Pakistan Economy - News & Updates - Archive

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Published: 06/03/2006

Karachi: Pakistan's budget to be unveiled on Monday will include the highest level of development spending ever, as the government draws on several years of good growth for programmes aimed at millions still mired in poverty.

But with no plans for significant budget cuts, and deficit targets remaining steady, the government may struggle to fully pay for its ambitious plans from economic growth alone, some analysts said.

"The government will face a stiff challenge in increasing the tax-to-GDP ratio," said Asif Qureshi, head of research at brokers Invisor Securities.

"It will have to take measures to broaden the tax base."

Pakistan will boost development spending by 52 per cent in 2006-07 with the focus on roads and other infrastructure as well as rebuilding areas hit by last year's devastating earthquake, a senior official said.

Minister of State for Finance Omar Ayub Khan will announce full details of the 2006-07 budget in parliament on Monday.

The government will allocate Rs415 billion ($7 billion) for development, including Rs50 billion for earthquake rehabilitation, in the new fiscal year starting on July 1, said Ashfaque Hasan Khan, economic adviser at the Finance Ministry.

This compares with an allocation of Rs270 billion for the current fiscal year.

"This will be the highest ever size of development spending in the country's history," Khan told Reuters in a telephone interview.

"This will be equivalent to around 4.7 per cent of GDP, compared with 4.2 per cent last year," he said.

The total budget outlay would be around Rs1,500 billion, up from Rs1,098 billion last year, he said.

Of the total, Rs310 billion will go to defence from Rs223.5 billion in the current fiscal year, the Dawn newspaper reported.

Pakistan will be aiming for gross domestic product (GDP) growth of 7 per cent in 2006-07, following expected growth of 6.6 per cent this year.

The government has also revised upward the growth rate for 2004-05 to 8.6 per cent from 8.4 per cent.

The government said this week it is aiming for a consumer price index at about 6.5 per cent for the next financial year. Inflation is expected to be about 8 per cent this year.

The government was expecting a budget deficit target of around 4.2 per cent of GDP for the fiscal year ending June 30, he said.

"But if we took out the impact of the earthquake, the deficit would be around 3.5-3.6 per cent, which is lower than the original target of 3.8 per cent," he said.

Analysts said the increased spending would help the government maintain the momentum of economic growth, but added it would require better revenue generation.

 

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LAHORE: The government will announce a ‘caring budget’, focusing on under-privileged as heavy subsidy would be given to low-income groups.

This was stated by Dr Salman Shah, Advisor to Prime Minister on Finance and Economic Affairs who was addressing a pre-budget seminar here at a local hotel on Friday.

The marathon session, organised by Press Information Department (PID) continued for over two hours comprising cross-questions on various monetary and fiscal issues by several participants and ensuing extensive explanation by the government representatives.

Dr Salman Shah informed that Rs200 billion subsidies were being given in power and petroleum sector for the betterment of low-income group. “Public sector servants and pensioners would be given increase in remuneration while payment criteria of old pensioners would particularly be revised to give a raise to their stagnant pay,” he said.

He added that teachers would get salary increase coupled with entitlement of special allowance besides tax exemption.

He maintained that GDP target had been set at 7 per cent for next fiscal. “Growth rate would be maintained between 6-8 per cent in next four years with the aim to create millions of jobs and subsequent reduction in poverty,” he observed.

Although Dr Salman had predicted relief to different segments of society in the upcoming budget, he warned against possible rise in POL prices, terming it beyond the control of the government. He said government would have to take immediate steps if POL prices continued to rise in future.

Referring to various stumbling blocks in robust growth of economy, Dr Salman said, relief and rehabilitation work has caused negative impact on fiscal deficit as it rose to 4.2 per cent in current fiscal. “Had Kashmir and NWFP not been hit by quake, fiscal deficit would have been at 3.5 per cent,” he observed.

