Pakistan Economy - News & Updates - Archive

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Luxury imports eating away at precious forex reserves ​

Thursday, August 28, 2008

KARACHI: The demand for imported goods continues to rise in Pakistan as items which were previously considered luxuries are now deemed to be necessities by those belonging to the affluent classes, complain economists.

Analysts are of the view that the post-9/11 return of many Pakistanis settled in the West is directly behind this, as these Pakistanis are more accustomed to a more pampered lifestyle. The trend has negative impact on the foreign exchange reserves and the local industry. The impact of importing luxury items was not felt as much in the past seven years, owing to notable foreign investments, the selling of government entities to foreigners in the private sector and the boom in the banking and telecom industries, which inflated economic numbers at macro level, say analysts.

However, now, the rising demand for imported goods, particularly items like luxury cars and mobile phones, is eating away a significant part of country’s forex reserves.According to the State Bank of Pakistan’s (SBP) quarterly report on Pakistan’s economy issued in the first week of June, “depletion in foreign exchange reserves has also eroded the reserves adequacy of the country in terms of weeks of imports. Import coverage ratio declined to 18.1 weeks from 30.6 weeks in June of the fiscal year 2007.”

Latest media reports say this import coverage ratio has further shrunk to 12 weeks. It is feared that the ongoing political tension may cause this figure to dip even further, said an analyst.

On August 16, the forex reserves reached a five-year low at $9.6 billion, registering a decline of 41.5 per cent, or $6.8 billion, in the last 10 months. The record high was $16.4 billion in October 2007.

Before Shaukat Aziz became prime minister, the import duty on vehicles ranged between 200 per cent and 300 per cent. Aziz reduced this to 90 per cent. M Muzammel Hussain, an economist at Alfalah Securities, said the current government has marginally raised this to 100 per cent.

Expatriates, higher-income families and professionals, who can afford a lavish lifestyle even during the current economic slump, claim that technologically-advanced mobile phones and the latest cars are a necessity for them.

The actual import of vehicles for personal use cannot be measured, as there is no category for personal vehicles in the monthly import data compiled by the Federal Bureau of Statistics (FBS) and SBP.

However, a rising number of expensive imported vehicles, such as the BMW, Hummer, Land Rover, Range Rover, Audi, Prado, Land Cruiser and Hi Lux Surf, have been witnessed on the roads, all of which are a burden on the economy. Heavy road vehicles are imported under the ‘machinery and transport groups’ category.

FBS figures show the number in 2008 is lower than the previous year, but economists say the number of such vehicles has increased manifold since 9/11.Saqib Hussain, Vice-President, Noman Abid & Company Ltd, explained why it is difficult to curb the import of luxury items. “We cannot stop importing cars, mobile phones and any of the other items, luxury or otherwise, because Pakistan has signed the Free Trade Agreement with many trading partner countries,” he said.

“According to the International Monetary Fund and World Bank, Pakistan cannot turn down locals’ demand for imported goods.” Hussain suggested that to help the central bank maintain its reserves, the rate of margins could be enhanced to 100 per cent for luxury goods from the current 35 per cent at the time of opening the Letter of Credit.

The government has constituted a committee to formally differentiate between luxury goods and necessities so that the import policy can be amended accordingly, said Ahmad Waqar, Chairman, Federal Board of Revenue (FBR).

FBS, which maintains a list of nearly 6,500 documented imported items and publishes import and export statistics every month, does not so far differentiate between necessity items and luxury items at import level. Once separated, it could mean that unessential items, or luxury items, would have a high tax. If the import item list is cut short, the country can maintain comparatively high reserves and so expand the capacity of import for a longer duration.

In view of the depleting foreign exchange reserves, experts say the export of wheat, raw cotton and sugar should be discouraged. When these items are exported, there is a local shortage. The items which are already locally produced have to be imported. Already, large chunks of forex reserves are being used up with the rise in import of luxury goods, such as cars and mobile phones.

Data from the FBS shows an increase in the number of power generators being imported, owing to the acute shortage of electricity. In addition to this, the import of oil and food items, which utilised a major part of country’s reserves, also took a huge jump just as the fiscal year ended, although it would be unfair to blame oil and food for exhausting forex reserves, as these items are necessities.

The situation can be also controlled if the duty is increased on the imported goods that are also locally produced.

