Pakistan Economy - News & Updates - Archive

[Neo]

MDA launches mega uplift projects​

MIRPUR (August 23 2008): Mirpur Development Authority (MDA) has launched about ten development projects of public welfare, recreation and entertainment worth over Rs 80 million in various parts of Mirpur Azad Kashmir, Dr Amin Chaudhry Chairman MDA said. He was addressing a reception given to a delegation of under-training officers of various groups from Civil Services Academy Lahore here on Friday.

Leader of the delegation of the trainee officers belonging to DMG, police, income tax, information, excise and taxation and other fields also spoke on this occasion and apprised the audience of the objective of the study visit of the members of his delegation to Azad Kashmir.

Dr Amin Chaudhry said that the development projects including three under construction parks including the giant Bhutto Park in Mirpur city on Mirpur-Mangla Road located at the picturesque periphery of Mangla lake is ready for inauguration in the near future.

The construction work on the project is swiftly underway and will be completed within the stipulated timeframe. Besides, the first ever solar-energy-based street lights project has also been launched in Mirpur city which will be completed in different phases, he added. Since MDA was emerged over three decades ago particularly for the rehabilitation of the affectees of Mangla Dam, the institution is going to perform more similar responsibilities in connection with the rehabilitation programme for housing the affectees of the ongoing gigantic Mangla dam raising project, the MDA chief said.

Dr Amin said that special attention is being focused to acquire land for the resettlement of the affected families falling displaced due to the upraising of the country's second biggest dam in Mirpur district. They told that the New City and four model towns comprising all latest amenities of life are already being constructed adjacent to existing Mirpur city and in Islamgarh, Siakh, Chakswari and Dadayal by Wapda with the co-ordination of the AJK government for housing the affectees of the Mangla dam upraising project.

Earlier, the delegation also met Commissioner Mirpur division Ehsan Khalid Kiyani, Commissioner Mangla Dam Affairs Amir Afzal and other officials of the divisional and district administration and gathered information about the pace of development, administrative matters and matters of general interest related to Mirpur division.

 

[Neo]

'Diesel import from India to save $700 million'​

KARACHI (August 23 2008): President of SAARC chamber of Commerce and Industry, Tariq Saeed has said that efforts are being made under Safta to bring duties down to zero rate. Speaking at a dinner meeting at Manzar Alam residence on Friday, he said that under Safta India would import around 400 products from Bangladesh.

He said that Pakistan could consider giving permission to Indian investors to invest in the country. Referring to import of diesel from India, he said that Pakistan would save around 700 million dollars from import of diesel from India. He said that Pakistan is also mulling allowing India to manufacture CNG buses in Pakistan.

 

[Neo]

Corporate agriculture farming: A step towards a greener Pakistan​

ARTICLE (August 23 2008): Agriculture ministry failed in managing agriculture field and research staff and their activities for development of agriculture sector. Agriculture sector is the sustenance of our country's economy. It contributes around 21% to the GDP, employees 44% of labour force and contributes 68% of foreign exchange earning through export of raw material, semi processed and processed agriculture products.

HIGH LIGHTS

1. Contributing 21% to GDP

2. Providing employment to 44%

3. Contributing to foreign exchange 68%

4. Having horizontal and vertical space for growth

5. And capable to increase 100% production within ten years.

6. Government neglecting this sector by providing insufficient financing. Not giving industrial status to corporate farming. SBP has not exercised its role for development of this sector. Further, it is not properly regulating and managing investment portfolio of financial institutions for sustainable and higher GDP growth.

Corporate agriculture farming encompasses the production of all crops as well as all other allied activities ie processing of seeds, business of pesticides / fertilisers, business of agriculture machinery/equipment used and related research activities.

WE MAY CLASSIFY PRODUCTION AREA AS UNDER:

1 Production of major crops (wheat, cotton, sugarcane, rice, maize)

2 Production of minor crops (oil seed, pulses etc).

3 horticulture (fruits, vegetables, flowers ,medicinal herbs)

4 dairy and poultry

5 forestry

6 fisheries

The average growth rate in this sector over the last forty years was 4.3%, which reflects good performance. Population growth rate average over the last forty years remains around 3.00% which is slightly below the growth rate of agriculture sector.

Further, with the advancement in technology and awareness in emerging new global world, trend of food consumption is changing and increasing towards high nutrition and hygienic foods. That phenomenon is also widening the gap between demand and supply.

Food crisis is being seen now-a-days, also globally. In this scenario we need a higher growth rate of agriculture sector which can fulfil our domestic requirements and surplus could be exported to other countries to set off the increasing demands of our imports and reduce the foreign bills deficit.

The scope of horizontal expansion in agriculture production has become limited as after construction of Mangla and Tarbela dams no remarkable reservoir was constructed or initiated. To secure this nature's gift is likely to save our future generations. To have our right from neighbours and settle this crucial matter is the demand of this era. That matter has prime importance and it should be planned and settled on priority.

It is equally beneficial for agriculture growth and economical power generation. There is space for horizontal growth in agriculture but is limited due to scarcity of irrigation water. The major scope is now in vertical expansion through improving farm productivity levels.

This can be accelerated through implementation of idea about the corporate farming. The table of productivity/yield levels has been prepared from data of year 2006, given on UNO website FAO and web site of Federal Ministry of Agriculture of Pakistan. It depicts that our country has great potential to increase its productivity/yield as our progressive grower is obtaining almost more than double production than our national average yield.

