Pakistan Economy - News & Updates - Archive

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5.5 percent GDP growth for 2008-09 not realistic ​

ISLAMABAD (June 09 2008): The National Economic Council (NEC) has fixed exaggerated GDP growth target at 5.5 percent for 2008-09, basically for boosting the nation's moral up in the ongoing political turmoil and imminent economic slowdown.

Sources said that NEC, which met here on June 2, with Prime Minister Syed Yusuf Raza Gilani in the chair, held threadbare discussion on GDP growth rate achieved in 2007-08, and projected for the next fiscal year.

They said State Bank of Pakistan (SBP) Governor Dr Shamshad Akhtar was highly critical to what she declared 'Unrealistic approach' towards GDP growth. The National Economic Council had scaled GDP growth rate down to 5.8 percent for the current fiscal year, besides setting 5.5 percent target for 2008-09.

The SBP governor contested the GDP growth rate for the current fiscal year as well as the next one. She claimed that achieved GDP growth rate in 2007-08 was less than 5.8 percent. She demanded that instead deceiving the nation by setting exaggerated target the government should come up with a realistic and accurate GDP growth rate for the next fiscal year.

The SBP governor said: "Setting of incorrect GDP growth target when all the economic indicators were showing negative growth would not serve any purpose."

Dr Shamshad Akhtar's viewpoint was seconded by many others in the meeting. Those who supported her on the issue also demanded realistic and achievable GDP growth target for 2008-09, besides announcing actually achieved for the outgoing fiscal year.

The government had initially set GDP growth target for the current fiscal year at over 7 percent. However, after dismal performance of major sectors of the economy in the first half of the current fiscal year the target was reduced to 6.5 percent. The NEC further reduced it to 5.8 percent for the current fiscal year.

The World Bank and the International Monetary Fund (IMF) also have been questioning the official GDP growth rate. The officials of both international donor agencies, who visited Islamabad just a few days before the NEC meeting, doubted that Pakistan was doing good enough to help it achieve even over 5 percent GDP growth rate in 2008-09. An IMF fact-finding mission, which visited Pakistan from June 17 to 28 sharply disagreed with the government officials on the GDP growth rate. Its mission claimed that Pakistan's growth rate was even less than 5 percent this year.

Business Recorder [Pakistan's First Financial Daily]

 

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Economic survey on June 10 ​

KARACHI (June 09 2008): Federal Minister for Finance Syed Naveed Qamar on Sunday said that economic survey will be released on June 10 and post budget conference will be held on June 12, a private TV channel reported.

Finance minister said that textile policy would be announced separately. Talking about the privatisation policy finance minister said that privatisation policy would be implemented vigorously. Syed Naveed Qamar said that government is taking steps to reduce budget deficit, the channel added.

Business Recorder [Pakistan's First Financial Daily]

 

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World Bank and IMF predict 3.5 percent growth in fiscal year 2009 ​

ISLAMABAD (June 10 2008): The World Bank and the International Monetary Fund have forecast a growth rate of 3.5 percent in 2008-09, while the Planning Commission has projected a 6.5 percent growth, well-placed sources told Business Recorder here on Monday.

"Pakistan should not see the world through the eyes of the Planning Commission," sources quoted the IMF mission as saying during recent meetings with the officials of the Finance Ministry.

"The WB and the IMF are not expecting more than 3 or 3.5 percent GDP growth next fiscal year, however, the government does not agree with this assessment," the sources added. The WB and the IMF missions were in Islamabad for almost a month in May to analyse the performance of the Pakistan economy; and based their assessment to determine the conditionalities that would be imposed on lending from the international financial institutions.

The sources said that the IMF had set an impossible conditionality for the government ie to bring the deficit down to 4.3 percent which would then allow the World Bank to release the loan of $500 million for balance of payment support. Another conditionality, reportedly, was for the government to desist from subsidising domestic fuel prices.

"These agencies are pressurising the government to adopt a formula for automatic fuel adjustment from July onwards, and increase electricity tariffs substantially," the sources maintained. The WB and the IMF missions pointed out that since furnace oil prices have reached Rs 45,000 per ton and per unit electricity generation cost has reached Rs 9 kWh, the government must minimise the subsidy. These agencies also urged the government to ensure food security and finalise a policy in this regard.

The sources said that the government has been asked to take measures for fiscal adjustments so that current account deficit could be brought to an acceptable level. Allocations for the Public Sector Development Programme (PSDP) was also one of the areas of concern for both the missions as according to them some of the allocations were unaffordable, the sources added.