Experts suggested that the dumping of Chinese goods, ranging from needles to cars, needs to be checked, and that there should be a heavy import duty on items such as tiles, marble, gems and jewellery, cigarettes, file covers, toys, shoes, home appliances, kitchen and bathroom items, etc. They added that only political stability can fix the economy.

 

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Rupee strengthens but outlook uncertain ​

Thursday, August 28, 2008

KARACHI: The rupee strengthened against the dollar on Wednesday as some export firms bought the currency to convert their dollar revenues, traders said.

The rupee ended trade at 76.00/76.10 against the dollar, strengthening 0.6 per cent from its previous close of 76.45/76.55.

Traders said export firms sold a larger-than-expected $30 million to $50 million of their dollar revenues, lifting investor sentiment. Market talk that the central bank intervened on Tuesday by buying rupees to ensure the currency did not fall beyond 77 to the dollar also boosted sentiment, they said.

“Sentiment was more positive today (Wednesday). There was a little bit more supply of dollars,” said one trader who declined to be identified. But traders said the long-term outlook of the currency was still uncertain. The rupee, which has lost about 23 per cent of its value against the dollar this year, hit a record low of 77.15 on Aug 22.

Uncertainty over the government’s future and a shaky economy has dragged on the currency. The coalition government split on Monday after the alliance’s second biggest party pulled out. After six years of healthy economic growth, the economy started faltering last year as high oil prices started to bite. Inflation is soaring, trade and fiscal deficits are rising, and forex reserves have been depleted by high oil payments.

 

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‘Debt factoring a useful tool for Pakistan’ ​

Thursday, August 28, 2008

KARACHI: The nature of international buyers has considerably changed in the past few years and now buyers enjoy credit terms at their supplier’s cost, which increases the risk of supplier’s payments or receivables.

Factoring is a new concept in Pakistan, but it has been successful in many countries around the world, which provides a modern concept of facilitation to the buyer and seller so that both parties could enjoy a win-win situation.

DS-Concept Factoring is a multinational European company operating in Pakistan for the last three years and the concept of factoring could help Pakistan in achieving export targets, said Qaseem Jaffri, Head of Business Development, DS-Concept Factoring, at a press conference at the Karachi Press Club on Tuesday.

He said that “we inform exporters what the financial position of a buyer is which helps exporters to adjust the quantity of order.” Resultantly, this process saves exporters from bad debts. “Interest rate for our services is as low as 8.5 per cent per year while local banks’ interest rates are around 12 to 14 per cent per year,” he added. Factoring is selling your invoices with deferred payment terms to get your money immediately after shipment, instead of waiting for 30, 60 or 90 days.

 

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Pakistan, Poland stress strong business ties ​

Thursday, August 28, 2008

KARACHI: Consul General of Poland, Ireneusz Makles has said it is need of the hour to accelerate existing business and trade activities between Poland and Pakistan and explore further avenues of business and investment opportunities bilaterally. Makles visited the Karachi Chamber of Commerce and Industry (KCCI) recently and speaking on the occasion said both the countries are enjoying good business relations. He said the visit of trade delegation of KCCI to Poland would be more helpful in expanding trade and commercial ties and it will further enhance trade relations in the sectors of textile and leather, rice, surgical instrument, sports goods, oil & gas, mining, chemical, maritime, engineering, heavy machinery and IT. He also said exchange of reciprocal trade delegation would enable both the countries to learn from each other experiences for exploring new avenues of trade, business and investment.

Makles also invited the business community to Poland for investment and development of agricultural farming and establishing industry. KCCI President Shamim Ahmed Shamsi stated the country’s business and trade community may join hands in the coal based power generation sector of Poland as Pakistan has rich source of coal at Thar and there are ample opportunities of joint venture and investment between the two countries.

 

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Rescheduling debt: ECC forms body to recover $500m from 6 companies​

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has decided to recover around $500 million from six defaulter private companies to enable the government service their rescheduled debt by the Paris Club creditors, official sources told Daily Times on Wednesday.

The ECC meeting held on Tuesday has already formed a committee headed by Minister for Port and Shipping, Qamaruz Zaman Kaira to present a report to recover the foreign currency loans from the private sector. Other member of the committee is the Secretary Finance. Secretary, Economic Affairs Division and the State Bank of Pakistan has been asked to assist the committee.