“Foreign direct investment is taking place at impressive rate while privatisation process is also continuing with a success,” he observed adding that foreign currency reserves have touched $13 billion mark. Like current fiscal, he said government would continue to give special incentive of zero sales tax to various sectors including textile, leather, surgical, carpet and sports goods.

The local industry, agriculture and services sector would be made competitive in years to come. He expressed the hope that internal rifts on construction of dam would be resolved and all dams would be constructed on River Indus.

Advisor to Prime Minister on Finance said currently Pakistan’s foreign debt is to the tune of approximately $35 billion, which is coming down gradually over the years.

Dr Shah said the foreign investors confidence has been restored over the last few years due to the investment-friendly policies of the government and direct foreign investment has touched new record with pouring more than US$3 billion.

He said that the government’s floated Euro Bonds in the international market got overwhelming response as 30 years long period bond worth $300 million were sold at once.

He said Rs50 billion would be earmarked in PSDP every year for reconstruction in the earthquake-affected areas. He said Rs415 billion development programme would be carried out across the country, equally focusing in rural and urban areas.

Among others Imtiaz Ahmad, Ibrahim Mughal, Razzak Ahmad, Waqar Ahmad, Ashraf Mehtab and Uzma Shahid spoke on the occasion. State Minister for Information and Broadcasting, Senator Tariq Azeem, PIO Ashfaq Gondal and PID Director Aijaz Ahmed were also present.

 

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WASHINGTON: World cotton demand in 2006-07 is projected to increase by three per cent to a record 25.7 million tonnes and production is expected to remain stable at 25 million tonnes, an international farm group said on Monday.

The International Cotton Advisory Committee Secretariat (ICAC) said in its monthly report that world cotton stocks are also expected to decline, driving prices higher.

Overall the 2005-06 world price is projected to be 56 cents per lb, eight per cent higher than last season, ‘and market fundamentals suggest that cotton prices may increase further in 2006-07,’ the group said.

World cotton plantings are expected to increase slightly in the 2006-07 growing season, reaching 34.6 million hectares. Production is expected to increase six per cent in China and five per cent in India, assuming increases in both area and yield.

In other growing areas, production is forecast to increase by eight per cent in both Pakistan and in the African zone due to mainly an expected rebound in yields. Turkey is forecast to see a 14 per cent boost because of a projected increase in cotton plantings.

Mill use in China, India and Pakistan is projected to increase six per cent to 16.7 million tonnes in 2006-07, accounting for 65 per cent of global mill use.

Outside of those countries, cotton mill use is expected to fall slightly to nine million tonnes, a two per cent decrease.

Meanwhile cotton production in the United States is expected to decline by 14 per cent, ICAC said.

 

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KARACHI: The World Bank has marked Pakistan as one of the growing consumption-led econ-omies in the world on lax fiscal and monetary policy, the international donor said in a latest report.

“In both India and Pakistan, the two largest economies in the region, growth was consumption-led, reflecting higher farm incomes on the one hand and a relaxation of fiscal policy in Pakistan, plus an already lax fiscal and monetary policy stance in India,” the Bank said in its report titled Global Development Finance 2006.

“The boost to private consumption represented almost three quarters of the increase in Indian GDP and more than all of the increase in Pakistan.”

It said in India, investment and exports continued to grow rapidly, but in Pakistan investment grew an anaemic 1.5 per cent and exports were up 7.8 per cent. The acceleration of domestic demand in Pakistan was not met by domestic production and, as a result, imports rose by much more than exports.

Even in India, the bank said, industrial production growth slowed from 8.5 per cent in 2004 to 7.8 per cent and import growth outstripped exports by a significant marginósuggesting that supply was unable to keep up with demand.

In India and Pakistan, more restrictive macro policies, combined with tighter international credit conditions, and an easing of external demand (in the United States), were projected to slow growth by about 1 percentage point in 2006.

“India is expected to continue benefiting from strong services sector growth, including foreign demand for IT services, and rising private investment, given improving business confidence and progress in market reforms’ said the report.

“The govt’s recently announced four-year ‘Build India’ infrastructure programme (equivalent to a total package of about 5 per cent of GDP) will provide an additional fillip to growth starting in 2006.”