Business Recorder [Pakistan's First Financial Daily]

 

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External debt, liabilities reach $46bn ​

Tuesday, June 10, 2008

KARACHI: Country’s total external debt and liabilities have swelled to $45.926 billion till end of March 2008 as compared to $42.931 billion in the same period of year 2007.

Total foreign debt grew to $44.596 billion while total foreign exchange liabilities slightly went down to $1.33 billion which was recorded $1.342 billion on March 31, 2007.

Public and publicly guaranteed debt rose to $40.692 billion against $37.836 billion in the corresponding period of last year. Public debt increased to $40.479 billion including medium and long term debt for more than one year surged to $39.865 billion in which Paris Club grew to $14.527 billion which was witnessed at $13.430 billion on March 31, 2007.

Debt of multilateral agencies augmented to $21.378 billion from $19.768 billion in the same period of last fscal, while other bilateral debt increased to $1.113 billion from $999 million and military debt remained stagnant at $48 million whereas commercial loans and credits also stayed pegged at previous year’s $120 million. Debt acquired through euro/sukuk/global bonds remained unchanged at$2.650 billion.

Country’s short-term loans for the period of less than one year also rose to $614 million from $601 million of last year. Short term publicly guaranteed debt slightly came down to $213 million from $215 million.

In short term borrowing country has to return $142 million to multilateral agencies besides of $64 million to other bilateral countries, and $4 million as commercial loans and $3 million for Sandak Metal Bonds.

As of March 31, 2008 the private non-guaranteed debts for more than one year stood at $2.215 million, which was $2.122 million on corresponding period of last year. Private non-guaranteed bonds surged to $275 million from $250 million and loans obtained from IMF increased to $1.414 million against $1.381 million in the same period of pervious year.

Foreign exchange liabilities including payments to be made against specialUS dollar bonds, foreign currency bonds (NHA/NC), National Debt Retirement Program, Central bank Deposits, NBP/BOC deposits and other liabilities (SWAP) FEBCs/FCBCs/DBCs increased to $1.330 billion.

External debt, liabilities reach $46bn

 

[Neo]

5.8 percent GDP growth in 2008 ​

ISLAMABAD (June 10 2008): The Finance Ministry has projected 5.8 percent growth in GDP in 2007-08, with 5.4 percent in manufacturing, 4.8 percent in large scale manufacturing (LSM), and only 1.5 percent in the agriculture sector.

ECONOMIC SURVEY HIGHLIGHTS:

-- Debt burden rises to 56 percent;

-- Agri growth declines to 1.5 percent;

-- Budget deficit to be 4.7 percent of GDP;

-- Inflation at 10.5 percent;

-- External inflows decline to 82.2 percent;

-- Subsidy on fuel to cost Rs 175 billion;

-- Per capita income shows a rise of 18.4 percent;

-- Finance and insurance show 17 percent growth;

-- Investment decreases to 21.6 percent of GDP;

-- National savings rate declines to 13.9 percent;

-- Forex reserves show depletion of $4.1 billion;

-- Assets of banking system registers net expansion of Rs 203.1b, to Rs 5155 billion;

-- There has been reduction in poverty headcount;

-- Credit to private sector grows while portfolio investment shows deceleration.

According to the 'Economic Survey 2007-08', to be unveiled on Tuesday by Finance Minister Naveed Qamar, along with Special Secretary, Finance, Dr Ashfaque Hasan Khan, in 'P' Block auditorium of Pak Secretariat, public debt burden increased from 55.2 percent of GDP to 56 percent during 2007-08 due to huge burden of deficits.

In addition, public debt, as percentage of GDP, rose for the first time in 10 years as borrowing requirements for the budget deficit rose to Rs 683.4 billion during the outgoing financial year.

At the end of the current fiscal year, budget deficit is expected to be 4.7 percent of GDP, whereas average inflation has been projected at 10.5 percent. The country's budget deficit is expected to be Rs 683.4 billion, or 6.5 percent of the GDP--highest in the past 10 years.

Actual interest payments were Rs 503.2 billion for the outgoing fiscal year, against the budgeted figure of Rs 375 billion. Pakistan, which according to the previous government was considered one of the fast growing Asian economies, is now showing 13.3 percent increase in its debt, totalling $45.9 billion--by the end of March, 2008.

