Pakistan Economy - News & Updates - Archive

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ISLAMABAD (June 05 2006): Inflation, which impacts the poor disproportionately, has come down by 1.3 percentage points to 8 percent during ten months (July-April) of the current fiscal year , the government said on Sunday.

According to the Economic Survey 2005-06, released here at a news conference, the inflation, as measured by Consumer Price Index (CPI), averaged 8 percent during 2005-06 (July-April), against 9.3 percent in the corresponding period of 2004-05.

On current trends, and barring any adverse shocks, it says that the government is expecting that inflation would be within the target of 8.0 percent set by the government for full year.

During the period under review, food inflation was estimated at 7.0 percent as against 12.8 percent in the same period last year. Non-food inflation at 8.8 percent was on higher side compared with 6.9 percent in the same period last year. The core inflation, which excludes food and energy costs from the headline CPI, moved up and estimated at 7.7 percent as against 7.0 percent in the same period last year.

House rent index also played an important role in building inflationary pressure this year. With second largest weight in the CPI (23.4 percent) after food (40.3 percent), the house rent component of the CPI registered a marginal decline to 10.3 percent as against 11.1 percent in the same period last year.

The survey says that in terms of generating inflation, the phenomenal rise in aggregate demand in the economy, on the one hand, was compounded by supply shocks, on the other. Besides, it says that the eight per cent inflation is also due to various internal and external factors.

The adverse external developments, which impacted the price levels for the fiscal year under review included a continuation of the surge in international oil price to an all-time record of nearly US $75 per barrel in April this year, before pulling back somewhat, coupled with an unprecedented rise in world prices of commodities due to demand from fast-growing economies such as China and India.

Besides, decline in the size of sugarcane crop resulting in relatively less production of sugar within the country as well as significant rise in international prices of sugar owing to diversion of large portion of sugarcane into ethanol (a petroleum substitute) by the world's largest producer, Brazil, also impacted price development.

 

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ISLAMABAD (June 05 2006): Adviser to the Prime Minister on Finance Dr Salman Shah on Sunday unveiled a plan to expand capital market, besides strengthening the banking system in the next fiscal year.

The plan included issuing of the new mutual funds, TFCs and bonds in the next fiscal year and continuing the reforms programme for the banking sector enabling it to take up the enhanced role to facilitate the capital market.

Salman Shah was responding to a questioner while releasing Economic Survey 2005-06 here.

The adviser said in the past weak banking system provided an opportunity to the influential and political elite to plunder billions of rupees of public money and the same unhealthy practice would have continued if the government had not reformed entire banking system to help it function independently.

He said the banks were operating under a strict monetary regulation system, which does not allow them cartelisation. The reforms in banking sector helped it come out of gray area and now the banks were performing very well in the private as well as the public sector, he added.

Salman Shah said that in the past influential and political elite made the entire banking system vulnerable to risks. He said a very big portion of the bank loans was turning into bad debt every year as long as they were being run by the public sector and added that the policy of handing over the banking business to the private sector did a marvellous job in their proper functioning and reduced the percentage of bad debt.

He said that our privatisation programme is the best in the world and hiring of reputed international financial adviser was indicative of its credibility. He said the Supreme Court''s review of Pakistan Steel Mills sell-off case would vindicate the Privatisation Commission''s decision.

Regarding debt retirement and the current debt level, Salman Shah said the government was strictly following Fiscal Discipline Law and maintaining debt level to a restricted level. He said Pakistan''s total debt in term of Pak rupee was Rs 4217 billion.

The adviser denied that any change has been done in the methodology to assess poverty and that the figures quoted by the official document were fudged. He added that the international donors and experts have certified the poverty figures and reduction in its percentage.

 

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Economic Survey 2005-06: overview of the economy
Economic Survey 2005-06: overview of the economy

Read the link: http://www.brecorder.com/index.php?...&term=&supDate=

 

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ISLAMABAD (June 05 2006): High international commodity prices have inflated Pakistan's imports by over 2.3 billion dollars, including 1.915 billion dollars for oil import alone, during the outgoing fiscal 2005-06.

Economic Survey 2005-06 released here on Sunday says that during the first nine months (July-March) 2005-06, the country had to bear additional cost of 1.915 billion dollars against corresponding period of the last fiscal year owing to high international oil prices.