The World Bank assessed growth in Pakistan was projected to become more balanced as consumer demand slows to more sustainable rates. A continued supportive external environment and expansion of Pakistan’s textile and other manufacturing sectors should maintain export growth, while investment is expected to rise, due in part to the reconstruction efforts following the October 2005 earthquake in Kashmir, it added.

Analysts believe the World Bank report reflects the reality emerged following monetary expansion, which on one hand increase positively affect the spending potency of the people but on the other negatively increase the inflation rate due to higher consumption.

“In growing economies like Pakistan, consumption always witnesses phenomenal increase on monetary expansion,” said Faisal Shaji, head of research at Capital One Equities. “But in case like Pakistan, monetary expansion more served to consumer financing rather than farming or other productive sectors.”

 

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KARACHI: Pakistan Islamic Medical Association (PIMA) has demanded the government to allocate three per cent of country’s GNP and 10 per cent of next financial year’s budget for health and medicine.

The pre-budget proposals were presented by President PIMA Karachi Dr Misbah ul Aziz at a press conference at the Karachi Press Club on Friday. Other PIMA office bearers were also present.

Dr Misbah said the government’s budget expenditure on healthcare in the current year is only 0.7 per cent of the country’s GNP and Rs240 were allocated for healthcare of each Pakistani in the last budget.

He claimed that the allocation of federal health budget is less than the Rs38 billion per annum taxes and duties collected from tobacco companies.

He revealed more than 45 per cent of total allocation for healthcare in Pakistan is provided to PIMS Islamabad and NICVD Karachi and only 10 per cent is spent on prevention of diseases.

“Only Rs15 million are spent for prevention and treatment of tuberculosis (TB), Rs20 million on Hepatitis and for the prevention of other diseases the government solely depends on running media campaigns, he deplored adding that there was no government programme for prevention of stroke and rehabilitation of its patients.

He suggested the government to provide life-saving drugs and antibiotics on highly subsidized rates, free vaccination, regulation of medicines’ prices, quality control over vaccines and local production of variety of vaccines.

Dr Misbha proposed the allocation of at least Rs30 billion for vaccination against Hepatitis and Tetanus, Rs1 billion for prevention of TB and Malaria, start of National Stroke Program and availability of clean drinking water to each and every citizen.

 

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KARACHI: A little bit of both - development of consumerism and rising income - is making Pakistan a desired destination for some of the most popular brand names, including those which value their principles over the quality of products.

The Body Shop (TBS) is one of them. Its Managing Director speaks more on the use of natural ingredients in cosmetics and toiletries and commitment against animal testing than claim the fame for quality in specific terms.

“We don’t believe in spending money on advertisements and media campaign,” Andrew Knappett said in an interview with The News. He said the company intends to connect with its customers through community welfare programmes.

But considering the already existing popularity of the brand among women, this cannot be termed a case of compromising market. Moreover, the particular class of society, the company is targeting, cares less about the price of products, which will cost in tandem with international rates.

Andrew insists TBS is a brand that stands ‘just below the premium’ class of cosmetic line of products and therefore the first shop opening at ‘The Forum’ with a range of over thousand products for both men and women will cater to the desires of general masses.

The company has evolved a peculiar system for development of indigenous colonies called community trading. This is a way to indirectly employ local people from places, which produce raw material for TBS products.

When asked if Pakistani herbs and natural ingredients could be used in their products, the MD said they were conducting a feasibility study on its possibilities. “I cannot comment on it,” he said without elaborating which local ingredients have been identified but added: “...it will be good for locals.”

He said the fast pace of changing environment drove TBS here. “Every time I visit, there are new changes to see. A lot of Pakistanis in UAE (United Arab Emirates), where we have a strong consumer base, asked us to open retail shops here.”

The arrival of TBS in Karachi, after two years of research, also reflects that at least some people, other than those who always had money to make couple of foreign trips a year, have earned enough to go for popular brands. “Purchasing power of a particular class has definitely increased,” independent economist Akbar Zaidi said.