Whereas the average national yield/production of developed countries is also more than double of our national average yield. It reveals that by applying the requisite resources/taking appropriate measures as mentioned in this article, we can double our agriculture production in coming ten years.

If it happens, then we will really enter a new age of prosperity and be able to place our nation and country on an upright status in the world. That milestone can be achieved through adaptation of futuristic/innovative policies, and revolutionary/proactive measures in the followings important areas, which can improve productivity levels significantly.

I Availability of quality seeds

II Availability of fertilisers at competitive cost

III Pest/weed management

IV Transfer of agriculture related technology in Pakistan

V Technical knowledge to farmers

VI Requisite funds availability for farmers

VII Well planned marketing mechanism

VIII Ensure water and other utility availability to farmers

All the above arrangements are not possible for our subsistent farmers under their prevalent financial conditions, technical awareness and marketing mechanism. In addition to continuation and improvement of facilitation to small growers, our government should formulate policies for initiation of corporate farming in our country on persuasive basis. For this purpose the following steps require to be taken:

1. Legislation giving status to corporate farming like industrial undertaking.

2. A task force to be established on corporate farming, comprising agriculture scientists, economists, farmers, investors, elected representatives and legal experts, who will explore all modalities, legalities and working mechanism along with suggestions for necessary clauses in corporate laws ie company law, income tax ordinance, sales tax law and other corporate statutes, determination of SECP, FBR, SBP and Ministry of Agriculture's role in the development and regulation of corporate farming. Task force report be submitted to National Assembly and Senate for their review.

3. Ensure credit/loan facility for inputs, tubewells and modern technologies from all financial institutions at subsidised rates for promotion of agriculture production and exports.

4. Ensure availability of electricity for tubewells at subsidised rates.

5. Availability of roads up to farms.

6. Financial assistance in construction of cemented khaals within farms.

7. Policies formulation for foreign investment with provision for to joint ventures and transfer of technology.

8. Income tax exemption for five-year period to local and foreign investors.

9. Amnesty on investment in corporate farming at 0% income tax.

10. Making arrangements for allied industries in vertical direction ie godowns, cold storages, international standard packaging, making of packed foods and drinks as per international standards and requirements.

11. Ensure documentation and accounting of their activity under prescribed laws like industrial undertaking.

12. Formulation and implementation of crop insurance policies.

13. Formulation of laws for environmental protection and socio-economic welfare of vicinity area population.

14. Ensure protection of small farmers and farm workers.

15. Formulation of policies for corporate farming workers like industrial workers ie social security, EOBI group insurance etc.

16. Mandatory induction of technical staff ie qualified agriculture experts/scientists for overall planning, monitoring and research work, management accountants for management of accounts and analysis of cost and incomes along with other documentation.

17. Agriculture research and extension department needs to be revamped and its policies and programmes need to be redesigned that they may play a vital role in bringing a revolution through corporate farming.

18. There is need for stringent laws in respect of adulteration of pesticide/fertilisers to enhance our crop yield and protect our farmers financially.

19. State Bank needs to formulate policies and programs for all commercial banks, financial institutions and NBFIs, in respect of their investment portfolio to industry, agriculture, service sector, construction, general consumer and capital market.

Investment portfolio of agriculture sector needs to be increased significantly ie 100% for every subsequent year and this practice be continued till the achievement of desired results. Credits to conventional farmers should also increase and monitored that it is consumed for the purpose it is obtained. SBP should entertain genuine and legitimate requests by corporate farming.

SECTOR WISE CREDIT/LOAN PORTFOLIO OF OUR FINANCIAL INSTITUTIONS, INCLUSIVE OF SBP IS:

The above data highlight the fact that the sector which is contributing around 21% to our GDP is highly neglected by our financial institutions. There is dire need to make programmes/policies and necessary laws, as stated above, for development of this sector on war footing, that financial institutions can offer loan to this sector like industry.

In the context of implementation of WTO and our achievements in engineering, electronics and other industries, we are far behind from developed countries. I think we cannot achieve higher and sustainable economic growth unless we succeed to double our agriculture production in the coming ten years as we have vertical and horizontal space for that target.

For this purpose we have to make arrangements as stated in this article along with providing desired share of financing ie at least 20% to 25 % from credit/loan portfolio of all financial institutions. That is suggested to achieve the targets gradually within the next five years.

SBP needs to introduce such policies and a programme for financial institutions, which encourage banks to invest in productive sectors like agriculture and industry and discourage non-productive (consumer financing and capital market) loans.

Further government borrowing needs to be reduced drastically. Cut from these sectors be utilised for agriculture sector and it needs to be doubled every year till the attainment of targeted results ie 100% increase in agriculture production during 10-year period.

20 Above all, we need to have and promote honesty and justice in our country, wherein the concept of implementation, monitoring and accountability will have its impact, otherwise in this new era it will be difficult for us to live honourably.

BENEFITS TO BE DERIVED THROUGH PROPOSED CORPORATE FARMING ARE:

A. Higher productivity/ yield.

B. Surplus production of all types of food, dairy products and horticulture items.

C. Increase in export items ie foods, dairy products and horticulture items.

D. Increase in national reserve on one side through reduction in imports of edible oils, tea and other food items and on the other side through increased export of surplus foods, dairy products and other horticulture items.