During the first three quarters of the current fiscal year, the consumption of petroleum products in households, agriculture, transport and power sectors, exhibited sharp decline to the extent of 35.3 percent, 47.4 percent, 8 percent and 16.8 percent, respectively, the survey said.

 

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KARACHI (June 05 2006): Airblue is set to induct 4 new aircraft and will be the first Pakistani private airline to operate long haul flights to United Kingdom in its third year of operations, said Shahid Khaqan Abbasi, Chief Operating Officer Airblue, in Lahore on Sunday.

He was addressing 40 corporate managers from Airblue's domestic and international network attending the airlines second Management Conference, "Blue-II Expanding Horizons" concluded here.

Abbasi emphasised that continued expansion was essential for the airline to continue surviving in the prevailing environment.

He said Airblue would be acquiring two Airbus A330s for UK operation, which are scheduled to be launched in December 2006.

Airblue will also be acquiring two Airbus A321s to further consolidate its domestic and regional schedule, he said, adding that in its third year of operation the airline would have a fleet of nine next-generation jet aircraft operating on a network of nearly one dozen destinations.

He pointed out that Airblue would be introducing a turbo prop operation on the socio-economic routes starting with a daily flight to Gwadar.

 

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ISLAMABAD (June 05 2006): Despite two percent increase of energy supply, the electricity generation showed only a marginal increase of 0.3 percent, while the number of consumers increased to 15.6 million from 14.9 million, says Economic Survey 2005-06.

The survey, which covers the first nine months of the outgoing fiscal year, further said the oil production also showed a decrease of 1.23 percent, while gas showed 4.4 percent production growth.

In the first three quarters of the outgoing fiscal year, the consumption of petroleum products in household, agriculture, transport and the power sector showed a declining trend, while energy supply registered an increase of two percent.

The Economic Survey data also said the decline in the use of petroleum products in households, agriculture, transport and power sectors, was due mainly to the availability of alternative and relatively cheaper fuels, low demand of LDO in agriculture and lastly, the massive increase of CNG and natural gas in transport and power sectors.

The consumption of gas in cement industry increased by 25 percent, while the power sector consumption grew by 9.9 percent followed by the fertiliser industry (8.0 percent), industrial sector (7.9 percent) and household sector (0.7 percent), it said, adding that a substantial increase in the consumption of electricity has also been witnessed during the first nine months of the current fiscal year.

The energy supplies increased to 42.449 million TOE from 41.617 million TOE, which is an increase of two percent, mainly due to appropriate and timely measures taken by the government to provide an investment-friendly environment for the energy sector to attract more local and foreign investors, the survey said.

The average crude oil production during July-March 2005-06 was 65,385 barrels per day as against 66,199 barrels per day during the corresponding period last year, showing a decrease of 1.23 percent and is due mainly to lower production by 10 percent from southern region oil fields.

The average production of natural gas during July-March 2005-06 was 3,826 million cubic feet per day (mmcfd) as against 3,663 mmcfd during the corresponding period last year, showing an increase of 4.4 percent.

The total installed capacity of electricity generation increased to 19,439 MW in 2005-06 from 19,389 MW last year, showing a marginal increase of 0.3 percent.

The number of electricity consumers has increased over the years due to rapid extension of electric supply to villages and fast urbanisation. The number of consumers has increased to 15.6 million, up to March 2006, from 14.9 million in 2004-05, showing an increase of 5 percent over the last year and a growth of 64 percent since 1995-96.

The NTDC and Discos have reduced power losses thus increasing the revenue by adopting measures such as renovation, rehabilitation, capacitor installation and strengthening consumer-end distribution supply network. It decreased the power losses from 24.2 to 22.8 percent during the first nine months.

The government has approved the recommendations under the Energy Security Action Plan, which include development of wind and solar energy to ensure that at least five percent of total power generation capacity is met through these resources by 2030 ie (9700 MW), it said.

The Alternative Energy Development Board to ensure the installation of 100 MW wind power by June 2006 at Keti Bandar and Gharo in Sindh and 700 MW by 2010, the survey added.

Due to the import of high cost energy resources, the government will enhance the share of coal in the overall energy mix from 5 percent to 18 percent up to 2018.

The Energy Security Action Plan has also set a target of generating about 20,000 MW power from coal by 2030 and 50 percent by 2050, the Economic Survey added.

 

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KARACHI (June 05 2006): Pakistan is ironically dependent on the import of crude oil to meet the demand gap, as the country was meeting only 18 percent of its oil needs from indigenous production and it had to import the remaining 82 percent and pay international prices.