 

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KARACHI: Federal Minister for IT and Telecom, Awais Ahmad Khan Leghari said on Friday the country was expected to have more than 1.5 million broadband users by 2010, and Wi-Max - the latest wireless technology - would prove to be the driving force behind this revolution.

The minister stated this following signing of a contract between Wateen Telecom and Motorola for deployment of Wi-Max network in Pakistan, a statement said.

Wateen Telecom, a subsidiary of Warid Telecom, and Motorola have signed the contract worth $60 million for the deployment of Wi-Max network in the length and breadth of Pakistan.

After the implementation of the project, Pakistan will become the first country in the world to have 802.16e Wi-Max technology for wireless local loop application serving residential and corporate customers for data and voice alike at unprecedented rates.

“The contract reflects on Pakistan’s improved image in the world as one of the serious and high-growth markets, ahead of anyone else including India,” the statement quoted the minister as saying.

He said it was encouraging to note this was the first ever commercial contract for nationwide Wi-Max deployment in the world, making it a historical milestone for Pakistan’s ICT (information and communication technologies) sector, he said.

The minister reiterated the government’s support for the proliferation of broadband services in the country.

“The government is making all-out efforts to encourage initiatives aimed at broadband penetration and national ‘Broadband Pakistan’ programme is a major step in connecting the unconnected and bridging the digital divide,” he said.

The Wi-Max technology uses IMS (Internet Protocol Multimedia System) core architecture, making it the first 4th Generation network.

The initial deployment of the wireless broadband voice and data network will be completed by the end of the year using Motorola’s access network, subscriber units, IP multimedia sub-system core and services based on the 802.16e mobile Wi-Max standard.

Motorola’s carrier-class Wi-Max network supports both the 2.5GHz and 3.5GHz frequency spectrums and uses special antenna techniques to provide greater coverage range and penetration.

 

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Saturday, June 03, 2006

ISLAMABAD: An IMF research paper has revealed that workers’ remittances contribute 4% to the GDP of Pakistan and are equivalent to about 22 percent of annual exports of goods and services.

These flows have historically been an important component of Pakistan’s balance of payments and have also contributed to the strengthening of the Pakistani rupee. Therefore, remittances play an important role in the country’s external position and influence the conduct of monetary and exchange rate policy.

IMF Working Paper “Altruism and Workers” Remittances: Evidence from Selected Countries in the Middle East and Central Asia” prepared by Jacques Bouhga-Hagbe1 revealed this.

According to the analysis of the paper, people working outside their home country regularly transfer money home. These flows play an increasingly important role in the external positions of the recipient countries. During the period 2000-04, workers’ remittances amounted to about 3.5 percent of GDP in Egypt, 20 percent in Jordan, eight percent in Morocco, four percent in Pakistan, and five percent in Tunisia. These inflows compare to a trade deficit of about 7.5 percent of GDP in Egypt, 24 percent in Jordan, 10 percent in Morocco, 1.5 percent in Pakistan, and 10 percent in Tunisia. Moreover, remittance flows to these countries have been larger than foreign direct investment flows.

The paper suggests that a sudden drop or reversal of remittance flows to the countries we consider is unlikely in a foreseeable future, as many of those who are receiving this assistance are likely to continue to depend on it in the coming years. Therefore, remittances are likely to continue to be an important element mitigating the external vulnerabilities of the countries considered.

In the above countries, the stability of remittance flows is an important policy issue that is relevant to the analysis of their external vulnerabilities. This issue becomes even more important given the fact that all these countries, with the exception of Egypt, are net importers of oil, and therefore are likely to experience the negative impact on their external positions of the current high oil prices. Remittances and tourism for some countries tend to mitigate the impact of unfavorable shocks on their balance of payments. Remittances also affect the liquidity in their banking systems and, therefore, indirectly influence the conduct of monetary policy. Assessing the stability of such flows could thus also be useful to understanding the challenges these countries face in the conduct of monetary and exchange rate policy.