E. It will increase employment in rural areas.

F. It will train vicinity farmers and enhance awareness about advanced technology.

G. Mass production will reduce cost of production.

H. Higher production will entail lowering of price in domestic market.

I. It will improve living standard of our rural area people.

J. Investor will prefer to establish allied industry in rural areas.

K. It will retard significantly the shifting of people from villages to cities.

L. It will reduce and ultimately convert foreign trade deficit to foreign trade surplus.

M. Overall industrial growth will increase and specially related to agri products.

N. Per capita income will increase.

O. GDP growth rate will increase and ultimately it will accelerate economic activities in the country.

P. Our country credit rating will improve.

Q. Dependence on foreign and internal borrowing will decrease.

R. More funds will be available to government for education, health and other infrastructure projects.

S. Our nation will surely be saved from forthcoming global food crisis. Further we will be in a position to market of our agri products throughout the world.

T. Poverty in Pakistan is largely a rural phenomenon; development of agriculture will be an important vehicle for alleviating rural poverty.

U. It will facilitate Government to have reliable statistics of agriculture sector.

V. It will facilitate and promote documented economy and increases taxes with the passage of time.

IT HAS ITS FLAWS AND LIMITATIONS, NARRATED HERE UNDER:

1. Small farmers' fears of monopolistic environment.

2. Many farm workers may be relieved of their jobs on account of use of modern technologies.

3. Sense of insecurity due to small farms and scarcity of resources.

Its payback is more than its flaws. Therefore our government should take drastic steps for the development of corporate agriculture farming. Since independence, we are saying that agriculture is the backbone of our economy. In fact, it remains just a saying and no solemn efforts and plans were made for the development of this sector.

Presently, the whole world is anxious about the attainment of self-sufficiency in foods. We have potential of horizontal as well as vertical growth in our agriculture sector. We must exert all our abilities and available resources for the development of our agriculture. It will in return, really save the future of our next generations. No doubt corporate farming will be a step forward for a prosperous Pakistan.

=======================================================================
Products National Progressive National Average
Average Growers Yield Yield Developed
Yield Pakistan Pakistan countries
(Tons/H) (Tons/H) (Tons/H)
=======================================================================
WHEAT 2.51 5.5 7.20 (Germany)
4.00 (Australia)
2.82 (USA)
4.45 (China)
COTTON LINT 0.704 1.45 1.86 (Australia)
1.24 (china)
0.80 (USA)
SUGAR 49.22 110 91.97 (Australia)
73.82 (USA)
82.52 (China)
RICE PADDY 3.16 7.30 6.30 (Australia)
7.70 (USA)
6.26 (China)
POTATOES 13.34 25.00 34.41 (Australia)
43.66 (USA)
14.35 (China)
ONION DRY 13.82 N/A 42.88 (Australia)
51.18 (USA)
20.61 (China)
APPLES 3.12 N/A 13.82 (Australia)
29.80 (USA)
13.71 (China)
=======================================================================

 

[Neo]

Increase in Export Finance​

EDITORIAL (August 23 2008): Promotion of exports has become one of the major policy objectives of Pakistan due to balance of payments difficulties and dwindling foreign exchange reserves of the country. In order to play a greater role in this effort, the State Bank of Pakistan on 19th August, 2008 decided to increase the amount of export finance under its Export Finance Scheme (EFS) to Rs 358 billion for eligible export products during FY09.

In order to ensure availability of adequate financing to the exporters under the EFS and to assist them in achieving the export target, the State Bank itself would allow limits of Rs 125 billion to the banks under the scheme for the current year which are 25 percent higher than the amount outstanding as on June, 2008.

As loans under the scheme are provided for 180 days, around Rs 250 billion would thus be provided during the whole year as refinance at the rate of 7.5 percent per annum. In addition, banks would also provide financing facilities to the exporters under the scheme from their own sources to the extent of 30 percent or an amount of Rs 108 billion at the same rate of 7.5 percent.

Commercial banks were brought on board for sharing this mechanism. In order to ensure timely availability of financing to exporters, State Bank has also advised the banks that in future, financing requests from exporters under EFS should not be turned down which, otherwise, are meeting the requirements of the scheme and lending criteria of the respective banks.

Further, the central bank would regularly monitor the behaviour of various banks to ensure optimal utilisation of limits and if a bank is unable to fully utilize its allocated limit, its unutilised limit would be allocated to other banks.

We feel that the State Bank has taken a timely initiative to play its part in enhancing the level of exports and narrow the widening gap in the external sector of the country. The increase in the amount of export finance and its provision at only 7.5 percent, which is substantially lower than the ongoing six-month Kibor (at present around 13.5 percent), is bound to provide much needed relief to the exporters.

It may be mentioned that in addition to the amount extended under EFS, the State Bank also provides refinance under its long-term financing scheme for export oriented projects at a mark-up of seven percent for a period of two to 7-1/2 years and for a period of 10 years at a concessional rate of mark-up under another Long Term Financing Facility to the exporters.

All these measures taken by the SBP are aimed at ensuring adequate supply of financing to the exporters to enable them to compete in the international market to boost exports of the country. However, whether the State Bank measures would enable the country to achieve the intended objective is difficult to affirm.

For a start, the real increase announced under the EFS is not as great as would look outwardly due to erosion of punching power of the rupee on account of inflation during FY09 and as a proportion to the projected increase in exports during 2008-09.