According to the official sources, in December 2001, Paris Club creditors lengthened the maturity of about $8 billion in so-called concessional, or development-related loans, due within the next five years, to 38 years. They also gave Pakistan 15 years grace, which means the government has to pay interest but no principal. The weighted-average interest rate on the concessional debt is 2.3 percent, which was reduced to as little as 1.5 percent during bilateral debt rescheduling agreements. Payments on the remaining $4 billion of Paris Club debt were extended to 23 years, with five years grace period.

According to the sources debt obtained by the private sector from Paris Club creditors was part of the rescheduling process and was also rescheduled in final agreement with the creditors. The government is still servicing this debt and the private companies number of which stands at six have defaulted in repayment of such loans.

The committee headed by Mr Kaira in consultation with Ministry of Finance, Economic Affairs Division and the State Bank of Pakistan would prepare a report relating to the outstanding debt and would submit it to the ECC. The ECC, based on the recommendations of the committee, would direct authorities concerned to initiate and ensure recovery from these private companies.

The country’s foreign exchange reserves are on the declining side and came down to $9.9 billion in August 2008 from $16.7 billion in June 2007. Foreign exchange reserves position of the country is in jeopardy and requires immediate attention at highest level to initiate each effort to generate foreign exchange.

With the fall in foreign exchange reserves of the country during the last few months actual reserves that would be available for financing of imports now stand at $5.42 billion as against the overall gross foreign exchange reserves of $9.92 billion the country possesses. Explaining the reserves position of the country, the official explained that total available foreign exchange reserves of the country also include around $3 billion held in foreign currency account, the SBP has already forward booked $1.5 billion from the banks which would be returned when the sufficient foreign exchange would be available and some $5.42 billion are the actual reserves that are with the SBP to finance essential imports.

 

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CDWP to take up revised Munda, Tarbela extension projects​

* The CDWP of Planning Commission is scheduled to meet on September 18, after a delay of almost two and a half months​

ISLAMABAD: The first meeting of Central Development Working Party (CDWP), for the current fiscal year 2008-09, would consider approving a number of important projects including Revised Munda Dam Project PC-II, Tarbela Extension Project and many others.

The CDWP of Planning Commission, which was to be convened by the end of July, is now rescheduled, with a lapse of almost two and half months, for September 18.

An official of the Planning Commission told Daily Times here on Wednesday that at the beginning of every year financial year, the CDWP meeting is delayed.

The Revised Munda Dam Project PC-II will cost the government Rs 651.862 million including foreign exchange component Rs 224.820 million. Its completion is expected in 24 months.

The cost estimates have been prepared by studies conducted by WAPDA in February this year.

The Munda Dam project is one of the multipurpose project which will help storing flood water that will be utilised for agriculture development of new areas. It will supplement shortages of lower Swat canal system. The project will also generate 740MW through hydropower. The water stored in the Dam would help in protecting lower valleys by lowering the magnitude of flooding.

With the availability of assured irrigation supply, annual cropping intensity of 180 percent can be achieved, which would result in increasing the agriculture production in the areas of Malakand and Mohmand Agencies of the region.

Existing annual cropping intensity, under rainfed conditions is 43 percent (2 percent in Kharif and 41 percent in Rabbi).

The revision of already approved PC-II is inevitable due to increase in cost of works, increase in pay and allowances of staff and increase in consultancy cost. Under the PC-II, investigation and project studies will be carried out to prepare the detailed engineering designs and tender documents of this scheme. The surveys to be carried out are; topographic surveys, geological investigation, hydraulic model studies and main structures, hydrological data collection and civil works.

Aim of the project irrigate 16940 acres, hydropower generation and flood control.

The government is considering various options for installation of power turbines on tunnel 4 of Tarbela Dam in a bid to fully tap the potential of the reservoir. This extension will add 960MW to the existing capacity of 3478MW. The estimated annual energy as per inception report would be to the tune of 2000Gwh. The cheap energy generated from this scheme would be fed to national grid through 500KV transmission lines. It will cost the government Rs 388.05 million including Rs 216.72 million as foreign exchange component.

According to the document of the projects, the local and foreign consultants will carry out the proposed studies. The studies would commence in October 2008 subject to selection of the consultants. WAPDA would second the technical personnel and provide the requisite administrative staff for smooth implementation of the project.