The figures released by the Economic Survey are not for the entire fiscal year, but up to March this year. According to the Survey, during the outgoing fiscal year M2 growth was entirely attributable to government borrowing for budgetary support, and Net Domestic Assets (NDAs) of banking system increased by Rs 656 billion due to borrowing for deficit financing. Net Foreign Assets (NFAs) of banking systems contracted by Rs 289 billion for 2007-08.

The Survey further shows that external inflows were adversely affected during the year, declining to Rs 119.4 billion, an overall 82.2 percent, or Rs 564 billion, of the budget deficit financing came from domestic sources, like banks and other financial institutions.

Subsidy on fuel will cost Rs 175 billion to the national exchequer despite recent increases in the prices of oil products by the present government. A massive slippage of Rs 324 billion has been recorded under other expenditures, and the Public Sector Development Program (PSDP) has been slashed by Rs 100 billion to rein in the deficit.

In the agriculture sector, sugarcane crop registered the highest ever production, of 63.9 million tons, while rice production showed a modest growth of 2.3 percent, to 5.6 million tons.

Cotton crop production has been estimated at 11.7 million bales against 12.9 million bales of 2006-07, and wheat crop production is estimated at 21.7 million tons against 23.3 million tons in the preceding year. The wheat figure remains controversial.

Per capita income showed a rise of 18.4 percent, from $925 to $1085, and real private consumption expenditure rose by 8.5 percent. Finance and insurance sector have registered a stellar growth of 17 percent, whereas external inflows were adversely affected, declining to Rs 119.4 billion.

Growth of small scale manufacturing sector has been recorded at 7.5 percent. The Survey further shows that investment decreased to 21.6 percent of GDP in 2007-08, from 22.9 percent in 2006-07. National savings rate declined to 13.9 percent from 17.8 percent of last year.

Pakistan's forex reserves have shown a significant depletion, of $4.1 billion, during three quarters of the outgoing fiscal year and, at the same time, assets of the banking system registered net expansion of Rs 203.1 billion, to Rs 5155 billion.

The Survey has shown that domestic debt increased by 15.7 percent--till end-March 2008--and current account deficit rose due to large trade deficit and outflow from services and income accounts of last year.

There has been reduction in poverty headcount, from 23.94 percent in 2004-05 to 22.32 percent in 2005-06. Pakistan's total population was estimated at 160.9 million.

Total labour force (ten years and above) was estimated at 111.39 million; national average of labour force participation rates total were estimated at 45.2 percent. Pakistan's population has been forecast to double by 2045, if it continues to grow at the current rate of 1.8 percent.

Credit to private sector grew by 14.9 percent due to bridge financing requirements to settle claims of oil marketing companies (OMCs) and independent power producers (IPPs). Portfolio investment shows large deceleration, whereas mutual fund industry grew from Rs 25 billion to Rs 313 billion.

Business Recorder [Pakistan's First Financial Daily]

 

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No power cut for textile industry from 10th ​

Tuesday, June 10, 2008

LAHORE: The government has announced a special relief package for the industry and tube-wells under which a major chunk of the export-oriented industry will be exempted from loadshedding from June 10.

The Water and Power Development Authority would also increase electricity supply to other sectors. This has been arranged through system optimisation, which would result in additional generation of 1,500 megawatts

The relief package was unveiled in a meeting presided over by Federal Water and Power secretary at the WAPDA House here on Monday. Pakistan Electric Power Company managing director and other senior officials, representatives of the industry as well as agriculture attended the meeting.

As per details of the package, the textile industry, fed through independent or grouped 11KV feeders, will now be provided electricity throughout the day against earlier closure of six hours every day during peak hours.

Power-looms will be provided power for 18 hours a day, with at least two continuous spells of power supply for six hours each against earlier outage of up to 10 hours in certain parts of the country.

Flour and ghee mills will be provided electricity for 18 hours daily with two spells of 8 hours each against earlier shutdown for 6 to 10 hours daily. All types of processing industries will be supplied electricity continuously throughout the day. However, they will reduce their running loads during peak hours from 1800 to 2200 hours.

Pre-dominantly industrial feeders will be provided electricity for 18 hours, preferably with closures between 1800 and 2400 hours daily, against earlier cut of 6 to 10 hours. Small and medium enterprises (SMEs) will specifically benefit from this measure. Agriculture tube-wells will be provided continuous power supply at night to get special rebate tariffs against earlier continuous supply for only 6 to 8 hours.