 

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Saturday, June 03, 2006

ISLAMABAD: Mobilink, a private sector cellular phone operator, on Friday announced that it would invest $1 billion in the next financial year.

The announcement was made by the company’s chief executive, Zouhair A Khaliq, in a press statement. He said the company would increase its subscriber base to over 20 million by the end of 2006.

“Currently, the company is leading the market with a lion’s share of over 56 percent subscribers which sums up to more than 15 million customers across Pakistan,” he added.

 

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Saturday, June 03, 2006

ISLAMABAD: The Asian Development Bank (ADB) said on Friday in the medium term Pakistan’s economy looks good, and although economic growth decelerated in the first half, the economy is expected to still post a robust growth for the full year.

The Bank has predicted that economic growth, although less than the last fiscal year, will remain at a healthy rate of 6%-6.5% in 2005-06.

Pakistan’s Economic Update prepared by the Pakistan Resident Mission (PRM) of the ADB provides an analysis of economic trends in Pakistan during the first three quarters of fiscal year 205-06 and presents an outlook of the economy for the whole year.

ADB Country Director Peter Fedon said: “The medium-term outlook for the economy looks good and although economic growth decelerated in the first half of 2005/6, the economy is expected to still post robust growth for the full year.”

The update notes the significant recent decline in poverty as estimated by the government based on a sound methodology. The report also discusses recent poverty trends in the country and reviews poverty reducing public expend aura during the first halt of 2005-06. The government continued to pursue an expansionary fiscal policy and the fiscal deficit increased. The increase in government spending was mainly due to a sharp increase in development expenditure and payments for relief operations for victims of the October 2005 earthquake.

In agriculture, the cotton and sugarcane crops are estimated to be smaller than last year. The growth in most manufacturing items in the first seven months of the year was also lower. Construction, however, continued to expand at a rapid pace in the services sector, telecom services, financial sector, and wholesale and retail trade continued to show a robust growth. A significant deceleration in food inflation was largely offset by a sharp increase in oil prices. Annualized overall inflation declined by one percentage point to 8.3 percent in the first 10 months of 2005/06. External trade continued to expand rapidly in the first three quarters of 2005106, with imports increasing by 43.2 percent and exports by 18.6 percent. The growth of imports was led by petroleum and petroleum products, which together increased by 64.5 percent to $4.6 billion. Textile and clothing was the largest contributor to export growth.

There was an almost three-told increase in foreign direct investment, partly because of higher privatization proceeds. The foreign exchange reserves held by the SBP increased by $477 million to $10.3 billion, which are sufficient to finance 42 months of projected imports in the current year. The deficit in the current account of the balance of payments almost quadrupled to $4.7 billion in the first three quarters of 2005-06, as imports grew rapidly. The increase in the current account deficit was largely offset by a sharp turnaround in the financial account. Pakistan’s external debt declined by $589 million to $352 billion in the first half of 2005/6. In March 2005, the government issued sovereign bonds for $500 million with tenures of 10 and 30 years. The bonds were heavily oversubscribed.

The ADB report highlights that the outlook for the economy is encouraging. Economic growth, although less then last year, will remain at a healthy rate of 6-6.5% in 2005/6. The growth in agriculture sector is expected to be sluggish, due to the smaller cotton and sugarcane crops as is the growth of the livestock sub-sector.

However, the large-scale manufacturing sector is projected to grow at a robust rate of 10 percent, as indicated by the sharp increase in imports of raw material’s and rapid growth in private sector credit In the services sector, telecom services, banking and trade ere expected to sustain high growth in 2005/06.

With robust economic growth and a sharp increase in imports, the target for revenue is likely to be surpassed, expenditures are also projected to exceed the budget estimate. As a result, the budget deficit in 2005/6 could rise to 4.2 percent of GDP compared with the target of 3.8 percent. Imports ere projected to increase by 30 percent, because of high oil prices and continued strong domestic demand. The end of the quota regime since January 2006 and the robust growth in world trade will boost exports, which are expected to increase by 14 percent. The trade deficit is projected to increase to over $8.0 billion and the current account deficit to $ 6.0-6.5 billion.

