 54.11 percent in total FDI as the two telecom giants, Telenor and Warid entered the market. In 2006-07 the contribution came down to 37.71 percent and it seems that it would further come down by the end year.

At present there are six cellular operators in Pakistan and all of them are now expanding their business in the far flung areas of the country as all of them have already invested in their basic infrastructure.

“Although all of them are still investing in Pakistan but the current investment could not be matched with their initial basic investment,” said an analyst.

Currently all six cellular companies have over 85 million subscribers and are aggressively working to expand their network to grab the market share.

Daily Times - Leading News Resource of Pakistan