Pakistan Economy - News & Updates - Archive

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ADB to provide $500 million for boosting economic transformation​

FAISALABAD (July 21 2008): The Asian Development Bank (ADB) will provide $500 million for 'Accelerating Economic Transformation Program (AETP) (Subprogram-1)', which will provide significant benefits in general, and targeted benefits for the poor in particular. First, it will help meet the immediate and massive fiscal needs of the Pakistan government.

According to a project report, prepared by Ramesh Subramaniam, Director, CWGF, the Asian Development Bank is considering to provide $280 million from OCR, and $220 million from Asian Development Fund for 'Accelerating Economic Transformation Program (Subprogram-1)'.

At a minimum, ADB report said, the agriculture and energy subsidies need to be met at a cost of upward of $3 billion, firstly. Secondly, the government needs to move away from the inefficient and untargeted subsidies to a targeted safety net program for the poor.

Beginning with about 2 million households, the program will help target up to about 5 million households, or roughly about one-fourth of the poor who are likely to be directly affected by the spiralling food inflation. Thirdly, the program will open the way for structural transformation. Fourthly, the program will help cut the transaction costs for businesses (reduction in red tape in tax payments) and improve investment climate.

Fifthly, the program will raise public confidence in the banking system arising from development of a financial sector safety net, including a depositor protection scheme, and stronger financial intermediaries that are better able to mobilise and allocate resources and risks, and promote financial sector stability.

Sixthly, the program framework will enable ADB to sustained policy dialogue on structural reform in sectors where ADB has been actively involved through investments. While Pakistan has achieved a real GDP growth rate of 6-7 percent in recent years, ADB sources said that this growth has generated large fiscal, trade, and investment deficits, and has occurred without any major structural changes. To sustain this rate of growth, Pakistani needs to transform in three directions.

First, it has to address the short-term distortions in the economy, particularly in the agriculture and energy sectors. The pricing and procurement system for wheat needs to be restructured, and subsidies better targeted to benefit the poor and vulnerable. The poorly targeted subsidies could cost the government upward of Rs 45 billion ($650 million) this year, not including the additional resource requirements--estimated upward of $2 billion at a minimum--to cushion the poor against the escalating prices.

Pakistan also needs to fix its subsidy system in the electricity sector. In the absence of an automatic adjustment mechanism, the government has not been able to settle the payments owed to distribution companies, which has resulted in a vicious circular debt problem and debt overhang in the sector. This problem needs to be addressed urgently to resolve the present energy crisis facing Pakistan. The immediate resource requirements are upwards of $2.5 billion.

Second, over the medium to long-term, the production and trade structure of the economy needs to be transformed to compete in the global economy. Specifically, Pakistan needs a deeper industrial base, a productive and efficient agricultural sector, greater value creation in the service sector, and far greater export sophistication.

TO ACHIEVE THIS, THE GOVERNMENT NEEDS TO:

(i) address policy and institutional distortions in the short term,

(ii) identify a few sectors where it can compete effectively, and

(iii) attract private sector participation.

Third, Pakistan needs to strengthen its domestic financial intermediation to facilitate structural transformation. At a macro level, the government has relied heavily on the central bank for its fiscal requirements--a practice that has to be reversed. Sector regulation needs to be strengthened to promote consumer confidence, manage risks effectively, and deepen financial intermediation.

ADB has been involved in competitiveness reforms in Pakistan since mid-1990s. It helped implement Trade, Export Promotion and Industry Program over 1999-2004, and a Small and Medium Enterprise Program to support reforms at the smaller end of the industry segment. In parallel, ADB has been engaged in financial sector reforms. ADB has worked closely with other development partners on these reform programs.

Through AETP, the Government is committed to adopting a structural transformation strategy focusing on industrialisation and increasing its competitiveness in industry and other areas, and related reforms to promote a stronger financial sector. To help leverage these reforms and bridge deficits, Pakistan has requested budgetary support through the AETP.

The expected outputs of the program are: (i) removal of price, fiscal and structural distortions in the agriculture and energy sectors in the short term, with the objective of resolving the present food and energy crisis and averting future crises; (ii) accelerated value creation in industry, agriculture and services through structural reforms, including greater private sector participation; and (iii) sound financial intermediation.

Under this project, ADB sources said, the extensive consultations were conducted with the government [including Ministry of Finance (MOF); Ministry of Industries; Ministry of Commerce; Ministry of Food, Agriculture and Livestock; Ministry of Labour, Manpower and Overseas Pakistanis; State Bank of Pakistan (SBP); Planning Commission; Board of Investment; Privatisation Commission; Engineering Development Board)] private sector (including ABN/AMRO, KPMG, McKinsey) and other development partners (including IMG and World Bank).