The crude oil and petroleum products import for the year 2004-05 amounted to about 8.3 million tonnes and 5.7 million tonnes, respectively with actual amount of payments worth $2,606 million and $1,998 million, respectively. The total annual oil import bill stood at $4,604 million during 2004-05.

According to Economic Survey 2005-06, the production levels may still be insufficient, our country is undoubtedly thriving with potential.

Pakistan has an interesting geo-dynamic history of large and prospective basin (onshore and offshore) with sedimentary area of 827,268 square kilometres.

So far about 844 million barrels of crude oil reserves have been discovered, of which 535 million barrels have already been produced.

Prognostic potential of total endowment of hydrocarbons has been estimated as 27 billion barrels of oil and 282 trillion cubic feet of gas in Pakistan.

Until recently, over 620 exploratory wells have been drilled by various national and international exploration and production companies, resulting in over 177 oil and gas discoveries.

In addition, indigenous production of crude oil during the year 2004-05 was 66,095 barrels per day. Similarly, 50 percent of the indigenous gas contributed a substantial portion of the energy requirements of the country.

Considering this, the government is making great efforts to attract local and foreign investors.

As a result of these financial and structural reforms, the energy sector has already become one of the most attractive sectors in the country.

Recently, the government had signed a number of agreements worth $42 million, with various international companies to carry out exploration activities in the oil and gas sector.

It is expected that the energy supply position will be better after the implementation of plans for pipeline projects from Iran and the Central Asian countries.

Similar pipelines are also being negotiated with Qatar and Turkmenistan. These energy development projects in the country would help battle future energy shortage in the country and pave the way for enhanced economic activities, reduction of poverty and bring Pakistan's backward areas at par with the developed areas.

As for energy in Pakistan, power, gas, petroleum and coal are the main components of this sector.

During 2004-05, the primary commercial energy supplies increased by 9.2 percent to 55.5 million tonnes of oil equivalent (MTOE), as compared to 50.8 (MTOE), in 2003-04. The major increases derived from natural gas (2.7 MTOE) oil (1.2 MTOE) and coal (0.9 MTOE).

In comparison to the previous year, the supplies from nuclear and LPG have also illustrated a slight increase, while those from hydel have decreased.

The share of natural gas in primary energy supplies, during 2004-05, has also reached up to 50.4 percent, followed by oil (29.4 percent), hydro electricity (11.0 percent), coal (7.6 percent), nuclear electricity (1.2 percent) and lastly, LPG (0.4 percent). The drilling activity, particularly exploratory drilling has slowed down during the last two years ie 2004-05 and 2003-04; only 19 exploratory wells were drilled during 2004-05 as compared to 29 during 2003-04 and 32 during 2002-03. The number of development wells drilled during 2004-05 was 28 as against 24 during 2003-04 and 45 during 2002-03.

Oil and gas production showed positive growth during 2004-05 and the oil production increased by seven percent from 61,774 barrels per day, in 2003-04, to 66,095 barrels per day in 2004-05.

At the same time, the natural gas production increased by 11.8 percent from 3,295 to 3,685 million cubic feet per day (MCFD) during the same period.

As far as consumption is concern, during the period of last 10 years (1995-96 to 2004-05), the consumption of petroleum products has increased by an average rate of 0.9 percent per annum. The consumption of gas, electricity and coal have also increased at an average rate of 7.9 percent, 4.6 percent and 9.1 percent per annum, respectively.

It is important to note that a structural shift is taking place in energy consumption in Pakistan, since 2000-01. While consumption of petroleum products is declining except in 2004-05, the consumption of other components of energy is rising. The average consumption of petroleum products has in fact, registered a decline of 3.3 percent per annum since 2000-01.

 

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KARACHI (June 05 2006): The government has decided to enhance the share of coal in the overall energy mix from five percent to 18 percent up to 2018, due to the import of high cost energy resources. The coalfield in the Sindh province has huge coal resources of about 175 billion tonnes.

According to Economic Survey 2005-06, in view of the anticipated shortfall of electricity and other energy resources during the next 10 years, the maximum utilisation of coal would be required in power generation and gasification.

The Approved Energy Security Action Plan has set a target of generating about 20,000 Megawatt (MW) of power from coal by 2030 and 50 percent by 2050.