The substantial public sector investment in irrigation and private investment in agriculture in the last four years will boost the agriculture sector.

The end of the quota regime for textile and clothing exports and large investment in textile industry. In the past 4-5 years will continue to energize the manufacturing sector. The growing imbalance in the external sector, however, poses a risk. Continued policy action would be required to deal with the external imbalance and monetary overhang. In the longer run, levels of investment in the economy need to be enhanced.

 

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Saturday, June 03, 2006


PESHAWAR: Pakistan, with most of its land classified as arid or semi arid, is extremely vulnerable to the growing threat of desertification through drought and soil degradation.

“It has one of the lowest percentages of area under forests and with little slowing down of the trend of deforestation - one of the major causes of desertification. The situation demands extraordinary measures to be undertaken on an emergency basis,” said a news release issued by The World Conservation Union here on Friday in connection with the World Environment Day 2006 to be commemorated on June 5 with the slogan “Don’t desert dry lands”. The day emphasises the importance of protecting dry lands, which cover more than 40 percent of the planet’s surface. Algiers will hold main events in connection with the environment day.

The UN commemorates the World Environment Day each year to stimulate worldwide awareness regarding environment. The day’s agenda is to give a human face to environmental issues; empower people to become active agents of sustainable and equitable development; promote an understanding that communities are pivotal to changing attitudes towards environmental issues and advocate partnership to ensure that all nations and people enjoy a safer and more prosperous future.

The news release says that dry land ecosystems receive very erratic rainfall, and as a result, are very fragile. The transformation of habitats for human use, mostly agricultural, and overexploitation, including overgrazing, has led to the degradation of up to 20 percent of dry lands ecosystems, with stark results: desertification and drought, the endangerment of 2,311 species, the loss of over 40 billion dollars a year in lost agricultural production and the resulting rise of social, economic and political tensions.

Poverty has forced populations, which are dependent on natural resources, to overexploit already marginal lands in order to sustain their livelihoods.

A major portion of Pakistan’s area, especially in Sindh and Balochistan, falls under this category and is especially vulnerable to the mounting threat of desertification from a variety of human activities. Nearly 60 percent of Pakistan’s area consists of rangelands that receive less than 200 mm of rainfall annually, and are considered arid. They support 93.5 million heads of livestock and a very large number of pastoral people. However, the release says, continuous shortage of fodder and water due to the recent drought has caused heavy losses of livestock and very adversely affected the life of the pastoral communities.

 

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Saturday, June 03, 2006

LAHORE: Pakistan was expected to have more than 1.5 million broadband users by 2010, Information Technology Minister Awais Ahmad Khan Leghari said in a statement on Friday.

Referring to the recent contract between Wateen Telecom and Motorola for the deployment of the wireless Wi-Max network in Pakistan, he said that the contract reflected Pakistan’s improved image in the world as “one of the most rapidly growing markets of the world”.

“It is encouraging to note that this is the first-ever commercial contract for nationwide Wi-max deployment in the world, making it a historical milestone for Pakistan’s IT (information technology) sector,” he said.

Wateen Telecom, a subsidiary of Warid Telecom, and Motorola signed the $60-million contract on May 23 for the deployment of Wi-max across the country. When the project is implemented, Pakistan will become the first country in the world to have the 802.16e Wi-Max technology for wireless local loop application, serving residential and corporate customers for data and voice at unprecedented data rates.

The minister predicted that Wi-Max would prove to be the “driving force” behind this revolution. “The government is trying to encourage initiatives aimed at broadband penetration, and the ‘Broadband Pakistan’ programme is a major step in connecting the unconnected and bridging the digital divide,” he said.