The project document further revealed that field investigations proposed by the consultants would be carried out through WAPDA field formation for which sufficient trained staff is available. In carrying out the assignments, WAPDA will provide the assistance in collecting additional reports regarding field investigations. This project will be carried out in nine months time after selection and hiring of consultants. The study is proposed to start from October 2008 and will be completed by end June 2009, subject to timely approval and releases of funds.

The PC-II of Tarbela Hydro Power Project is formulated for preparation of detailed engineering design, Tendered Documents and PC-I covers survey, geo-technical investigations, detailed engineering design, tender documents including in PC-I.

 

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Foreign funds net selling on stock market amounts to $396 million ​

KARACHI (August 28 2008): The offloading by foreign funds from the stock market remained the main cause of the recent fall in Pakistan equities as the net selling of offshore investors amounted to $396 million so far in calendar year 2008, analysts said. According to the NCCPL data, the foreign investors sold shares worth $2.7 billion and bought worth $2.3 billion, thus a net offloading of $396 million was recorded in this period.

However, majority of the foreign selling occurred in the last three months when the foreign investors sold shares valuing $233 million. "Though the quantum of selling was not huge, but due to low volumes and uncertain political and economic conditions it created a huge impact on share prices", Muhammad Sohail, an analyst at JS Global Capital, said and added that this trend of selling by offshore investors had been happening in all emerging markets. In fact, in a few countries, this sell-off had put pressure on currencies also, he said.

He said that in terms of net selling as percentage of market capitalisation, the selling in Pakistan was not substantial. However, limited free-float of Pakistan market (estimated at 25 percent), coupled with economic and political issues, had a drastic impact. "That is why Pakistan market (with 46 percent decline in dollar terms) was one of the worst performing markets in Asia, after China in 2008 to date".

According to figures available, heavy foreign selling was witnessed in other regional markets. South Korean market witnessed the highest outflow of $28,948 million, 3.8 percent of market capitalisation. Outflow of $24,422 million (0.6 percent) was from Japan, $9,026 million (1.4 percent) from Taiwan, $7,197 million (0.7 percent) from India, $3,014 million (2.0 percent) from Thailand, and $500 million (0.7 percent) from Philippines in this period. In Indonesia and Vietnam, net inflows of $458 million (0.3 percent) and $455 million (3.5 percent) were witnessed in this period.

According to SBP statistics, foreigners who brought money through SCRA still held shares valuing $2.6 billion as of August 16, 2008. This meant that so far in this year they had sold approximately 10 percent of their average holding, Sohail said.

The current holding is only 6.4 percent of market capitalisation. But in relation to free float it is at a decent 25 percent. Two years back, foreigners' holding was only 3.1 percent of capitalisation. But since then it has increased tremendously, he added.

 

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Saudi oil facility likely in next few days ​

KARACHI (August 28 2008): Saudi authorities have assured Pakistan delegation that Saudi oil facility against deferred payment will be started very soon, according to well-placed official sources. Saudi Foreign Minister Saud Al Faisal reportedly told his Pakistani counterpart Shah Mahmood Qureshi who also holds the portfolio of petroleum ministry that the Saudi government fully appreciated the position of Pakistan's economy, which is under immense pressure.

"We fully understand it's not a time of procrastination, it's time of action," the Saudi minister was quoted as saying during his talks with the Pakistani team members who met him on Wednesday. According to sources, the Saudi minister has assured the Pakistan team that oil facility will be started "as early as possible". The sources believed that the facility is likely to come into effect in the next few days.

 

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WHT exemption for manufacturers/exporters: FBR to provide lists to Wapda and KESC ​

ISLAMABAD (August 28 2008): The Federal Board of Revenue (FBR) will provide the list of manufacturers-cum-exporters of textiles, carpets, leather, artificial leather, footwear, surgical items and sports goods to Karachi Electricity Supply Corporation (KESC) and Water and Development Authority (Wapda) for exemption of 10 percent withholding tax on electricity bills exceeding Rs 20,000 per month.

Sources told Business Recorder on Wednesday that withholding tax exemption on electricity bills would be available to those manufacturers-cum-exporters in the said sectors where exports are 80 percent of total goods manufactured. In this connection, the board has issued instructions to the Directors-General, Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs).

According to FBR directive, the rate of collection of tax under section 235, read with Division IV of the Part-IV of the First Schedule of the Income Tax Ordinance 2001, where the amount of electricity bill exceeds Rs 20,000 per month, withholding tax at the rate of 10 percent of the bill amount is to be collected by the person preparing electricity bills.