As a result of the government endeavours, about 80 percent of the cement industry have now switched over to indigenous coal from furnace oil that has saved considerable foreign exchange being spent on the import of furnace oil.

The conversion of the whole cement industry to coal would generate demand for 2.5 million tonnes of coal per annum.

To ascertain commercial viability of mining coal from Thar, the German consultant Rheinbraun Engineering has completed a mining feasibility on a specific block in Thar coalfield.

The same block has been assigned to a firm from the United States for commissioning of integrated coal mining and 1000-MW power generation project.

The government has also decided to establish a coal mining and power generation company on the pattern of WAPDA for harnessing the Thar coal resource.

As a part of the promotional activities to increase the share of coal, the Government of Sindh has leased out a coal block to Fatteh Group of Hyderabad to commission a coal-based power plant of 250-MW.

In addition, the government has also allowed a Chinese company namely, China National Chemical Engineering Group Corporation (CNCEC) to conduct a feasibility study on a coal block in Sonda Jherrick coalfields in the Sindh province for an integrated mining project of one million tonnes and commission a 250-MW coal based power plant.

In pursuit of a Presidential directive, the Sui Northern Gas Pipeline Limited (SNGPL) is in the process of preparing pre-feasibility for the commissioning of town gas plant at Bakar (Punjab), by utilising Makarwal coal.

The total national coal production from operational coal-mines during 2004-05 remained around 4.60 millions and about 80 percent of it was consumed by the brick kiln industry.

 

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Inaugurating the ‘marble city’ at Gaddani in Balochistan, the President General Pervez Musharraf assured the manufacturers that the government would serve as a facilitator to promote the marble industry and its mining will be undertaken by utilizing the latest technologies to avoid wastages.

About 300 units have been planned for the marble city on some 600 acres of land. Four units are currently in production at the facility and investment has been made by expatriate Pakistanis from USA, Japan, Spain and the UAE. The President also assured some other measures to help the marble industry.

The industry has failed to benefit from the marble boom. Disorganized and mismanaged and possessing poor technology, the industry has been shy of sizeable investment.

Pakistan is currently mining 40 types of natural colour marble and also dying the marble in various colours which is processed by 150 different units. Only now utilization of modern machines has started to produce qualitative products in bigger quantities.

The efficiency of marble processing industry depends on the quarry products. Development of the skills of the local quarry masters can improve the quality and raise productivity to meet international standards and demand. Private sector can be encouraged to establish a large number of marble enterprises in Balochistan, which would carry out the quarrying, processing and trading of marble products.

The use of out-dated technology in the mining results in some 70 per cent of wastage, as the explosives are used for the purpose. Obsolete methods are still in practice and a lot of breakage occurs.

The government needs to develop processing centres with automatic tiling plants in the Gaddani marble city and the president has assured that the equipment would be imported for the purpose.

Marble is largely used in construction and handicrafts sectors. Amongst the building stones, marble occupies a unique position. Marble slabs and handicrafts have great demand in national and international market. The ministry of industries and production has set a marble export target of $500 million.

Marble is an export-oriented sector. There is a big demand for this mineral in the Middle East, Far East and European countries, where almost 50 per cent of the world’s marble output is consumed. Pakistan earned $15.8 million foreign exchange with the export of marble in FY 2001-02.

The 40 per cent export was in the shape of handicraft, while the rest of 60 per cent in slabs and bricks form. Marble is exported to the USA, Dubai, Korea and Bangladesh while Europe is considered a potential market. What is needed is the tapping of the world markets and improving quality, value addition and bringing down the extraction losses.

Marble in commercial quantities is found at a number of places including Lasbela, Khuzdar and Chaghi districts. Commercial marble is defined as “any crystalline rock capable of taking a polish and suitable for decorative and structural purposes”.

Marble in Chaghi district is of onyx variety and is being mined since 1950’s. The term ‘onyx’ signifies a banded variety of quartz, highly prized as an ornamental stone.

The onyx is largely used for beads, brooches, ring-stones and other small ornamental objects, while the larger pieces are occasionally wrought in the form of cups, howls, vases etc. Onyx is the favourite stone for cameo work because its layers can be cut to show a colour contrast between the design and the background.

For its vast applications and uses, onyx marble is in great demand in the international market. The onyx marble from Chaghi can meet the international standards and demands if it is processed efficiently.