The Wi-Max technology uses Internet Protocol Multimedia System (IMS) core architecture, making it the first fourth generation network. The initial deployment of the wireless broadband voice and data network will be completed by the end of the year, using Motorola’s access network, subscriber units, IMS core and services based on the 802.16e mobile Wi-Max standard. Motorola’s carrier-class Wi-Max network supports both the 2.5-GigaHertz (GHz) and 3.5-GHz frequency spectrums, and uses special antenna techniques to provide greater coverage range and building penetration.

 

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Saturday, June 03, 2006

* Now it is $165m against the fiscal year’s target of $160m

By Tanveer Ahmed

KARACHI: The country’s seafood export has crossed the full year’s target of $160 million in 11 months of the current fiscal, as now it is around $165 million.

“The seafood export sector is well poised to be exporting between $175-180 million by the end of this fiscal year, which would be a significant achievement following years of stagnant export performance”, Vice Chairman of the Pakistan Seafood Industries Association (PSIA) Faisal Iftikhar told the Daily Times on Friday.

Despite several problems confronting this industry, the export figures rose on the back of huge catch of tuna fish through long-liner tuna vessels.

“Tuna fish remained the main contributor and helped the seafood exports to rise by over 30 percent in 11 months of this fiscal compared with previous year”, he said, adding that as far as the conventional sector is concerned, its performance declined slightly due to problems faced by local fishermen.

Over 20 long-liner vessels are operating in the deep-sea catching huge quantity of fish and shrimp and they are directly exporting instead of local catch, which finds its way into the local processing plants, for its onward export to foreign destinations.

He said that increase in export of seafood is a welcome sign for this struggling industry, which is facing a critical situation because of high cost of voyage caused by rise in diesel prices.

However, he suggested that we limit ourselves to current growth but strive more to boost the seafood export, which has immense potential, but unfortunately could not be tapped due to apathy of the government to extend incentives to this sector.

For instance, we have a great potential of aquaculture, he said, which if developed could take the seafood export to over one billion dollars annually.

This is not a difficult task because there are examples of enlarged seafood exports, when some countries went for aquaculture and enhanced their export manifolds. He said the government should develop the required infrastructure and ensure security in coastal areas of the city for the development of aquaculture.

Another seafood exporter, Captain Ikhlaq Hussain, said that the fishing sector of Pakistan this year have done very well and is hoping for an increase in exports to nearly 170-180 million dollars record from a mere 130 million dollars last year.

However, he said that no one knows if government would acknowledge this and offer some incentives, which have been always for other sectors and this sector remained ignored.

“With proper planning to arrange continuous raw material by aquaculture and other conservation methods this industry has the potential of earning up to one billion dollars”, he said.

He pointed out that the biggest damage that has been caused to its operation is by non-professionals and an example of this was witnessed recently in national newspapers about one department blaming another and a tussle between the federal ministry of food, agriculture and livestock and the Sindh fisheries departments and its allied departments.

 

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ISLAMABAD (updated on: June 04, 2006, 19:36 PST): The government is set to achieve sustained economic growth of 6 to 8 percent in coming years, which will help reduce unacceptable levels of poverty, a government adviser said on Sunday.

The percentage of the population living below the poverty line has fallen to 23.9 percent in 2004/05 from 34.5 percent in 2000/01, but it was still too high, said Salman Shah, a government adviser on finance and economic affairs.

"Despite the reduction, poverty is still at an unacceptable level," Shah told a news conference at which he released the government's annual Economic Survey.

The government is due on Monday to announce its budget for the 2006/07 financial year, which begins on July 1. It is expected to include measures to alleviate poverty through increased development spending.

"The current budget and the government policy will ensure that these people are pulled out of the poverty trap by increasing opportunities through employment measures and through a growing economy," Shah said.

"We will not rest until we have made a major dent in poverty.

Pakistan has seen strong economic growth over the past few years and the government expects 6.6 percent gross domestic product (GDP) growth in the 2005/06 fiscal year, ending on June 30.

The previous year saw growth of 8.6 percent, the highest in more than 20 years.

The target for 2006/07 is expected to be set at 7.0 percent when the budget is announced on Monday.