The clause 66 of the Part-IV of the Second Schedule provides exemption from withholding tax of different classes of persons, who are manufacturers-cum-exporters of carpets, leather, artificial leather footwear, surgical items; sports goods and textile and articles thereof.

The FBR further clarified that for the purpose of this clause, the 'manufacturer-cum-exporter' would be the person whose export sales constitute 80 percent or more of the total goods manufactured in the preceding tax year.

The DGs in the field formations have been requested to compile lists of such cases from the tax assessment record and transmit the same to the concerned corporatised units of Wapda or KESC as the case may be with the request ie not to withhold tax under section 235 in such cases from the electricity bills payable for the month of July 2008 and onwards, and till further orders.

It is worth mentioning that the retailers and wholesalers constitute 19.2 percent of GDP but contribution of this sector towards income tax is not more than 2 percent which, reflecting under-taxation. To improve collection, withholding tax @ 10 percent of the bill amount exceeding Rs 20,000 per month would be collected from all commercial and industrial consumers. For bill amount up to Rs 20,000 per month the previous treatment has been continued in 2008-09.

 

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Economic team grilled by World Bank chief ​

ISLAMABAD (August 28 2008): World Bank President Robert B. Zoellick is said to have grilled Pakistan's economic team headed by the Prime Minister's Special Assistant on Economic Affairs, Hina Rabbani Khar, for presenting what he believed exaggerated statistics of the country's economy to seek project and programme loans, well-placed sources told Business Recorder.

Khar was part of the official delegation accompanying Prime Minister Syed Yousuf Raza Gilani during his visit to the United States last month. Economic team which met the World Bank President also comprised Secretary Finance Furrukh Qayyum and Pakistan Executive Director to the World Bank Jeved Talat.

Javed Talat, who is a former Secretary Finance has recently been appointed Executive Director of the World Bank after he was exonerated from corruption cases under the National Reconciliation Ordinance (NRO). "Zoellick was very harsh with Pakistan's delegation for reportedly presenting a picture of the economy which he believed was far from reality," the sources added.

"Please do not quote inaccurate statistics," the sources quoted the Bank's President as having advised the Pakistan's economic team. It is relevant to note that the World Bank as well as other multilateral financial institutions routinely assess and rate economies of their client countries, including Pakistan. Additionally, statistical data as well as analyses undertaken by the International Monetary Fund under Article IV are public information placed on their website.

Pakistani delegation looked perturbed after the meeting with the World Bank President, the sources continued. They claimed that no World Bank President had ever used such a harsh tone with any Pakistani delegation in the past and that the reported incident was unprecedented.

Javed Talat was Secretary Finance in 1996. Business Recorder sent him an email a couple of days ago to obtain his comments over the reported incident with the Pakistan delegation in the World Bank headquarters. No response was received till the filing of this story.

Isabel Guerrero, World Bank's Vice President for South Asia Region, who recently replaced Praful Patel, has reached Islamabad and would be holding meetings with the country's top economic managers.

It is pertinent to note that on August 21, according to Standard and Poor's (S&P), Pakistan's "B" rating was fully justified and reflected a negative outlook for the future. "It's already at a very low rating, a "B" rating and we certainly did not signal in any way that we are contemplating a ratings action," said Agost Bernard, a credit analyst at the S&P in Singapore.

 

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Investigation into mega tax frauds: high-powered body formed to monitor cases ​

ISLAMABAD (August 27 2008): The Federal Board of Revenue (FBR) has constituted a high-powered 'Integrity Management Steering Committee' (IMSC) to ensure speedy investigation of mega tax fraud cases through regularly monitoring of investigators engaged in probing such big scams, involving billions of rupees.

Sources told Business Recorder on Tuesday that the IMSC would not be directly involved in investigation of mega tax fraud cases but would strictly monitor the performance of officials investigating scams.

It has been observed that biggest tax fraud cases like Bawan Shah Group of Companies; Sheikh Noor-Uddin; sales tax refund frauds; payphone scam and fake exports to Afghanistan have never reached their logical conclusion. All these scams have caused massive loss to the national exchequer, but no final action has been witnessed against the culprits.

The IMSC has been empowered to seek regular reports from the investigators of mega tax fraud cases and provide necessary funding and support to them to ensure speedy processing of such cases. The IMSC would also bring transparency in the system being adopted for investigating of such cases.