ADB will monitor program implementation through regular reviews and progress reports throughout implementation. Based on these reviews, modifications and improvements will be considered. To facilitate such reviews, the government will assist ADB by providing relevant data and information in such details as ADB may reasonably request.

Business Recorder [Pakistan's First Financial Daily]

 

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Gas becoming a major source of power generation: World Bank​

ISLAMABAD (July 22 2008): The World Bank report 'World Development Indicators 2008' reveals that Pakistan's dependence on water resources for power generation declined by 12 percent - from 44 percent to 32 percent - during 1990 to 2005 whereas reliance on gas increased by 11 percent - from 33 per cent to 44 percent.

The decline in reliance on hydel electricity can be attributed to the failure of the previous government to invest in construction of big projects such as Kalabagh Dam, Basha Dams etc. Statistics reveal a declining trend in hydropower generation in the region with the exception of Nepal, which was relying exclusively on water resources for power generation.

Further analysis of the data showed that Pakistan generates 20.6 percent of its electricity from oil, which is becoming dearer in the international market with each passing day and may not constitute an economically viable means of power production in future. There is need to exploit alternate sources of energy such as water, coal and nuclear, which are environment friendly.

A comparison of sources of power production in the region showed that Pakistan, India and Iran have been rapidly shifting to gas as the major source of power generation, which increases the need for early materialisation of Iran-Pakistan-India gas pipeline to meet their domestic demand for future consumption.

Pakistan's gas consumption as a percentage of its total power generation increased from 33 to 44 percent, India's from 3.4 to 8.9 percent while Iran's 52 percent to 73 percent during the period under review. India's reliance on Hydropower also declined from 24.8 to 14.3 percent during 1990 to 2005.

Similarly, Bangladesh has been mainly relying on use of gas for power generation and its consumption as a percentage of the total generation increased from 84.3 percent in 1990 to 86.6 percent in 2005 while Sri Lanka which in 1990, was mainly using water as a major source for power generation is now relying on oil to meet about 60 percent of its power production needs.

Data also showed that Pakistan in 2005 met 20 percent of its energy needs through imports with 3.7 percent average annual percentage growth of energy use from 1990 to 2005.

Business Recorder [Pakistan's First Financial Daily]

 

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Thar coal-fired power plant: Sindh government barred from joint venture​

ISLAMABAD (July 21 2008): The Private Power Infrastructure Board (PPIB) has barred the Sindh government from entering into any joint venture with investors for a 1000 MW coal-fired power plant without prior consultation with the power purchaser, well-placed sources told Business Recorder.

The Sindh government had alleged in a letter to the federal government that a conspiracy was being hatched at the federal level against the much needed development of an integrated coalfield power plant project. The 'insensitive handling' of a Chinese company, the Shenhua Group, which led to its withdrawal from the process, was cited as the reason.

"We understand that before finalising the joint venture with the investors, the Sindh government must discuss major issues with the power purchaser so as to generate support from the power purchaser for the proposed joint venture," said PPIB Managing Director Fayyaz Elahi, in a letter to Mines and Mineral Development Secretary Younus Dagha.

The PPIB was informed that the Sindh government recently guaranteed coal supplies at a price higher than the three different pricing references.

In case of non-absorption of guaranteed coal supplies, the Sindh government would pay liquefied damages (LDs) of Rs 300 per ton, which is said to be a good incentive to attract investors.

The PPIB, however, is of the view that to avoid incurring LDs, the Sindh government and the PPIB would have to try synchronising the commissioning of power plant with the start of commercial mining, the sources added. The Sindh cabinet, a couple of months ago, had reviewed progress on all mega projects, including the Thar coal project, noting that despite best efforts of the government and completion of the corresponding infrastructure, the project had not moved forward.

"Agencies at the federal level have not been supportive, on the contrary, frivolous and fictional impediments are being created in allowing upfront tariff, which is the only way forward for integrated coal-fired power plants," the sources quoted the Sindh government as saying in the letter.

Pakistan has not been able to exploit its coal reservoirs for power generation, as World Development Indicator of the World Bank, 2008 reveals that coal share in power generation remained stagnant, 0.1 percent, from 1990 to 2005 whereas India has been heavily relying on coal for electrify production with 66.2 percent in 1990 that was enhanced to 68.7 percent in 2006.