Secondly, adequate and timely provision of export credit is only a one out of many export incentives. For instance, proper adjustment in exchange rate is the most potent instrument of export promotion and overvaluation of the currency could thwart all other efforts of gaining international market access.

Adequate provision of energy to the exporters, quality control, proper law and order situation, modern infrastructure and cheap and educated labour force are some of the other pre-requisites which could contribute immensely to the export promotion efforts. No less important are the technology know-how and the needed investment for the purpose.

Obviously, if all these factors do not simultaneously get the required importance and attention of the authorities, the State Bank's efforts alone are not likely to yield the desired results. In fact, the provision of higher credit to the exporters could sometime make the task of monetary management more difficult for the central banks. Since money is the most fungible commodity, its allocation and use cannot be usually restricted to the sector for which it is intended.

If the enhanced amount of export finance is channelised to non-productive sectors by the business community by some dubious devices or by relending at higher rates because of comparatively very low lending rate, it could further ignite inflationary pressures in the economy and add to the worries of the State Bank.

Notwithstanding all these limitations, we feel that the State Bank has taken a right step which needs to be complemented by all the other concerned authorities to improve the fast deteriorating situation in the external sector.

 

[General Fujita]

Pakistan's IT sector registers 30 percent growth in revenue

Saturday, 26 July 2008 00:00 Pakistan Daily

IT sector in Pakistan has registered 30 per cent growth in revenue in a very short span of time whereas the fundamentals of the sector are highly strong and the recent dollar's appreciation has significantly boosted the IT sector revenues.

The Chairman, NetSol Technologies Limited and Chief Executive Officer (CEO), Saleem Ghauri said the present growth pattern can be maintained and revenue can be doubled provided priorities are reviewed.

About the ongoing economic pressure, he said one immediate way to come out of economic crisis is the earliest start of automation of public sector that would double public sector's efficiency. He, however, said that the decline in stock market is due to different reasons and it has nothing to do with the strong fundamentals of IT sector. The IT sector stocks will shoot up again once the inflationary pressure on economy is away.

The growth in revenues has enabled the industry to hire high-skilled IT professionals and thus contributed to the national economy in a big way, he said. Adding that more the trained human resource the IT sector has, the more country's economy would flourish and prosperity could sustain on longer terms, he added.

Moreover, he said that the NetSol Technologies is doing miracles in the field of IT and exports of its flagship product LeaseSoft, a suite of end to end leasing and finance software solutions catering to the needs of retail and wholesale finance businesses, has touched to the level of $20 million in a short span of time.

"We are foreseeing exports of LeaseSoft will touch $100 million in the next three years," he said. According to him, leading international business houses like Mercedes Benz, Yamaha Motors, Toyota Motors, Dongfeng Nissan, UMF, BMW and FIAT group in Asia Pacific region, besides a good number of leading brands in Europe and North America are successfully using LeaseSoft.

He said that the IT industry has already realised the potential and started putting infrastructure in place to have more and more human resource in the years to come. "NetSol has recently come up with the concept of NetSol Technology Institute (NTI) and it has planned branching out all over Pakistan to ensure short courses for Pakistani youth. "We want to dispel the impression that IT belongs to the youth of elite class" he added.

According to him, the government can ensure a real economic revolution by providing IT training to youth on war footing basis on the one hand and automation of public sector organisations on the other.

"A strong leadership with a visionary approach towards IT sector is an urgent need of the hour," he said. When pointed out that senior employees' in public sector organisations are a major hurdle in automation drive, Ghauri said this is where a strong and clear-headed leadership is required.

Since majority of Pakistani youth lives away from major cities, ie in rural areas, therefore, a strong network of IT training institutes is the only way of spreading IT education in Pakistan," he said. Ghauri extended a wake-up call to the government for investment in IT training of youth, which would ensure IT Pakistan of tomorrow.

The country's exports in IT have reached to half a billion dollar and number of highly skilled human resource is very impressive in the sector but still it needs from the government to do more.

He said Pakistan, with a population of 170 million, 60 per cent of which consists of under-25 youngsters, is an ideal country where IT sector can spearhead the economy in the days to come. "Once the government realises this potential and ready to invest on technical training of Pakistan youth, IT revolution will start in the country," he said.

 

[Neo]

Pakistan food crisis unlikely to improve soon: WB meeting ​

Sunday, August 24, 2008

ISLAMABAD: Despite posting a bumper wheat harvest of 23.7 million tonnes in 2007, Pakistan faced rising prices as well as a shortage of flour, participants at a recent World Bank consultation meeting were told.

With prices rising, incentives were created to export, smuggle or withhold wheat stocks, said WB Senior Rural Development Specialist Kevin Crockford, who added that the situation is unlikely to get better in the short term.

Crockford said that world food prices increased rapidly in 2006 and from 2000 prices went up by 75 per cent. Some of the factors responsible for this included a change of diet in countries like China and India, while there was a reduced supply of stock owing to high fuel and fertiliser prices as well as usage in bio-fuels.

Crockford said that the food situation was “particularly serious” and in Pakistan alone wheat prices had risen over 25 per cent. Pakistan’s import bill has risen by 31pc in 2007-08, of which wheat import contributes 2.1pc and edible oil imports constitute 2.36pc, the meeting was told.