A marble policy should envisage the sanction of mining leases to private firms in Balochistan. Prospecting license may also be granted to firms for unexplored areas and the local private sector should be extended incentives for making investment in the marble sector. The marble city is a step in the right direction.

 

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Dubai: DP World, the world's third largest container port operator and a unit of holding company Dubai World, said on Sunday it was discussing with the Pakistani government the terms of reference for taking over the strategic Arabian Sea port of Gwadar.

"We have been confirmed as the preferred bidder by the Gwadar Port Implementation Authority. We are currently in discussions to finalise the terms of reference for the concession," a company spokesperson told Gulf News.

A Pakistani official earlier said that operational management at the deep-sea port, built with Chin-ese assistance and located about 120 kilometres from the Iranian border, has been given to the Dubai firm.

Balochistan Chief Minister Jam Mohammad Yousaf on Saturday also said five border points have been opened with Iran to promote trade via Gwadar port, according to an agency report.

DP World emerged as the favourite for operating Gwadar after the world's number one port management firm Hutchison Port Holdings of Hong Kong withdrew a bid for the facility.

 

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Monday, June 05, 2006

ISLAMABAD: Over three million people in the labour force were unemployed in the first six months (July to December 2005) of fiscal 2005-06 and the unemployment during this period was 6.50 percent, according to the Economic Survey 2005-06 released on Sunday.

Agriculture employment increased from 43 percent in fiscal year 2003-04 to almost 45 percent in the first six months of 2005-06. In Pakistan, labour force participation is estimated on the basis of Crude Activity Rate (CAR) and Refined Activity Rate (RAR). CAR and RAR were 32.8pc and 46.9pc respectively during the first half of 2005-06, up from 30.4 percent and 43.7 percent in the same period in 2003-04. The survey said 5.82 million jobs were created from 2003-04 to December 2005, 4.4 million in rural areas.

The employed labour force shows an increase in women’s number in most sectors. The increase in rural female employment was mainly in the category of unpaid family helpers. The largest increase in female employment was in agriculture and allied industries, supporting the view that employment gains are concentrated in female unpaid workers.

 

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Monday, June 05, 2006

* Government may announce 50% rebate on power charges for tube-wells

ISLAMABAD: The government will present Pakistan’s highest-ever federal budget of Rs 1.141 trillion in the National Assembly today (Monday) for the fiscal year 2006-07.

A senior official told Daily Times that the federal and provincial consolidated budgets outlay was expected to be Rs 1.5 trillion, which would include Rs 1.141 trillion for the federal budget and Rs 344 billion for the provinces.

The federal cabinet will approve budget proposals for the next fiscal year in its special budget meeting in the morning, and State Finance Minister Umer Ayub Khan will present the budget in the evening. The fiscal deficit is estimated to be 5.1 percent of GDP or around Rs 401.8 billion, while the current account deficit has been estimated at 4.3 percent of GDP in the next fiscal year. The budget deficit will be financed through foreign borrowing of Rs 228.9 billion, domestic borrowing of Rs 119.9 billion and projected privatisation proceeds of Rs 75 billion.

The defence budget allocation is expected to be increased from last year’s Rs 223.5 billion (later revised to Rs 240 billion) to Rs 248.25 billion for the next fiscal year with an increased foreign exchange component to finance defence imports. The budget aims for seven percent economic growth in the next fiscal year with a political objective to win public support for the 2007 general elections by providing maximum relief to government employees and low-income groups.

The budget’s main features are: an increase in the pay of government employees, increase in the pension of retired employees, and continuing Rs 200 billion subsidies and grants on food and public services such as utilities, electricity, fuel and fertilisers. The government will also announce special measures to stop inflation. A special price regime is also expected to be announced to control the price of food items. The revenue collection target is expected to be Rs 838 billion, aimed at expanding the tax base by including sectors that were outside the tax net or contributing less than their actual potential.

The government will also announce a new Wealth Tax Law, allowing people to legalise hidden wealth by paying tax ranging from two percent to 10 percent. The services sector will be taxed on the basis of rates prescribed in the first schedule of the Income Tax Ordinance. The government will introduce new income tax forms and they will include a new section relating to income from the sale and purchase of property.

Agriculture: The government will announce a 50 percent rebate on electricity charges on tube-wells used for irrigation because of the shortfall in the availability of water in the canal system, sources told Online.