No power cut for textile industry from 10th

 

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Wapda announces package for agriculture and industrial sectors ​

LAHORE (June 10 2008): Export-oriented textile, spinning and flour industries and the agriculture sector have been declared exempted from power cut on June 10, 2008, while electricity supply will also be increased for other sectors, including agriculture tube-wells.

This has been arranged through system optimisation, which would result in additional generation of 1,500 mw. Federal Secretary for Water and Power, Ismail Qureshi, announced on Monday a special relief package for the textile industry and tube-wells through which a major chunk of export-oriented industries will be exempted from the power cut beginning on June 10.

The package was unveiled in a meeting by Ismail Qureshi with Akbar Sheikh, Chairman, All Pakistan Textile Mills Association, Punjab Zone, here on Monday. Shafqat Elahi, Chairman, Aptma Energy Committee Punjab zone, Shahid Mazhar Senior vice chairman Aptma Punjab Zone Managing Director Pepco Fazal Ahmad Khan Tahir Basharat Cheema, DG Energy Conservation were also present in the meeting.

As per details of the package, textile industry, fed through independent or grouped 11-kV feeders will now be provided electricity throughout the day for 24 hours against the earlier closure of 6 hours each day during peak hours. Power looms will be provided supply for 18 hours every day, with at least two continuous spells of power supply for 6 hours each against the earlier closure of up to 10 hours in certain parts of the country.

Flour and ghee mills will be provided electricity for 18 hours daily with provision of two spells of 8 hours each against the earlier closure of 6 to 10 hours daily. All types of continuous process industries will be provided continuous supply throughout the day. However, they will reduce their running in the peak hours--from 1800 to 2200 hours.

Predominantly industrial feeders will be provided electricity for 18 hours, preferably with closures between 1800 and 2400 hours daily, against the earlier closure of 6 to 10 hours. Small and medium enterprises (SMEs) will specifically benefit from this measure.

Agriculture tube-wells will be provided continuous power supply during night-time daily to avail of special rebated tariffs against the earlier continuous supply period of only 6 to 8 hours.

Akbar and Shafqat, talking to Business Recorder, praised the decision, saying that uninterrupted supply of power to the industrial sector would boost the production and industrialists would conveniently achieve the export target of $10 billion. Akbar said the government was moving in the right direction of action and giving top priority to the agriculture and commodity producing sector which is need of the hours.

Business Recorder [Pakistan's First Financial Daily]

 

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Export-related industry to get more electricity​

LAHORE, June 9: The government on Monday announced a special package under which major export-related industries would be exempted from loadshedding with effect from Tuesday.

Power supply will also be increased to tube-wells used in irrigation.

The package was unveiled at a meeting presided over by the federal secretary for water and power at the Wapda House.

Pepco managing director and representatives of industry and agriculture attended the meeting. The meeting decided to arrange an additional supply of 1,500 MW through system of optimisation.

Under the package, textile industry will get uninterrupted 24-hour power supply and the six-hour loadshedding during peak consumption hours will be stopped.

Power looms will get supply for 18 hours a day, with at least two continuous spells of supply for six hours.

Flour and ghee mills will get electricity for 18 hours a day with two uninterrupted spells of eight hours.

The process industries will be provided continuous supply throughout the day, but will be required to reduce their running load during peak hours.

Export-related industry to get more electricity -DAWN - Top Stories; June 10, 2008

 

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Consortium plans steel mill at Kalabagh ​

Four mills join hands to use indigenous iron ore for steel production​

Tuesday, June 10, 2008

ISLAMABAD: A consortium of four steel mills will establish an integrated steel mill at Kalabagh, The News has learnt. The planned steel mill would have annual capacity of producing one million tonnes of steel using indigenous iron ore excavated from Kalabagh and Chiniot.

Kalabagh and Chiniot have known deposits of iron ore that have not yet been excavated and utilised by the local steel industry, as importing iron ore, iron and steel scrap was cheaper than mining local ore a capital-intensive venture.

With global steel and iron ore prices skyrocketing the steel makers have finally decided to excavate and exploit local reserves. Pakistan Steel Mills is already using ore from Caghi, Balochistan.

The consortium comprising four companies include Mughal Steel, Star Cotton Corporation, Pak Steel and Ittehad Steel Mills. They have already incorporated a company under the name of ‘Indus Consortium Mining & Steel Industry (Pvt) Ltd’ with Securities and Exchange Commission of Pakistan (SECP), sources in the ministry of Industry & Production (MOIP) told this correspondent.