Participants were told that the rise in wheat prices in Pakistan were not primarily due to a production shortfall, but the strategic wheat reserve fund in addition to the ban on exports dampened the effect on domestic prices. But price shocks were mostly felt in urban areas with poor households spending over 70pc of their incomes on food. This in turn affects household spending on education and health with the result that Pakistan is facing deteriorating child malnutrition and increased child mortality.

The WB specialist said that the food price situation is “unlikely to ease” as wheat will be imported at higher international prices, while fuel and other inputs will push up domestic wheat prices. He said that while there will be continued demand from neighbouring countries, a silver lining would be that higher prices would be an incentive for farmers.

Response of the government to the crisis has been multi-pronged. It has started to import wheat and increase wheat supply to the poor through the Utility Stores Corporation. The government has also increased fertiliser import and banned export and inter-provincial movement of wheat. It has also launched the Benazir Income Support Programme.

UN agencies and the World Bank have responded by assistance to small farmers, nutrition and health interventions and relief intervention in most food insecure areas. The World Bank is also working on economic stability, social intervention and safety nets.

Senior Social Protection Specialist of the World Bank in Islamabad, Iftikhar Malik, talked of safety nets that have been introduced. This included the Benazir Income Support Programme, which will target 4.6 million families with Rs1000 per month and the Punjab Food Stamp Programme that targets an additional 1.7 million households with the same amount.

A participant, Ashiq Husain, of the Marvi Rural Development Organisation, pointed out that according to a basic estimate, every household with a family of six would be spending a minimum of Rs55,000 on food alone in a year. In this, the government proposes to help with Rs12,000 under the Benazir programme, which “was simply not enough.”

Dr Sonu Khangharani of the Thardeep Rural Development Programme pointed out that with a rise in food prices, suicide rates had gone up in rural areas like Tharparkar. “The situation is alarming and this is an SOS,” he said, adding that people were pulling their children out of school in many areas, as they could not afford to educate and feed them at the same time.

A participant, Ahmed Faraz stated that one of the reasons for high prices was that no action was being taken against cartels that had been formed. He said that was policy failure as well as an institutional breakdown.

Dr Abid Burki of the Lahore University of Management Sciences emphasised that the first step should be to identify who the poor are. He said that any strategy has to first identify who need to be helped.

Another participant said that in FATA, a 20 kg bag of flour costs Rs1,500 and supplies are erratic owing to the deteriorating law and order situation. He said more needs to be done to save the poor in vulnerable areas.

In his concluding remarks, Yusupha Crookes, Country Director of the World Bank said that not allowing international prices to flow through hits the poor the hardest. He said that somebody has to pay for the gap. The government meets this gap in a number of ways, which include taxation and borrowing which in turn pushes inflation.

Crookes said that the challenge before the international donor community is how to protect people whose budget is squeezed and the way they are coping is to reduce spending on health and education. He said that the first challenge is to identify these people. The second is to help them purchase services they would otherwise do without.

“In a charitable society like Pakistan, there should be more analysis,” said the WB country head, adding “we do not know how much poverty has declined between 2006 and now.”

 

[Neo]

Govt likely to increase working hours ​

Sunday, August 24, 2008

ISLAMABAD: The government has decided to increase working hours till 5pm if it goes ahead with the proposal of two weekly holidays in the next federal cabinet meeting, it is learnt.

The idea of five working days came under consideration at the highest level on several occasions but it failed to get through in the recent past. Those who were opposing two weekly holidays, used to cite an example that it would negatively affect Federal Board of Revenue’s efforts to collect due taxes in five working days. “After increasing working hours till 5pm, it will not affect revenue collection,” said a high-ranking official of the government while talking to The News here on Saturday.

Now the government cannot ignore the much-needed energy conservation plan owing to an unprecedented surge in the oil import bill, which is estimated to cross $14.5 billion in fiscal year 2008-09.

The next cabinet meeting will approve five working days in a week but working hours will be increased from 9am to 5pm. The government, sources said, would also approve closure of petrol pumps for one day in a week.

“Petrol pumps will be closed for one day within the five working days,” said the sources and added it would not resolve any problem if the government decided to shut pumps on weekly holidays. Earlier, the government during the cabinet meeting held on May 15 rejected the proposal forwarded by the Ministry of Water and Power for granting two weekly holidays to conserve scarce energy resources.

The WAPDA has estimated that two weekly holidays could help save 850 to 1,000 megawatts of electricity with the closure of all government offices from 9am to 5pm on Saturday.

However, the sources said that the government has so far failed to come up with concrete measures related to conserve the electricity with clear-cut steps when the country is facing severe and torturous load-shedding, making life miserable. Now it seems the realization of severe situation felt at the highest level but the lip service will not help to overcome the situation and concrete steps are required to conserve energy. In the wake of soaring oil prices as well as severe electricity shortages, the government contemplated various options to ensure conservation of energy resources. The sources said the corporate sector was already doing five-day work and other private offices did not contribute a lot in terms of consuming the major chunk of the electricity by doing work on Saturday.

When the sources was asked about the government’s plan to import one million energy bulbs for saving electricity, they said that some people were estimating conservation of the electricity in the range of 500-600MW but according to WAPDA’s estimates, they can save 225MW with the help of energy savers owing to diversity.

 

[Neo]

Conference says technology key to growth ​

Sunday, August 24, 2008

LAHORE: Pakistan needs to focus on human capital as it is as important as financial and physical assets are. “We should nurture and promote human capital if we want progress and prosperity.”