The Food, Agriculture and Livestock Ministry had asked the government for the rebate, said sources. A National Assembly standing committee had backed the idea, they said. WAPDA has been told to facilitate the government in this regard, they added. Sources said the government would also remove the general sales tax (GST) on fertilisers and pesticides. “The government also plans to reduce the interest rate on farm loans from nine percent to four percent,” they added.

 

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Monday, 5 June 2006
Perfect Pakistan


by Stuart Wilson
Dr. Aamir Matin, the newly appointed general manager of Cisco PakistanSizing up


Vendors, distributors and resellers are waking up to the huge potential that exists in the Pakistani market. With a population in excess of 150 million people, a buoyant enterprise IT spending environment and strong cultural and economic ties to the Middle East, Pakistan is a market on the up.

It is easy to underestimate the size and potential of the Pakistani IT market. IDC estimated that full year PC unit sales during 2005 hit the 500,000 mark, but many players operating on the ground inside Pakistan believe this figure falls well short of the actual market size. The analysts and the local channel do agree on one point: the conditions are perfect for rapid market expansion in the next few years as local assemblers and A-brand vendors tap into the wave of demand expected to materialise. IDC predicts that total PC unit sales per annum in Pakistan will exceed one million units by 2010.

“In Pakistan, encouraging government-led policies and structural liberalisation in the financial and telecommunications sector helped to lift the PC market,” explained Andrew Wong, personal systems research manager for emerging Asia countries at IDC.

Local assemblers are staking a claim to the growing PC market inside Pakistan. Brands such as In-Box, Raffles and Softwise are building significant brand equity and grabbing significant market share. With many A-brand vendors yet to deploy full-scale operations within Pakistan, local assemblers realise that the next few years will be critical in cementing their long-term future in the market.

At present, the local assembly market remains highly fragmented with Pakistan’s number one brand, In-Box, taking just 5.8% market share in 2005, according to IDC, driven in part by success in the government and education space. The market is ripe for local assembly consolidation and the emergence of a top-tier.


Venu Menon, divisional director at Online DistributionLocal heroes


Hafeez Khawaja, senior regional director Middle East, Africa and South Asia at storage giant WD, believes that the local assemblers are more than capable of giving the A-brands a run for their money.

“There are some very professional local assemblers in Pakistan,” he said. “I was amazed by the quality of the facilities that players such as In-Box and Raffles now have. They have employed Pakistanis that used to work for global vendors such as HP and Dell in the US who decided that they wanted to come back. Their technology is state of the art and their product marketing is top class.”

Estimating the size of the total IT market in Pakistan remains a tricky task. One person well placed to assess the data is Dr. Aamir Matin, the newly appointed general manager of Cisco Pakistan. Prior to his appointment, Matin worked at the Pakistani Ministry of IT where he led various successful initiatives to boost exports of IT and IT-enabled services. “The overall IT market is growing at 50% year-on-year,” said Matin. “You talk to the major hardware and software vendors and this is the growth in numbers that they are seeing. The actual size of the market — excluding the telecommunications sector — is around the US$1 billion mark and this includes hardware, software and services.”

Matin estimates that at least 50% of this total is currently derived from hardware sales with software and services accounting for approximately 25% each. As the market grows and matures, the channel also has to evolve and develop in order to keep pace. Specialisation and focus is the name of the game as the Pakistani market reaches a critical mass. For Cisco, making sure that its channel has the breadth and depth of skills and reach to take on all the opportunities that exist in the market is an ongoing challenge.

“There is still a challenge inasmuch as the channel remains very fragmented,” conceded Matin. “There are not that many large partners capable of handling some of the bigger projects that are coming up in the country. The situation is changing but it will take time. What we are now doing is looking to work with some of Cisco’s large global partners to address these opportunities in the market.”


Mobeen Ul Haq, manager at Pakistani networking and storage distributor Silicon TechnologiesSkill sets


In the enterprise IT segment, the telecommunications sector has played a pivotal role in driving the growth of IT spending. For value-added distributor Tech Access, which represents Sun Microsystems, Symantec and Mercury in Pakistan, building a highly focused partner base capable of dealing with the largest companies has been the secret of its success.

“You have to be very focused to develop an effective enterprise channel in Pakistan,” explained Dimuth Wijeratne, partner sales manager for Pakistan at Tech Access. “The telecoms sector still accounts for 70% of spending and we have built a strong partner network to address this opportunity. We are now looking to replicate this in the financial services vertical.”