The company has also submitted an application to the DG (Mineral), Punjab for the grant of lease for 2000 acres at Kalabagh and 1000 acres at Chinot, they added.

Pakistan Steel Mills (PSM) is the only integrated mill in the county with a capacity of 1.1 million tonnes per annum. PSM was making steel prtoducts from 100 per cent imported ore and coke India, Iran and Australia. However, in last few years it has started using ore from Chaghi and imports ore only to meet the shortfall in local supply.

The steel industry of Pakistan consists of steel smelters, re-rollers, PSM, foundries, ship breakers and line pipe industry.

Increase in the international prices of iron ore, coking coal, metallurgical coke forced policymakers to either reduce import tariff or explore new venues to meet steel demand said an official of the Engineering De elopement Board (EDB).

A policy institute for the development of engineering sector in the country EDB is also encouraging and facilitating the PSM to increase the use of local iron ore and coal in the blend for manufacturing steel, the same official added.

Giving the details of the agreement for increasing steel production, the official said that a private firm AMCO Minerals would supply 15,000 tonnes of iron ore from Chaghi. It is already supplying 5,000 tonnes to the PSM. Similarly, another iron ore supplier from Chaghi is in negotiations with PSM administration for supplying ore.

The PSM has signed an agreement for the supply of 60,000 tonnes of iron ore concentrate with Saindak Metals and a similar supply agreement of 65,000 tonnes of Sharigh coal has also been signed, the official added.

The smelting capacity in the country is around four million tonnes of ingots and billets. The total number of re-rollers is 276 with an estimated capacity of 4 million tonnes whereas the ship breaking industry supplies around 600,000 to 900,000 tonnes of ship plates to the re-rolling industry.

Consortium plans steel mill at Kalabagh

 

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‘1000MW supply from WAPDA can end loadshedding’ ​

Tuesday, June 10, 2008

ISLAMABAD: Managing Director Karachi Electric Supply Company (KESC) Amjad Hussain has said that 1000 megawatt power supply from Water and Power Development Authority (WAPDA) to Karachi can end load shedding in the city, local media reported.

“The power load shedding in the metropolis can be ended with 1000 megawatts of power supply from WAPDA,” KESC MD said. He said the Federal government was well aware of the problems being faced by the KESC with regard to power generation. “Six units of Bin Qasim Power Plant have completed their period, while SITE and Korangi thermal power stations are not generating substantial power,” he said. Recently, the Federal government has decided to increase the electricity supply to KESC by WAPDA from 500 megawatts to 1000 megawatts. Presently, WAPDA was supplying 600 megawatts of power to KESC.

‘1000MW supply from WAPDA can end loadshedding’

 

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Government to freeze defence allocation: Gilani ​

ISLAMABAD (June 10 2008): Prime Minister Yousuf Raza Gilani on Monday announced in the National Assembly that the government has decided to freeze the defence budget for coming fiscal year and would present its specific details in the parliament. Delivering a policy speech in the lower house 2 days ahead of the budget.

Gilani said that keeping defence allocations at last year's level would actually mean reduction in it if factors like price hike and rupee depreciation against the dollar were considered. "As a measure of our tangible display to seek peace with our neighbours, we have decided to freeze, actually reduce, the defence budget when seen in the context of inflation and the rupee-dollar parity," he said.

Gilani said Pakistan stood for regional peace and its defence was based on the strategy of minimum essential credible deterrence. The country would never enter any arms race, the Prime Minister added. He said Pakistan would like to see a similar gesture by its neighbour for peace and stability in South Asia. "We hope to see a reciprocal gesture from our neighbour for the sake of peace and prosperity in the region," he added.

The Prime Minister also announced that the government has decided to present the defence budget estimates in a format reflecting the estimated expenditure under major 'heads' in the parliament for the first time in the country's history. Gilani told the house that both the defence ministry and the chief of the army staff have backed the idea of presenting some details of the budget to the parliament.

"I am pleased to inform you that the Ministry of Defence and Chief of Army Staff have fully endorsed the revised format of the defence services budget estimates," he added. Presently, the budget of the three services, ordnance factories and others is presented as a one-line allocation.

It is not approved separately but in a consolidated form for all defence services. After approval of the budget, the Ministry of Defence distributes the allocation to the three services and other defence organisations. Gilani said the government would never compromise on issues relating to the country's defence and vowed to maintain a minimum deterrence.