This was the upshot of the speeches delivered at the International Human Resource Conference organised by the Lahore Chamber of Commerce and Industry here on Saturday.

Chief guest Syed Baber Ali, while stressing the need for bridging the science and technological gap in Pakistan, urged the government to divert its attention towards that particular area which had attained prime importance in the wake of fast changing global scenario. “No value-addition in any sector is possible without bridging the science and technological gap.”

He drew a comparative analysis with India regarding science and technology, saying that they while realising its importance focused on the subject a few years ago and “now they are in a very comfortable position when it comes to dealing with other global players.”

Indian HR expert Dr Sunil Gupta said Pakistan had no dearth of talent, it had all the resources and above all more than half of its population was less than 25 years of age, so a little well-directed effort could help bring a sea change.

Group Head of HR Department of a multinational bank, Bakhtiar Khawaja, said there was a need to make a paradigm shift in the operation of local enterprises. He said these enterprises should operate as learning companies that should reflect the prudent input of all employees, customers, shareholders and vendors.

Speaking on the occasion, LCCI Acting President Mian Muzaffar Ali said the world was constantly changing. Companies, organisations, regions and indeed entire nations were locked in a struggle to gain competitive advantage over their counterparts. Thus, “if the strategic plan is the vehicle for achieving such success, the HR function is the engine that drives the plan.”

“Our institutions of higher learning need to prepare professionals with required skills who can quickly add value to their professional or corporate organisation. These corporations in turn must continuously transform themselves into leading entities, those which are increasingly competitive on the basis of product innovation and differentiated service.”

 

[Neo]

Bumper rice crop of 6m tons likely this year​

ISLAMABAD, Aug 23: The Ministry of Food, Agriculture and Livestock (Minfal) is hopeful of crossing 5.9 million tons rice production this year, about 9 per cent more than last year.

The government has fixed this year’s rice production target at 5.5 million tons, but data collected by Minfal from its field officers and provinces show that Pakistan will be able to reach close to 6 million tons after harvest that is about to start in Sindh this month and will commence in Punjab in October-November.

The increase in the rice production is expected not due to surge in per acre yield, but around 8 per cent increase in the sowing area than the last year’s 5.7 million hectares. Last year, the per-hectare yield was 2,211 kg.

The increase in the sowing area was mainly due to an unprecedented hike in the price of rice in the international market and better pay back to local farmers.

According to official data, Punjab is expected to produce around 3 million tons of rice, followed by Sindh with 2.5 million. Around 500,000 to 800,000 tons rice is expected from the NWFP and Balochistan.

Rice Commissioner Inayatullah Khan told Dawn that recent rains had not damaged the rice crop and that farmers’ interest in the crop had increased after getting better price last year.

In response to a question, the rice commissioner said normally 45 per cent of the Pakistani rice was of fine type (Basmati) and 55 per cent coarse (Irri).

Meanwhile, the Rice Exporters Association Pakistan (REAP) expects this year’s rice export to touch the five million tons, way over the 3.33 million tons last year.

From the last year’s rice export, the country earned around $1.818 billion compared to $1.125 billion in the previous year when the country exported 3.129 million tons. The skyrocketing increase in the international market had enabled the country to see over 61 per cent value addition in the price of rice last year over the previous year.

But, a bumper crop this year is not believed to resolve the issue of the highest ever domestic rice prices. Domestic prices of the commodity have already doubled this year despite a good crop last season, as exporters took advantage of a tight global market.

Exports of basmati rice had increased by over 40 per cent to 1.28 million tons last year, while other varieties declined by nearly 7 per cent to 2.06 million tons.

But, amidst expectations of a high crop, there are also reports of hoarding. There are reports of massive stocks of rice lying in private godowns in Karachi and other areas of the country. These stocks are not being released in the domestic market in order to ease prices.

 

[Neo]

Non-textile exports up 84.6 per cent​

ISLAMABAD, Aug 23: Country’s non-textile products exports edged up by 84.6 per cent during the first month of the current fiscal year over last year, Statistics Division data revealed on Saturday.

In absolute terms, the export value of these products increased to $999.504 million in July this year from $4.972 million last year, mainly due to a substantial increase in export of food commodities.

This shows that the new fiscal year started with an impressive growth in export of traditional products, mostly agriculture products, despite the fact that the input cost of such products witnessed a substantial increase.

However, textile and clothing exports dipped by 2.62pc to $905.912 million as against $930.32 million in the same month last year.

Despite dismal performance of textile and clothing sector, the overall export proceeds recorded an impressive growth of 29.48pc.

Export of food group inched up by 121.14pc. Export of rice went up by 226.43pc, fish products 65.45pc, fruit 13.14pc, oil seeds 330.39pc, sugar 100pc, meat 18.13pc and all other food items 8.53pc.

Export of petroleum products increased by 91.68pc, sports goods 22.41pc, leather products 11.68pc, footwear 24.43pc, surgical instruments 21.64pc, engineering goods 30.61pc, cement 103.52pc, molasses 217.31pc, jewelry 399.51pc, gur 5.61pc during July 2008 over the same month last year.

This shows a natural diversification of the export base, as share of textile and clothing in total exports declined to 47.5pc in the month from 63.22pc last year despite subsidies to the sector worth billions of rupees.

While the share of non-textile products soared to 52.44pc in July 2008 from 36.8pc last year, without any financial package from the government.