“The market in Pakistan has matured a great deal over the past couple of years and this has allowed systems integrators and solution providers to start focusing on specific verticals. It is important to remember that this is a market of more than 150 million people — that is the scale of the opportunity that exists in Pakistan. We have also found that IT managers are extremely knowledgeable when it comes to purchasing decisions. They are working on limited budgets and project failure is not an option,” he added.

Tech Access is not the only distributor looking to serve Pakistan from a Dubai hub. Broadline distributors such as Tech Data and eSys have also invested in building up an in-country presence within the Pakistani market — a move that reflects both the size and the significance of the opportunity. From a networking perspective, Online Distribution is also working hard to tap into the Pakistani channel.

Venu Menon, divisional director at Online Distribution, commented: “Pakistan is growing at a tremendous rate and it is now a market that we have a strategic focus on. More and more vendors want to serve Pakistan from their Middle East and Africa operations. The Pakistan channel community likes to purchase product from Dubai — and I think vendors are waking up to the fact.”

Online represents both Zebra and Symbol in Pakistan and already has a database of 100 in-country resellers purchasing product. “There is a massive amount of IT spending happening in Pakistan and the country is also serving as a gateway for product that is eventually destined for Afghanistan. In terms of skill sets, the Pakistan channel is very well developed — there are significant software development skills within the country and the cost of labour remains relatively low,” Menon continued.


Hafeez Khawaja, senior regional director Middle East, Africa and South Asia at storage giant WDTop tier players


Wijeratne at Tech Access agrees that the Pakistan channel is comfortable dealing with vendors and distributors operating out of Dubai. “Our sales in Pakistan are more than doubling year-on-year,” he added. “The market now accounts for 20% of Tech Access’ total sales. There has been a great deal of investment into Pakistan from the Middle East and the cultural ties are very strong. It makes more sense for vendors to handle Pakistan from the Middle East as opposed to handling the market from Singapore.”

Vendors are starting to realise the importance of in-country channel coverage within Pakistan. “We are convinced that the long-term growth opportunities are massive.” Said Khawaja at WD, “That is why we have just appointed Pakistan Office Products (POP) as a second distributor alongside Roma. POP has offices in multiple cities and that is very important for the long-term development of our channel strategy.”

 

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“Pakistan is a vast country almost twice the size of France and the infrastructure for moving product around from one place to another is limited. Appointing a second distributor does not meant that they will fight each other — it means that we have broader channel coverage and reach.”

A top tier of in-country distributors is starting to emerge within the Pakistan channel. POP, Marsons and Roma are becoming familiar names to the bevy of vendor channel managers attempting to work out the best way to develop in-country routes-to-market. Other local distributors such as Silicon Technologies are also carving out reputations as focused distributors working in specific product segments.

Mobeen Ul Haq, manager at Pakistani networking and storage distributor Silicon Technologies, commented: “We have a distribution portfolio of products that now includes US Robotics, D-Link, 3Com, Adaptec, Tandberg Data and Moxa. Our main office is in Karachi with 40 people but we also have an operation of 12 people in Lahore and have just launched another office in Islamabad.”


Consumer demand for IT products is also starting to grow in PakistanFake fears


Adding more vendors to the portfolio is not the top priority for Ul Haq. Instead, his energies are concentrated on expanding the company’s channel breadth. In the cities where Silicon has points of presence, the distributor has built an expansive reseller customer base. In other cities, the company has developed a network of select resellers that effectively take on the role of sub-distributor and actively help to develop the channel breadth in their specific area of geographic focus.

Challenges do still remain in the Pakistani IT channel. “Three years ago, grey market product was the major threat,” continued Ul Haq. “Today grey is less of a problem but the amount of fake and counterfeit product in the market is growing. Most of it comes from China through a variety of routes. Pakistan has relatively soft borders and the fake product can come in by air, land or sea.”

The surge in enterprise IT spending is filtering down to the consumer market. As the population becomes more tech-savvy, demand for IT products is soaring. As one of the fastest growing markets in the world for mobile phones, Pakistan’s future growth looks assured. The window of opportunity is now and vendors moving in-country first and deploying people on the ground have the opportunity to carve out a significant first-mover advantage. The conditions in Pakistan are perfect for growth.

“Vendors are realising that the Pakistani market has been neglected and they are now investing more in the market,” said Matin. “It is important that this investment results in real benefits for the country as a whole.”
http://www.itp.net/features/details.php?id=4497

 

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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."