"Pakistan is located in a geo-strategically important but a turbulent region. We live and operate in a volatile environment. We can not, therefore, afford to remain oblivious to our defence needs," he maintained. "We shall continue to strive for it without compromising on our national interest," Gilani added.

Business Recorder [Pakistan's First Financial Daily]

 

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Trade deficit at record high of $18.7bn​

ISLAMABAD, June 9: Pakistan’s trade deficit swelled to an unprecedented $18.756 billion in the first 11 months of the current fiscal year, up 52 per cent from $12.311 billion for the same period last year.

The extraordinary increase in trade deficit is the outcome of the spending on import of oil, foodstuff and consumer items like mobile phones.

On import of wheat alone, Pakistan spent $770 million to overcome its shortage during the outgoing fiscal year.

The oil import bill may swell to over $11 billion by the end of the current fiscal year, against over $7 billion last year, an increase of 40 per cent.

Analysts said the trade deficit this year might reach $21 billion. Last year, the deficit for the whole year was $13 billion.

Fall in agricultural yields also pushed the government to spend foreign exchange reserves during the current fiscal year, while bill for importing industrial raw materials and machinery declined during the period under review. The period also saw industrial output declining by four per cent.

Official figures obtained by Dawn on Monday showed that the import bill had increased by 29.56 per cent to $35.943 billion in July-May 2007-08, against $27.743 billion last year. It increased by 3.883 per cent in May 2008 when it stood at $3.883 billion, against $2.750 billion in the same month last year.

Unexpectedly, exports grew by 11.37 per cent to $17.186 billion in July-May 2007-08, against $15.432 billion last year. The export growth recorded an increase of 22.61 per cent in May 2008 when it stood at $1.946 billion, against $1.58 billion last year.

The government has projected a $19.2 billion export target for 2007-08 on the assurance of the textile industry to edge up its exports to over $11 billion. The textile exports has witnessed a negative growth over the past few months and it may not cross even the $10-billion mark this year.

A commerce ministry official said that the export target was likely to be achieved by end-June. The rupee depreciation and robust growth in non-textile exports would help in achieving the target, the official added.

Official statistics showed that Pakistan’s current account deficit surged to between 7.3 and 7.8 per cent of GDP. The fiscal deficit has spiralled to close to nine per cent but the government expects to bring it down to 6.5 per cent.

Trade deficit at record high of $18.7bn -DAWN - Top Stories; June 10, 2008

 

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Gems, jewellery training centre established ​

Tuesday, June 10, 2008

KARACHI: Pakistan Gems and Jewellery Development Company (PGJDC) has established the country’s first Gems and Jewellery Training and Manufacturing Centre (GJTMC) in Saddar town, Karachi.

The centre is going to facilitate the gems and jewellery industry in technology upgrading, skill development of miners, gems processing and jewellery manufacturing through training and provision of required equipments and facilities.

Such centres are also being established in Lahore, Gilgit and Quetta. The basic idea for introducing CAD/CAM (computer-aided designing and manufacturing) technology by PGJDC is to facilitate the local industry and manufacturers with highly mechanised manufacturing. It will enable the manufacturers to be competitive locally and internationally by producing high-quality jewellery with maximum output in minimum time.

The GJTMC would be used to provide training in gems and jewellery designing and manufacturing with dual exposure to traditional and state-of-the-art machines like CAD/CAM technology. All these trainings would be provided free of cost to facilitate the industry.

Gems, jewellery training centre established

 

[Neo]

Dalton first to provide Pakistan-focused fund: release set for June 19 ​

LONDON (June 10 2008): Dalton Strategic Partnership (DSP) has become first UK fund manager to offer focused retail access to Pakistan's equities, with the launch of its 'Melchior Selected Trust: Pakistan Opportunities Fund'. The fund, whose investment date was delayed to avoid a sharp correction in Karachi Stock Exchange in May, is slated for release on June 19.

Portfolio management has been outsourced to Karachi-based KASB Funds, which was founded in 1952 and its 5 percent is owned by BlackRock since early 1990s. KASB chief executive and chief investment officer Faisal Potrik will run a selection of 35-45 stocks--80 percent of which will be drawn from 30 largest companies listed on KSE. Remaining 20 percent will be non-benchmark positions.