Fayyaz Elahi also said that coal without guarantees for firm off-take would also be required four to six months earlier than the actual commissioning of the plant during the testing phase of the power plant.

The PPIB also believes that information memorandum prepared by the provincial government promised certain incentives which would have a direct impact on the power purchase agreement (PPA) and all the costs would be eventually passed onto the power purchaser.

"Coal pricing formula would have a direct bearing on the dispatch ability of the power plant, and the resultant ballpark figure for minimum take or pay," Fayyaz Elahi added.

Business Recorder [Pakistan's First Financial Daily]

 

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Pakistan witnesses 41 percent increase in fertiliser consumption​

ISLAMABAD (July 22 2008): The fertiliser consumption in terms of 100 grams per hectare of arable land in Pakistan has shown an increase of 41 percent from 1990-92 to 2003-05, World Bank report revealed. Fertiliser consumption in India, during the same period, has shown an increase of 34 percent from 1990-92 to 2003-05 while Bangladesh has increased its use by 46 percent during the same period.

China has shown relatively slow progress with witnessing only 28 percent increase. According to the report, irrigated land in Pakistan has increased to 84.2 percent in 2003-05 from 78.5 percent in 1990-92 indicating an increase of 5.7 percent. From 1990-92 to 2003-05, irrigated land in Bangladesh increased by 38 percent of the crop area; during the same period China irrigated land showed a downward trend showing 4 percent reduction; while India witnessed 4.4 percent increase in irrigated land.

Irrigated agriculture is the major user of both, surface and groundwater resources in Pakistan. About 77.4 percent of the total irrigated area of Pakistan fall in Punjab, 2.8 percent in NWFP and 19.8 percent in Sindh/Balochistan.

The report indicates that the total agricultural land in Pakistan has increased to 35.2 in 2003-05 from 33.7 percent in 1990-92, showing an increase of 1.5 percent. While India and Bangladesh have shown a decrease 0.3 percent and 6 percent respectively in agricultural land during the same period. China has witnessed 2 percent increase in total agricultural land as compared to 1990-92.

Agricultural employment in Pakistan has decreased from 48.9 percent in 1990-92 to 42.7 percent in 2003-05, showing a reduction of 6.2 percent, the report said. Same is the case with Bangladesh where the agricultural employment has reduced to 21 percent during the same period. The report does not provide any data regarding agricultural employment in India and China.

Business Recorder [Pakistan's First Financial Daily]

 

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Domestic debt surges to Rs520 billion ​

Wednesday, July 23, 2008

KARACHI: Total domestic debt of the country surged to Rs520.111 billion till May 2008, which was recorded at Rs300.112 billion in the corresponding period of fiscal year 2006-07.

“Upsurge in domestic debt is a very negative sign for economy which is crippling due to huge outstanding amount of international lending agencies,” said Dr Usman, head of economics department at a local university.

Foreign debt of the country has reached $45 billion mark, which leaves very narrow space for economic managers to allocate enough amounts for development of social sector besides health and education, he said.

Major allocation of fiscal budget is spent on debt servicing which was borrowed by successive governments.

From June-May 2007-08, the permanent debt including medium and long-term debt which was acquired through Pakistan Investment Bonds (PIBs) and prize bonds swelled to Rs54.030 billion compared to Rs41.804 billion in the same period of FY07.

Moreover, latest statistics of State Bank of Pakistan (SBP) revealed that country’s outstanding debt obtained by successive governments through auction of Pakistan Investment Bonds (PIBs) augmented to Rs57.467 billion compared to Rs39.298 billion of FY07 while the government acquired Rs8.509 billion through auction of prize bonds which was recorded at Rs6.770 billion in the corresponding period of previous fiscal year.

The break up shows that government borrowed highest amount in the form of floating debt which consists of short term borrowings in the form of treasury bills (T-bills). Till May 2008 the total amount of outstanding floating debt grew to Rs397.568 billion which was witnessed Rs208.901 billion in the matching period of fiscal year 2006-07.

However, under the head of unfunded debt which refers mostly to outstanding balances of various National Saving Schemes (NSS) also enhanced to Rs68.513 billion compared Rs49.407 billion in the same period of FY07. During last fiscal year 2007-08 the unfunded debt witnessed a massive growth through Special Saving Certificates (SSC) which expanded to Rs13.671 billion till May 2008 against Rs6.201 billion in corresponding period of pervious fiscal year. Government borrowed Rs38.523 billion through Bahbood Savings Certificates in above mentioned period as compared to Rs44.918 billion in this head during similar period of FY07.