The FBR has also given mandate to the IMSC for taking disciplinary action against the tax officials involved in mega tax fraud cases. According to sources, the FBR has recently convened a meeting to discuss the terms of reference of IMSC for devising a new integrity action plan with focus on anti-corruption strategy. One of the important mandates of the IMSC is to expedite investigation in big tax fraud cases.

The committee has given due importance to speedy investigation of such cases through proper monitoring mechanism. It would not intervene into the investigation, but constantly review the progress of the investigators. The IMSC comprising senior FBR members would take necessary action in cases where tax officials deliberately adopt delaying tactics in big cases of tax fraud.

In the next meeting of the IMSC, the FBR would exclusively discuss the mega tax fraud cases and review their progress. It is important to mention that the FBR has never completed investigation in biggest tax fraud cases. Secondly, no action has been taken against the officials involved in such big scams.

A few months back, Directorate-General of Intelligence and Investigation had provided a list of 60 corrupt tax officials to FBR for completion of disciplinary proceedings. These officials of customs, excise and income tax groups, who had indulged in corrupt practices, committed tax frauds, concealed property and issued illegal refunds in different cases.

The list also contains the names of income tax officials of Karachi who were part of the racket involved in issuance of bogus refunds in various scams. It is not yet clear whether the IMSC has the authority and courage to take action against these officials as recommended by the DG Intelligence.

An FBR internal investigation also confirmed that the tax officials operating 'Sales Tax Automated Refund Repository Computer System' (STARR) in Islamabad and Lahore had tampered the record to issue illegal refunds of billions to the exporters. Some STARR managers were primarily responsible for diverting the system merely to issue huge amounts of illegal refunds.

The internal inspection and audit had disclosed some astonishing facts about the modus operandi of the sales tax officials to bypass the checks in the system. The investigation was being conducted to check the involvement of STARR officials in mega-refund scams particularly in 37 tax fraud cases referred by the National Accountability Bureau (NAB) to the FBR.

A large chunk of money was fraudulently withdrawn as sales tax refund at the time when STARR was fully operational. The modus operandi was to flash incorrect particulars of the suppliers on STARR window at the time of refund sanctioning. This technique was used to show that the supplies had actually taken place even in non-existent cases. The refunds were generated on the basis of wrong data of suppliers using STARR system, it added.

The said report was finalised many months ago. It is hoped that the IMSC would take serious notice of such visible violations by the tax officials committed in the past or direct investigators to verify such loopholes in the systems, sources added.

 

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Contractors stop work on uplift projects in NWFP ​

PESHAWAR (August 28 2008): All Pakistan Contractors Association (APCA), NWFP chapter, on Wednesday announced stoppage of work on all developmental projects in the province and announced to boycott participating in all kind of biddings till acceptance of their demands by the government.

This was announced by Provincial APCA chief Ghulam Habib during a news conference while flanked by other members of the association. He said that despite our deadline to the government for the acceptance of other demands, the government had so far only agreed to review of the new rates through issuance of notification regarding Schedule 2008.

"Contractors had stopped construction work on all developmental works across the province and no one will participate in the bidding of tenders with the government unless the government fulfils our demands," Ghulam Habib declared.

The Association, he said, had presented 21 demands relating to their field works and hurdles faced by them in obtaining and continuation of work on the ongoing government development projects. The contractors of the province instead of 0.03 percent tender form fee had demanded its fixation at Rs 5,000 or Rs 10,000, making assurance of the availability of the 50 percent fund of the tender before its release.

Ghulam Habib said that on completion of the project the preparation of the PC-4 is the responsibility of the department; therefore, it should fulfil its own duty. He also called for guaranteeing the implementation of the contract agreement and abolish of the British era agreement to implement the PEC prepared agreement.

In case of the failure in implementation of the agreement, he called for increasing the time period of the contractor and payment of price variation with each bill and payment of ex-gratia in proportion to the price-hike on construction works. Similarly, he also called for taking action against all officers, who are creating hurdles in the completion of the development schemes.

The NWFP APCA chairman also demanded the payment of compensation to contractors in case of delay in the payment and abolition of corruption in t6he garb of the performance guarantee and bringing an end to the blackmailing in the name of pre-qualification even after the renewal of the contractors' licenses.