Analysts say that subsidies are not the real issue, but there is a need to address the structural weaknesses in the textile sector. This also means that the production capacity of the sector has reached a saturation point.

With the exception of raw cotton and cotton cloth, all other major components of textile manufactures registered a negative growth despite a major depreciation of rupee and an appreciable gain made by the currencies of the competitor countries, like India and China.

Product-wise details showed that export of readymade garments declined by 0.21pc in July 2008, cotton yarn by 17.49pc, knitwear 8.93pc, bed-wear 8.52pc, made-up articles 0.57pc, other textile material 32.25pc, over the same month last year.

However, export of raw cotton was up by 120.18pc, cotton cloth 3.73pc, cotton carded 51.46pc, yarn other cotton yarn 15.46pc, towels 51.46pc, tents 22.79pc and art-silk by 16.84pc.

 

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IMF’s Letter of Comfort to provide cushion for economy​

ISLAMABAD: Agreeing to Issue the Letter of Comfort by the International Monetary Fund (IMF) to Pakistan would help bring to a halt the downslide of Pakistani Rupee and will restore confidence of the local as well as foreign investors, a senior official at Ministry of Finance told daily Times on Saturday.

IMF authorities have agreed in principle to issue Letter of Comfort to Pakistan, its formal approval is to be given in its Executive Board meeting expected next week. This will remove the last hurdle in the releasing of around $1.5 billion lending, said the official.

Asian Development Bank (ADB) has committed $1 billion, and based on IMF Letter of Comfort, $500 million’s World Bank Credit Facility will also be available. This will provide much-needed breathing space for the new government to steer the economy out of the woods.

Due to the political uncertainties and law and order situation, Pakistan’s economy has faced many challenges like depletion in foreign exchange reserves and due to it, rapid depreciation of Rupee, and growing imports and scarcity of financial resources at home to meet the current as well as development expenditures.

Pakistan Peoples Party led coalition government has already put in place a multi-pronged strategy aiming to bolster over all economic scene during FY 2008-09.

The steps aims to boost the vital economic sectors and checking devaluation of rupee, provision of Saudi oil facility on deferred payments, reinvigorated privatisation programme, expediting inflow of pending installments from already privatised units like PTCL, floating of workers remittances, injecting foreign investment in KESC, FDI in oil and power sectors and renegotiated credit facility from IFIs.

Political uncertainty before the resignation of the President General (R) Pervez Musharraf and widening differences between coalition partners along with declining foreign exchange reserves have led to the depreciation of Rupee from Rs 62 a dollar to Rs 77.10.

According to a senior government official, issuance of Letter of Comfort by the IMF authorities would help the authorities at IFIs to the speedy processing of lending arrangements.

GoP is currently working on Saudi Oil Facility that aims to provide a substantial cushion of US $5 to $6 billion followed by major privatiation programme worth $ 2 to $3 billion and ensuring a receipt of $136 million from PTCL’s installment receipt schedule after its privatisation. The government is also considering the floating of workers’ remittances securitisation bonds worth $800 million to provide boost forex reserves. Foreign Direct Investment in oil and power sectors is promising and foreign investors have expressed interest in investing $400 million in KESC. Government expects to generate another $250 to $300 million out of Pakistan Telecommunications Authority’s licensing of internet based licensing projects to be issued to various companies. Besides this, a US supported democracy dividend of $1.5 billion per annum is likely to start from 2009 onwards.

 

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Industrial output target missed, grows by a paltry 3.76%​

KARACHI: Country’s industrial output registered a meager 3.76 percent growth during the financial year 2007-08, missing the whole year target of 7.2 percent by a huge difference.

The state of industrial production was even more worrisome during June of last fiscal, when it posted a negative growth of 4.22 percent over the same month of previous year, Statistic Division reported on Saturday.

This slow down in the industrial output during the financial year 2007-08, marred by worst political and law & order situation, also caused decline in the GDP as well as poor performance of export sector. The textile sector, which is the major export oriented sector of the economy, witnessed poor export performance along with the other sectors.

“The declining trend in the manufacturing sector began in 2005 due to inadequate level of investment and kept on worsening afterwards”, economist Dr Asad Saeed noted. “There has not been any investment in enhancing the capacity of the sector during the last fiscal year,” he added.

The industrial growth has seen gradual decline in the last three years, as it plummeted to 8.8 percent in 2006-07 from 19.9 percent in 2004-05, in the wake of rising cost of production. This led to the closure of many industrial units, especially in textile sector, as well as impeding new investment.

Dr Asad pointed out that even the high growth in manufacturing sector was driven by few sectors— auto and cement— on the back of auto financing by the banks and huge public sector spending. “Once these sector started drying up, the growth in the manufacturing sector also slowed down,” he added.

He regretted that massive inflow of liquidity in the aftermath of 9/11 could not be diverted in the real sector, which could have huge benefits for the country in the shape of quantum jump in export and more job creation.

The break-up shows in petroleum sector, production of Jet fuel oil declined by 13.74 percent, diesel production 8.77 percent, lubricating oil 0.54 percent, LPG by 5.66 percent and other petroleum products by 13.06 percent during the previous financial year. The production of kerosene oil was up by 5.71 percent, motor spirits by 10.07 percent, high speed diesel by 10.11 percent, furnace oil by 3.02 percent, jute batching oil by 8.79 percent and solvant naptha by 1.87 percent.