Government borrowing through Special Saving Accounts declined to Rs4.157 billion which Rs5.202 billion on May 2007. government made use of Rs18.578 billion obtained through Pensioners’ Benefit Accounts against Rs10.860 billion of pervious fiscal year.

Domestic debt surges to Rs520 billion

 

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Fund worth Rs20bn launched to bail out stock market ​

Wednesday, July 23, 2008

KARACHI: Finance Minister Syed Naveed Qamar has announced to borrow zero rupees from the central bank during fiscal year 2009 and hoped that it would help the SBP keep its monetary policy stable instead of tightening it furthermore.

He stated this at a press briefing while visiting Karachi Stock Exchange (KSE) on Tuesday where he also announced to formally launch Equity Market Opportunity Fund (EMOF) worth Rs20 billion within this week. This fund would be injected in equity market in gloomy days. Razi-ur-Rehamn, SECP-Chairman and Adnan Afridi, KSE-MD flanked minister at briefing.

He said that when PPP-coalition took over government in March, the budget deficit was standing historically high at 9.5 per cent, but they reduced it to seven per cent and committed to slash it further to 4.7 per cent in running fiscal year.

For this purpose, government was gradually pulling back subsidies on POL products and also cutting down other unnecessary expenditures on government hands, minister added.

“Our decision not to borrow from the central bank would help us controlling inflation and make the SBP monetary policy stable,” he added.

Qamar further said that his government would go for utilizing other channels than the central bank for meeting the budgetary demand. “If government has to borrow from SBP in this regard the size of borrowing would be nominal or within the legal limits,” he added.

Responding to query, he said that the initial size of EMOF would be Rs20 billion that may be enhanced in future. Earlier, the market regulators were talking to initiate this fund with at least Rs50 billion funds.

It is supposed to be a market support fund that would be injected in market in bad days. The money in this fund would be pooled in by government and semi government and other institutions and would be invested in KSE 100-Index and CFS MK-II eligible scrips only. National Investment Trust (NIT) would manage this fund, it was learnt.

Further details and modalities regarding EMOF would be announced in a day or two by the regulators.

Minister, who also holds Privatisation Portfolio, said that privatisation programme of his government was ready for current fiscal year, but waiting for cabinet approval so that it could be made public.

Qamar said that Saudi Arabia has finally agreed to provide oil on defer payments to Pakistan and it will unveil details in this regard very soon.

On the other hand, USA has announced to give $7.5 billion non-military aid to Pakistan over a period of fiver years.

“We are using our foreign offices to make our economy improve. The availability of Saudi oil on deferred payments and USA aid would help government to fix its economy and set it on right direction,” he opined. Responding to a query regarding conducting inquiry in current equity market crisis, he said that none of the ministries were responsible for that and this question should be asked to market regulators.

“We are also waiting for stability in market so that we could launch bonds through capital markets and could use them for borrowing purposes,” he responded.

He asked regulators to introduce those procedures which could remove the element of manipulation and bring transparency in equity markets.

Fund worth Rs20bn launched to bail out stock market

 

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KSE up 410 points as investors garner confidence ​

Wednesday, July 23, 2008

KARACHI: Government’s move to build confidence of the equity investors proved healthy for market, as Karachi bourse benchmark KSE 100-share Index reverted to well above 10,500 points mark on Tuesday.

The KSE 100 posted a significant increase of 410.51 points or almost four per cent to 10,784.81 points. The closing level of the session was just 10.22 points lower than the intra-day high of 10,795.03 points.

Market managed to keep going higher throughout the session. Investors accumulated stocks on strength. Energy, telecom, fertilizer, cement and the banking stocks led the rally.

Briefing by Governor-SBP to KSE-member that financial accounts of banks continue to soar and they were allowed to invest in stock markets changed negative perceptions about banks to positive, said analysts.

More than 40 leading stocks closed at their upper limit of five per cent or Re1- whichever is higher one from previous closing value. On the other hand, five scrips hit their lower lock as well.

Analysts said that market participants were expecting some positive and market-friendly news ahead of Finance Minister Syed Naveed Qamar visit to Karachi Stock Exchange (KSE) on Tuesday.

A day earlier, Governor State Bank, Dr. Shamshad Akhter also visited KSE and met the members and board of directors.

The meeting of Naveed Qamar and Dr. Akhter with KSE members and likely announcement of the size of Equity Market Opportunity Fund in rupees boosted confidence among the investors community, they added.