"The contractors carrying work in mountainous areas should be paid additional premium and their representative should also nominated on the price control and crime control committees," demanded Ghulam Habib saying that tender should be accepted or cancelled on passage of 30 days of the opening of the tenders. He demanded of the provincial government for immediate acceptance of their demands in order the contractors would restart construction work on all development schemes.

 

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Mega development projects being initiated in Punjab: chief minister ​

LAHORE (August 28 2008): Punjab Chief Minister, Mian Muhammad Shahbaz Sharif has said that a number of mega development projects were being initiated in Punjab for the rapid development of the province and provision of better transport facilities to the masses and these projects would be executed on priority basis in less developed areas.

He said that several developmental projects would commence in the provincial metropolis in the first week of September. He averred that foundation stone of Shalimar fly over would be laid on September 2 while construction work of express roads in Rawalpindi and Lahore would start in October 8.

He issued instructions for setting up of a task force to be headed by Khawaja Ahmad Hassan for the monitoring of development projects and co-ordination between concerned departments. He was addressing a high-level meeting held here on Wednesday regarding construction of different flyovers, express roads and other roads.

Khawaja Ahmad Hassan, Director General Lahore Development Authority (LDA), Director Frontier Works Organisation (FWO), Managing Director TEPA, Vice President Nespak and Mustafa Kamal were present on the occasion. Addressing the meeting, the Chief Minister said that FWO had executed a number of development projects in the provincial metropolis and despite passage of nine years no need had been felt for any repair.

He said that designs had been prepared for the construction of flyovers at Shalimar Chowk and Hussain Chowk in Gulberg, however, the construction work of Shalimar flyover would start first so as to solve transport and other problems of the people of the area as early as possible. He dilated that different projects including Shalimar Road, Multan Road, Circular Road, Shaukat Ali Road, Walton Road, Khurshid Alam Road and Jain Mandir Road would also commence in the first week of September.

He directed Nespak to complete the designing of express road from Lahore Bridge to Ravi Bridge in Lahore and Murree Chowk to Faizabad in Rawalpindi as early as possible so that construction work on these projects could also start in October. Shahbaz Sharif further said that uplift projects were executed round-the-clock in developed countries and this culture should also be promoted in Pakistan.

He said that construction work during night helps in early execution of the projects as well as save the people from traffic and other problems. He said that attention was also being paid to the implementation of development projects in Rawalpindi, Multan, Sialkot, Gujranwala, Sargodha, Bahawalpur and other cities and development activities would soon start in these areas.

 

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LCCI seeks early economic roadmap ​

LAHORE (August 28 2008): The Lahore Chamber of Commerce and Industry (LCCI) has urged the government to immediately announce economic roadmap as its failure to give a proper economic strategy in the last four months has virtually pushed the country to the wall. The situation is so pathetic that the industry has no money even to pay the salaries to its workers, said LCCI President Muhammad Ali Mian in a statement here on Wednesday.

He said if the situation remains the same for sometime, even the harshest measures would not be enough to give the economy a kick-start. It has now become very difficult for the industrialists and traders to even cover the cost of their businesses while the situation has reached the alarming stage, he added.

It seems the present rulers have no time to look at this matter of prime importance and days are fast approaching when no industry would be able to remain operational, he said.

The LCCI chief also said that during the past four months, foreign exchange reserves have dipped to the lowest level while rupee is on a free fall and the capital market's performance reflects the apathy of regulators. It looks that the government has lost all financial controls. On the other side, banks are in the driving seat as they continue to offer marginal returns to depositors while charging over 16 percent mark-up from borrowers, he added.

 

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Lower output of motorcycles feared ​

KARACHI (August 28 2008): Motorcycle assemblers fear around 15 to 20 percent decrease in the production of motorcycles in the country owing to the continuous increase in prices of components. Due to political and economic crises, as well as decline in the value of rupee against the dollar, prices of components used in manufacturing of motorcycles have gone up considerably.

They include imported steel, aluminium sheets, rubber, plastic and other components. In about eight years motorcycles production has gone up by 30 percent per annum. In 2007-8 the total production of motorcycles stood at 1054120. In 2006-07 it was at 839650 and in 2001-02 it was 100,000 units.

Chairman, Association of Pakistan Motorcycles Assemblers (APMA), Mohammed Sabir Sheikh, said they fear that this year motorcycle assemblers may not be able to maintain the pace of increased production due to high cost of production and low demand. He said that the production of motorcycles may be 15 to 20 percent lower this year.