 

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LSM registers six-year low growth in fiscal year 2008​

KARACHI (August 24 2008): The large scale manufacturing (LSM) presented poor performance and registered six-year low growth of 3.76 during fiscal year 2007-08 mainly due to political uncertainty, power shortage and deteriorating law and order condition. The LSM growth during last fiscal year not only missed its target of 12.5 percent but was also lower than 8.4 percent in 2006-07.

The government in economic survey had announced that LSM had posted a growth of 4.8 percent. However, on Saturday Federal Bureau of Statistics (FBS) gave final growth figures, which depicted that LSM growth was lower than the expectations. LSM also registered a negative growth of 4.22 percent during the last month of 2007-08 due to decline in production of diesel, LPG and other manufacturing.

Official provisional statistics of Quantum Index Numbers of Large Scale Manufacturing Industries (QIM) of FBS depicted that production of major industries had not been growing.

LSM is the one of the major indicators of the economy which shows industrial productivity of 100 items received from different sources ie Oil Companies Advisory Committee (OCAC), Ministry of Industries & Production and Provincial Bureaus of Statistics. OCAC supplied the data of 11 items, Ministry of Industries & Production supplied the data of 35 items and Provincial Bureaus of Statistics provided data for 54 items.

With 3.76 percent growth, overall QIM of 2008 reached 213.13 points from 205.40 points. Major share in this growth was contributed by industries which went up by 4.66 percent from 200.47 points to 209.82 points, while OCAC index grew by 3.41 percent to 171.09 points.

During June 2008, LSM witnessed a decline of 4.22 percent in growth, to 211.94 points as against 221.29 points during the same period of previous year. Economists said that decline in LSM growth would also affect the GDP growth rate, which was announced by 5.8 percent in the economic survey by the government in June 2008.

They said that poor law and order situation, high interest rates, shortage of power and other utilities were major causes of slow growth of LSM in 2008. Production of petroleum products increased by 3.41 percent during the year while it declined by 9.29 percent in June 2008.

Production of sugar, cigarettes, soda ash, motorcycle and buses registered growth of 34.20 percent, 1.92 percent, 10.37 percent, 26.04 percent and 15.41percent respectively in 2008. The production of phosphate fertiliser, coke, billet, tractors and jeeps/cars dipped by 5.44 percent, 10.83 percent, 21.86 percent, 1.84 percent and 7.26 percent respectively during the year.

Production of vegetable ghee declined by 5 percent, wheat and grain milling by 2.55 percent, cotton by 12.48 percent, electric transformer by 30.90 percent, power looms by 25.76 percent and production of deep freezers declined by 9.78 percent in FY08.

 

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'Power generation from Tarbela reaches 3,682 megawatts'​

LAHORE (August 24 2008): Shakil Durrani, Chairman, Water and Power Development Authority (Wapda) during his visit to Tarbela power station has said that electricity generation from Tarbela Hydel Power Station has touched the figure of 3682 MW, which is six percent more than its installed capacity because of heavy rains in the country resulting higher water level of the lake.

Now, Wapda is considering various options for installation of power turbines on tunnel four of Tarbela Dam in a bid to fully tap the potential of the reservoir. This extension project will add another 960 MW to the existing capacity of 3478 MW, he added.

While expressing satisfaction over the water availability, he said that the Tarbela Dam reservoir is filled to its maximum capacity ie 1550 feet above sea level, which is a positive sign for the irrigation and power generation and it would help to reduce unprecedental power load shedding in the country.

During his visit, the chairman was briefed about the salient features of the 4th Tarbela Extension Project. Earlier, the chairman visited the dam, spillways and powerhouse. He distributed shields and certificates among the officers and officials of the powerhouse for their good performance. He also visited the hatchery wherein 'Mahasher,' rare specie of fish, is being bred now-a-days. The chairman also planted a tree on the site of project.

 

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Pakistan for enhancing trade with Europe​

LONDON (August 24 2008): The visiting Pakistan Commerce Secretary underscored the need of enhancing trade and investment in the South Asian country as a part of international support in the perspective of new era of democracy following the February 18 parliamentary elections. "Pakistan needs trade and not aid", Syed Asif Shah told a seminar, organised by the Asia House Corporate programme in Central London on Friday.

Introducing Pakistan as a investment-friendly country, the commerce secretary informed that with $160 billion GDP and Foreign Direct Investment of average $5-7 billion coupled together with ease of doing business, Pakistan can be counted as one of the friendliest investment country in the world.

Shah said that perception of Pakistan differs from the reality. The foreign investors and expatriates based in Pakistan have entirely different view about the country and its investment environment. He pointed out that multinational corporations working in telecommunications services are earning up to 120 prcent profits.

He told the British entrepreneurs that his country enjoys a significantly high-ranking in terms of investment-friendly policies and this potential must be utilised by investors from UK for enhancing trade and investments in Pakistan, for mutual benefits of both the countries.

Asia House Chief Executive MsCharlotte Pinder, in her opening remarks, introduced Pakistan as a country with remarkable economic growth having immense potential for investments in various sectors. Pakistan High Commissioner Wajid Shamsul Hasan appreciated the role of Asia House in introducing economic and trade potential of Pakistan to investors in UK.

He said that present government aspires confidence of people, but international support in the form of greater investments for strengthening economy were essential to build up this confidence. The high commissioner pointed out that existing gap between demand and supply in sectors such as energy offer huge potential and opportunity to foreign investors.