Market pundits were of the view that market was standing at very much attractive levels and whosoever having hard cash can run away with great financial benefits at current levels.

Investors were not short of money while the full-launch of Continuous Funding System Market-II (CFS MK-II) also ensured to provide unlimited money in the market. But investors had lost their confidence in market that has begun restoring following visits of Dr. Akhter and Naveed Qamar.

The positive thing of the day session was notable increase in market turnover that surged to 135.254 million shares in ready market. This is 44 per cent higher as compared to 93.853 million shares of a day earlier.

Accordingly, the overall market capitalisation massively surged by Rs122 billion to Rs3.366 trillion.

The future market turnover, however, marginally fell down to 15.354 million shares from 18.445 million shares in previous session.

The parallel running junior 30-Index soared by 537.29 points or 4.65 per cent to 12,096.87 points.

Oil and Gas Development Company, Pakistan State Oil, Pak Oilfields, Pak Petroleum, MCB Bank, National Bank, Habib Bank, United Bank, Pakistan Telecommunication Company, and JS Siddiqui Co. were a few notable gainers, which contributed their points in positive and in double digit in 100-Index. Each of them included their points in range of 10 points to 89 points.

The plus sing overpowered the minus one after quite a long time, as 227 companiesí stocks advanced against 67 scrips fell in red. The value of 12 scrips closed pegged at pre-opening levels with total 306 active counters on board.

Highest volumes were witnessed in NIB Bank at 11.821 million closing at Rs10.48 with a gain of Re1, followed by Bank of Punjab at 7.169 million closing at Rs22.50 with a loss of 54 paisa, Arif Habib Securities at 6.446 million closing at Rs136.71 with a gain of Rs6.51, Oil and Gas Development company at 4.694 million closing at Rs119.39 with a gain of Rs5.68 and MCB Bank at 4.008 million closing at Rs232.50 with a gain of Rs11.07.

KSE up 410 points as investors garner confidence

 

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Japan offers to install 500MW power plants ​

Thursday, July 24, 2008

ISLAMABAD: Japanese government on Wednesday offered Pakistan installation of two 500-megawatt power plants and showed interest in increasing investment in the automobile industry, while Islamabad assured Tokyo of establishment of Special Economic Zone (SEZ) for Japanese investors on priority basis, which would be equipped with basic infrastructure.

Federal Minister for Finance, Privatisation & Investment Syed Naveed Qamar assured this in a meeting with a visiting 15-member Pak-Japan Business Forum delegation led by Makoto Kakebayashi held here on Wednesday.

Qamar said in order to curtail the smuggling of diesel to the neighboring countries, the subsidies on certain petroleum products would be reduced gradually.

Pakistani workers remittances have gone up to $6.5 billion as compared to the previous year’s figure of $5.5 billion, he informed. The minister also directed the Board of Investment (BOI) to work together with the Pak-Japan Business Forum in knuckling down to study to find out the impediments being faced by the investors in general and the Japanese investors, in particular. A workable report should also be prepared in the light of this study suggesting remedial measures to remove all sort of hindrances and bottlenecks and all-out efforts should be made to encourage the Japanese business sector to enhance operations and investment in the country, he added.

Giving an overview of the country’s economy Syed Naveed Qamar said the pressure on current account was due to oil and food imports, which was being curtailed through effective measures.

Efforts were underway to improve environment for the private sector and a list of the public sector entities being offered through strategic sales, out right sale for privatisation would be made public within next ten days, while inflows of FDI have been good, which reflected the government’s facilitated†portfolio, based on investment planning and especially the tremendous interest by the investors in the power projects in consideration of existing power shortage in the country was encouraging, he stated.

Kakebayashi expressed that the Japanese business and investment groups and the government were keen to modernize the basic infrastructure in Pakistan through Official Development Assistance (ODA) in health, education, water and communication sectors and projects of Khanki Barrage and Karachi circular railway were already under way.

A report of the forum, joint study group, would be submitted to the government by the end of the year, he said. The Japanese study group comprises important heads of Japanese companies that focus on investment, business opportunities and bilateral trade between both the sides.

The group aims to prepare a study report on scope, extent, problems and prospects of Japanese investment in the country.

Japan offers to install 500MW power plants

 

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Punjab aims to enhance meat exports ​

Thursday, July 24, 2008

LAHORE: The Punjab government, realising the potential of livestock to narrow down trade deficit, has planned to boost processed meat exports to $200 million in the current fiscal year compared to $34 million last year.