Starting overweights are in oil exploration, chemicals, agriculture and cement sectors. David Graham, partner at DSP, said that average price/earnings multiple of 11 times for KSE stocks did not price in the country's prospects, which were reminiscent of India's five years ago.

He said: "Pakistan is extraordinarily well positioned between oil-rich Middle East and oil-deficient China and India. All sorts of pipelines are coming across Pakistan, and Pakistan itself is growing as energy producer with aggressive exploration programme. With wealth creation going on in Middle East, a significant amount of money is going into Pakistan."

While he acknowledged inherent degree of political risk in the region, he insisted that underlying fundamentals, with growing consumer spending and a population of 160 million, would drive the country's equity market for foreseeable future. He added: "What people don't realise is Pakistan is pretty broad in the number of stocks it offers.

Business Recorder [Pakistan's First Financial Daily]

 

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Shortage of skilled workers, no solution in sight yet ​

Tuesday, June 10, 2008

KARACHI: Like every new government the present government has also pledged to start a major programme for the training of human resource, a capital resource that Pakistan has failed to exploit.

The industry has seen phenomenal growth in last 15 years with heavy investments in BMR (balancing, modernising and replacement). The industrialists have installed new machineries using computer-aided manufacturing (CAM) operating on computer-aided design (CAD) but there is a dearth of persons to run the CAD CAMs.

Beside CAD CAMs there is an overall shortage of skilled workers to operate modern machinery in almost every sector from engineering to textiles. In Pakistan the vocational training programmes are being provided by a number of federal and provincial agencies. The Government Vocational Institutes (GVIs) are under the administration of Provincial Education Department, and the Technical Training Centres (TTCs), Vocational Training Centres (VTCs), Government Vocational Institutes (GVIs) and Apprenticeship Training Centres (ATCs) are under the administration of the Provincial Labour Departments.

A senior trainer from Karachi requesting anonymity told The News that the teachers and trainers in government training centres are not accustomed to latest technologies.

The young workers coming out from these centres are of no use to the present day industry as they lack the training to use latest machinery, he said adding that the government training institutes mostly have obsolete machines.

The Sindh Labour Minister Amir Nawab said in a recent meeting with industrialists of SITE industrial area that the government would not only improve the present training facilities but also open new centres to train 0.1 million skilled labour annually.

A senior industrialist told the meeting that Japanese labour output is 3.5 times more to our labour so the problem is not only training but also the low literacy rate of the country.

Zubair Motiwala, Managing Director of Diamond Textiles Pvt Ltd said, “we are running in-house training centres for labour for our convenience to train eligible persons, but this facility is not for everyone.”

However, he said, government needs to differentiate between unskilled and skilled labour. The Rs6,000 minimum wage set for labour is very high for unskilled labour because if this would be the case then which unskilled worker will go for training?

He added that skilled workers are already getting around Rs8,000 to Rs12,000 depending on their skills but paying Rs6,000 to unskilled worker will add up to our cost of production.

Muhammad Idrees Gigi, Chairman Federal B Area of Trade and Industry said labour output is one third of Chinese labour, in china minimum wage is $130 equal to Pak Rs9,000, however, our labour output is not even equal to Rs3,000 then how would we pay them Rs6,000? He said this without taking into account the social and economic set of China before comparing it with Pakistan.

He said industry is ready to pay Rs6,000 per month even more, as this is not sufficient considering today’s inflation but when the employer pays desired salary he would demand desired output from labour, which is not possible until government comes up with a comprehensive labour training program.

Industrialists may train limited educated labour to work on some machines but to train uneducated labour is an uphill task, he said. “A whole generation has been lost in last 50 years and our present efforts of educating labour will bring results some 15 years later so educating every citizen is the real task,” he appealed to the government.

Another industrialist from Karachi told The News on phone that private training institutions in the country are running appropriately but their performance in public sector is not only defective but unfortunately they do not know their real objectives.

He said industry has always been ready to support students of training institutes but this will not work until proper Public Private Partnership (PPP) projects do not surface to cater the growing demand of skilled manpower. The old machines at technical training centres are not catering the demands of new technology use in industry.

Nisar Shekhani, Chairman SITE Association of Industry said our technical institutions are using machines of 1960’s and such obsolete technologies are good for nothing in the fast changing technological world except in some cases where basic theory is unchanged.

He anticipates that if technical training centres induct latest technologies of different fields then private sector would also show interest and cooperate in producing trained labour.

Shortage of skilled workers, no solution in sight yet