RISING INVESTMENT

But the government has faced criticism from some economists who say the growth has largely benefited the rich, while the poor have been hurt by higher prices.

Shah said he was confident the country would be able to sustain its growth in the medium- to long-term, backed by a rising investment-to-GDP ratio, increased foreign direct investment and a successful privatisation plan.

According to the economic survey for the financial year ending at the end of this month, the investment-to-GDP ratio stood at 20 percent in 2005/06, while average annual per capita income rose to $847 from $742 the previous year.

The manufacturing sector, accounting for 18.2 percent of GDP, grew by 8.6 percent during the year, while large-scale manufacturing grew by 9.0 percent.

The services sector also performed well with growth of 8.8 percent, while the construction sector, helped by activity in the private housing market as well reconstruction in areas hit by a big earthquake in October, grew 9.2 percent.

However, growth in agriculture, which accounts for 21.6 percent of GDP, was less than satisfactory, the survey said.

The sector grew by only 2.5 percent, with major crops and forestry contracting 3.6 percent and 9.7 percent respectively.

Shah said overall growth targets should be reached.

"We saw solid economic growth in 2005/06 and in spite of the major devastation of the earthquake and high global oil prices, the economy has managed to sustain its growth momentum," he said.

"If there are no major shocks we should be able to sustain 6 to 8 percent growth."

 

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ISLAMABAD (June 04 2006): Assuring full protection and facilitation to international investment, President Pervez Musharraf on Saturday said high growth and friendly policies make Pakistan an ideal destination for world entrepreneurs and stressed that the country's economic reality is far better than "distorted perceptions."

In a keynote address to OPEN Silicon Valley's annual business moot in California through video conference, President Musharraf said that the country is shaping up through construction of Gwadar Port and a network of infrastructure to serve as trade and energy corridor for landlocked Central Asia, South Asia, the Gulf region and China.

"Pakistan today is in an altogether different league economically - it has been put firmly on the path of high economic growth with its GDP having more than doubled to US dollars 135 billion and all macro economic indicators including exports, revenue collection, foreign investment, forex reserves staying positive," he said.

He rejected negative travel advisories issued against Pakistan and added that these did not reflect prevailing ground realities.

"I think we suffer from distorted perceptions - but in reality we are much better as evident from the fact that none of the foreign companies doing business in Pakistan has ever been harmed due to policies or internal situation," he emphasised to a gathering of American and Pakistani entrepreneurs at OPEN 2006 moot.

President Musharraf said the government is striving to improve the image of Pakistan but also urged the Pakistani expatriates to contribute to these efforts through personal example and effective countering of misperceptions about the country.

In the widely applauded address, the President referred to an international report that described Information Technology progress as Pakistan's best kept secret and said the country offered a host of opportunities in fast-developing sectors.

"We have put in place an elaborate IT infrastructure, connected cities and towns to the Internet and three submarine cables are to further enrich the IT scenario - on top of it, we have talented English speaking graduates, which are an asset for the country and international investors."

President Musharraf informed the appreciative gathering of Pakistani and American entrepreneurs and top professionals that the country is synergising education with expanding demands of industrial development. "We are establishing nine high-tech engineering and science and technology universities of international standards with the help of advanced countries - these will produce professionals of high calibre to push industrial development on fast-track basis," he said.

The President also spoke about the National Vocational and Technical Education Commission and said it would set up an infrastructure for equipping the young people with skills commensurate with technical and industrial advancement.

"We are creating synergy between education and rapid industrial growth," he said, adding that the budget for higher education has been increased from Rs 0.6 billion about five years to Rs 22 billion this year.

On meeting Pakistan's growing energy requirements, the President said the government is working on import of natural gas from Iran and Turkmenistan and electricity from Central Asia.

He said the country has been able to reduce dependence on costly oil and is constructing large dams and canals to produce cost-effective hydro power.

President Musharraf asked the Pakistani expatriates to live as peaceful and useful citizens of their adopted countries, foster unity in their ranks and not be divided along political lines.