The News has learnt that the Punjab government is hopeful that exports of processed livestock products would pick up substantially to reach $1 billion in the next fiscal as a result of facilitation the Punjab Livestock Department is providing both to farmers and exporters.

Sources say though export is a federal subject, Punjab rulers have decided to utilise their goodwill for getting a UAE ban on meat export lifted as most of the export industries are based in the province. Moreover, they add the ban by the UAE government is likely to trigger similar bans from other Muslim countries of the Middle East that account for 90 per cent of total meat and beef exports from Pakistan. The UAE alone accounts for 20 per cent of total meat exports from Pakistan.

The News has learnt that Punjab chief minister has arranged market access to meat markets of the UAE, which had been prohibited since June 2007. It was found that the main reason for the ban was non-compliance by slaughter houses with global standards dictated by HCCP certification.

The exporters were facilitated in making their slaughter houses fully compliant with international standards after which inspectors from the Municipality of Dubai examined four slaughter houses based in Lahore.

The inspectors after a thorough check declared three of them fully compliant with best global standards and on their report the general secretary of Dubai municipality lifted the ban. It has allowed two of them to export both mutton and beef to Dubai while one has been granted permission to export mutton only. The fourth exporter has been declared non-compliant.

Meat exports from Pakistan to the UAE had been increasing at a rapid pace during recent years. Exports increased from $1.25 million in 2003 to $3.41 million in 2006. The ban imposed in 2007 put a brake on the fast growing market where predominant Muslim population feels more comfortable with consuming Halal meat from Pakistan.

Beef exports to the UAE increased from mere $283,000 to $2.38 million in 2006. Exports rose three times from $0.80 million in 2005 to $2.36 million in 2006. The exporters had expected the volume to increase to over $10 million in 2007 when the ban was imposed.

Mutton and beef exporters told The News that the ban by the UAE also slowed down orders from other Middle Eastern countries. They said after the ban they realised that deviating from international standards could land them in trouble. “Now even the minutest directives stated in HCCP certification are being followed,” an exporter said.

The ban was imposed when UAE inspectors paid a surprise visit to exporters’ slaughter houses and found minor deviation from standard procedures, they claimed.

The Punjab government also facilitated a leading poultry breeder to obtain an order of $7 million for export of grand parent stocks to Saudi Arabia after the three-month ban on Pakistan due to bird flu scare was lifted in June this year.

The Punjab government is implementing globally accepted standards to maintain a minimum distance between two poultry farms in order to check the spread of any disease from one farm to another.

Punjab aims to enhance meat exports

 

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Panama offers investment opportunities to Pakistanis ​

Thursday, July 24, 2008

KARACHI: A two-member Panamanian delegation, which arrived in Pakistan this week, is trying to woo Pakistani businessmen to invest in the South American country. The delegation offers opportunities in the real estate sector and invites businessmen and investors to invest in their country to establish trade ties with them.

Adviser Government Affairs, Alejandro Moreno V and Advisor Real Estate Promotion, Government of Panama Rafael Sabonge V, talking to The News, said that they have travelled to Pakistan to understand the market and assess investment opportunities that are likely to benefit both countries.

“This is more like an orientation trip from which we hope to learn about the customs and people of the country, while at the same time explore to assess what options are available and what would work out best for us,” shared Moreno.

He said that they are staying in Karachi for a week during which period, the two diplomats would meet prospective investors and enlighten them on Panamanian business opportunities and the incentives offered alongside to facilitate them.

Interestingly, despite 60 years of Pakistan’s existence and even more so of Panama, there has never been any direct trade relations between the two nations and therefore the Latin American country is now looking forward to establishing direct trade routes for local goods such as textiles, marbles, surgical goods and certain eatables amongst others.

“Panama has changed its immigration laws completely since February 2008 and has brought about several positive changes in it,” informed Moreno. “Prospective businessmen from nations such as Pakistan would initially have to find a sponsor for them,” he added.

The advisor to government affairs continued that once a sponsor is available, then the applicant would have to prove with the help of supporting documents that he is going to invest into a business in Panama.

Once the Panamanian immigration officials are satisfied that all the documents are complete and authentic the visa would be granted.

The Pakistani businessmen after acquiring Panamanian visa may start performing their trade, he further stated.

The two visiting diplomats also informed that the government offers certain incentives to persons ready to invest in their country. They commented that their local government offers tax exemptions on land, equipments etc.

Citing an example, Moreno further added that immigration incentives include the benefit that if a certain investor is setting up a restaurant, he has the advantage of employing his hometown workers with no visa arrangement hassles.

However, Moreno was also quick to add that the Panamanian government keeps a regular check to ensure that the established business or investment is legal and running and “it’s not a ghost organization on papers alone.”

Rafael Sabonge informed that apart from tourism, real estate is the most lucrative sector in Panama where there are two types of investments. The first type is where people purchase personal homes as a “summer house for the vacations where they come only in summers to enjoy the good weather,” and the second is the commercial real estate market.

He explained that real estate opportunities include investments for renting purposes, for residential and commercial development, for tourism and logistics developments, revaluation amongst others.

Sabonge further elucidated that Panama is the largest growing economy in Latin America with a record 11.5 percent GDP growth in 2007 and with an unemployment rate as low as 4 percent, signifying that they are in need of foreign investors and workers to work along with them.

“Panama has a stable political economy, low taxes and direct flights to and from 30 countries around the world apart from a favourable corporate structure and a small but established Pakistani community,” he concluded.

Panama offers investment opportunities to Pakistanis

 

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Indonesia to boost bilateral trade ​

Thursday, July 24, 2008

KARACHI: Consul General of Indonesia Mustaqeem visited the Pakistan Commodities Importers and Traders Association (PCITA) to explore means to boost bilateral trade between Indonesia and Pakistan.

In his welcome address, PCITA Chairman Raees Tar Muhammad laid emphasis on a preferential trade agreement between the two brotherly countries to attract lost business from those countries which are already under the FTA of Malaysia, India and Sri Lanka.

He stressed particularly items such as spices, tea, palm oil and other agricultural products which form the biggest import from Indonesia. Muhammad gave a proposal to form Pakistan-Indonesia Business Council which will be a big tool for the facilitation of entrepreneurs of both countries and to assess business delegations.

In his reply, Mustaqeem appreciated the role played by the PCITA in getting the stuck-up cargo of betel nuts of Indonesian origin last year released which in turn opened the closed channels of betel nuts to the country. He agreed in principle for speedy visa for members of the PCITA on its recommendation.

Indonesia to boost bilateral trade

 

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Engro to post 54pc growth in profit​

KARACHI, July 23: Engro Pakistan Limited is expected to post 54 per cent growth in after-tax profit at Rs1.712 billion, translating into earning per share (eps) at Rs8.32, the average of projected potential results for the first half of the year ended June 30, by four stock brokerage firms, AKD Securities, Arif Habib Limited, Capital One Equities and First Capital revealed.

The company would unveil the financial results following the meeting of the board at 5:30pm on Thursday.

The market is anxiously looking forward to the results of first major liquid company, following the depressing period between April and July. Overall corporate results this season are expected to show a robust growth.

Analysts at Capital One issued the most positive results preview for Engro of an eps of Rs9.17, up 61pc over the corresponding six months of the previous year. AHL visualised eps at Rs8.56 up 56pc; analysts at AKD offered eps at Rs7.77 with First Capital showing an equal eps at Rs7.79, representing growth of 50pc over the previous same period.

Interestingly, all brokerages were expecting the company to disburse first interim cash dividend in the range of Rs2 and Rs2.50.

Analysts said that the growth in bottom line was likely to be a result of higher urea off take, improved gross margins on urea volumes and decent dividend receipts from subsidiaries.

“During the half year under review, urea and DAP prices had averaged to an all time at Rs614 per bag and Rs2,800 per bag respectively,” analysts noted.

HBL and UBL would declare financial results on Friday, which would give an interesting insight into the performance of the banking sector.

Engro to post 54pc growth in profit -DAWN - Business; July 24, 2008

 

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Barclays Bank commences operation in Pakistan​

KARACHI: Barclays Bank Plc., a prominent bank of the United Kingdom, has become a scheduled bank in Pakistan from July 23 by opening its four branches, said Shazi Ashraf, head of corporate affairs of the Bank.

“The Bank has commenced its two-branches in Karachi, one in Lahore and one in Islamabad from Wednesday (July 23) and the people are joining bank by opening their accounts,” she said. “These branches are absolutely new and we have hired staff in every section of the bank,” she said. Ms Shazi said, “the bank is neither interested to acquire any Pakistani bank till now nor it is negotiating for any merger.”

Barclays Bank Plc entered into Pakistan with an initial investment of $100 million aiming to open ten branches throughout the country. It has commenced four branches in Pakistan while other six branches would be started by the end of this year.

Through a notification, the State Bank of Pakistan (SBP) has declared “Barclays Bank Plc.” as a scheduled Bank with effect from July 23, 2008. Barclays Bank Plc, is the second largest global bank by assets size with regulatory capital of $68.138 billion and is a subsidiary company of Barclays Plc. Barclays Plc is listed in London, New York and Tokyo stock exchanges. Barclays Bank is a major global financial service provider engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management services. The bank operates in over 50 countries employing 123,000 people and has customer/client base of over 27 million. Barclays Bank and its companies operate 3,913 branches in over 50 countries.

Daily Times - Leading News Resource of Pakistan

 

[Neo]

Govt plans to utilise 6.30 million hectare salinity affected areas​

* Project would be initially implemented in 11 selected districts​

ISLAMABAD: The federal government has planned to initiate a project worth Rs 826 million for proper utilisation of about 6.30 million hectares salinity affected area for semi-agri business across the country, officials in the Ministry of Food, Agriculture and Livestock (MINFAL) told Daily times here Wednesday.

Life duration of this project would be 5 years and initially it would be implemented in 11 selected districts throughout the country where the land was of no use to the farmers.

These districts include in Punjab, Faisalabad, Lodhran, Bahawalnagar, Rahim Yar Khan, in Sindh, Thatha, Badin, Larkana, Sanghar, Tharparkar, in Balochistan Jafferabad and in NWFP Lucky Marwat. “We are investing Rs 826 million on the project and are hopeful that the return would be Rs 8.5 billion”, the officials maintained.

The plants that would be grown on this land would provide wood and animal fodder and MINFAL would help the growers in building up nurseries of these plants.

According to the available data, in Pakistan 1.89 million hectare was saline-affected area, 1.85 million hectare was permeable saline-sodic, 1.02 million hectare was impermeable saline-sodic and 0.028 million hectare was sodic in nature. It was estimated that out of 1.89 million hectares saline patches, 0.45 million hectares presented in Punjab, 0.94 million hectares in Sindh and 0.5 million hectares in NWFP.

“The project is divided in two phases; in the first phase Atomic Energy Commission did research work in this regard for 5 years with the total cost of Rs 176 million sponsored by the food ministry”, they explained. The officials informed, “during our research work, we have made 25,000 acres salinity affected land already cultivable”.

“We have started working on the second phase of the project as we have already initiated work in Lodhran and Faisalabad with Rs 50 million”, they added.

The location of Pakistan is in arid and semi-arid climatic zones. Generally high evapo-transpiration in semi-arid and arid zones is the basic cause for salt accumulation on the soil surface, the officials added. The average summer temperature is about 40OC and the minimum winter temperature remains between 2OC to 5OC. The annual rainfall varies between 100mm to 700mm throughout the country. The evaporation rate was generally very high and exceeded that of precipitation. Thus, the insufficient rainfall followed by high evaporative demand and shallow ground water depth, enhances the movement of salts towards soil surface.

Salinity is an important problem affecting irrigated agriculture of Pakistan. Improper irrigation practices and lack of drainage have generally led to accumulation of salts in the soil in concentrations, which were harmful to the crops, they added. There was a major imbalance in the amount of salt entering and leaving the soil in the country. Each year about 120 million tonnes of salts were added to the land in canal water and brackish under ground water. Only about 20 percent of this salt finds its ways to the sea. The remainder accumulates in the soil, which continued to decrease the growth and survival of crops.

Most saline soils need chemical amendments to restore their productivity. Many suitable amendments are available, gypsum, sulphur and sulphuric acid is the most common, but application of acid needs special care due to its corrosive action.

Daily Times - Leading News Resource of Pakistan

 

[Neo]

Japanese team shows interest in water, power sectors​

ISLAMABAD: Japanese investors’ delegation Wednesday showed keen interest in making millions of dollars investment in water and power sectors in Pakistan. A 17-member delegation of Japanese investment companies under Pakistan-Japan Business Forum in a meeting with the federal minister for Water and Power, Raja Pervez Ashraf discussed the investment opportunities. It also assured technical and financial assistance in this regard to meet the future electricity demand and water requirements for irrigation. The ambassador of Japan to Pakistan, Seiji Kojima discussed bilateral relations and investment opportunity in the power sector and assured full support of government of Japan in the fulfillment of development agenda, particularly in the power sector. The minister said Pakistan was facing great challenges especially in power sector and foreign investment in the coal and hydel power generation would help to meet the country’s future requirements.

Daily Times - Leading News Resource of Pakistan