Pakistan Economy - News & Updates - Archive

[Neo]

Wednesday June 07, 2006


KARACHI: The world’s leading satellite mobile phone service provider THURAYA’s regional Head of Gulf and South East Asia Ahmed-Al-Sharief has said that due to good policies of Pakistan government in telecom sector his company has succeeded in introducing best satellite mobile phone services in the country.
Addressing a conference here on Tuesday, he appreciated the government for its investor friendly policies and vowed to introduce state of the art services for the people of Pakistan.

"I have come here to take further initiatives for the betterment of our services" Mr Shaeirf said.

He said that government of United Arab Emirates (UAE) was investing a lot in Pakistan.

"The investment made by Etisilat and THURAYA have helped in further strengthening the relation between the two brotherly countries", he said

He noted that Pakistan is one of those counties where people are getting cheaper telecom services.

For further lowering the rates in Pakistan, we have planned to introduce satellite public call offices throughout the country that would be available any time every where in the country, he added.

 

[Owais]

Two percent CVT coverage extended to suburban areas property

ISLAMABAD (June 08 2006): The Federal Cabinet has extended the coverage of 2 percent CVT on immovable property to the suburban areas of the country, it is reliably learnt. The Cabinet meeting, held on Monday last to approve Finance Bill, asked the CBR not to restrict the CVT coverage to urban areas but also bring property deals in suburban areas (smaller towns) into documentation.

Official sources told Business Recorder on Wednesday that the Cabinet in its meeting on June 5 held to approve the 2006-07 budget had approved the CBR proposal regarding imposition of CVT on property, besides extending its coverage to suburban areas.

"CVT should be imposed at 2 percent on purchase of urban and suburban immovable properties exceeding 500 sq yards, one kanal and above. In case, the value is not recorded, CVT should be collected at Rs 50 per sq yard," sources quoted the Cabinet as directing CBR.

In another move, the Cabinet asked the State Bank of Pakistan to look into complaints received from politicians and lawyers that the leasing cos and credit card issuing banks were denying these two banking products to them.

Sources said that the SBP has also been directed to introduce student loan scheme, adding that special incentive package for setting up universities, technical training and research institute, would also cover schools, colleges, vocational and all training institutes.

The Cabinet also asked for collection of utility bills through one-window in all banks, and in one of the clarifications SBP Governor said that all banks have been instructed to accept 'basic accounts' free of charge.

They said the Federal Cabinet rejected CBR proposal in which Rs 500 as fixed GST had been proposed on old and used computer monitors, adding that some Cabinet members said that with the imposition of GST monitors prices would increase.

According to sources, this idea was floated by CBR on the proposal of television manufacturers who said that sale of used monitors negatively impacted their business.

Sources said that the Cabinet decided that petroleum development levy (PDL), a major source of budgetary revenue in the past, would no longer form part of government revenue, which the Cabinet believes is change in the policy.

According to sources, the share of provinces in divisible taxes was raised from 37.5 percent to 41.5 percent, which would gradually increase to 46.26 percent within five years, adding that total transfers to the provinces were estimated at Rs 406 billion.It was also proposed that purchase of transformers for agriculture tubewells from the open market be allowed.

 

[Owais]

Expansionary stance in budget may cause fiscal slippage: S&P
RECORDER REPORT KARACHI (June 08 2006): Standard & Poor's Ratings Services has said that the expansionary stance, adopted by Pakistan while announcing the budgetary measures, raises concerns over the country's fiscal position and its existing weaknesses.

Although the budget has no immediate impact on the sovereign credit ratings, signs of further fiscal slippage could warrant a downward revision of the outlook.

"By relegating fiscal consolidation as a policy objective, the proposed budget will prolong vulnerabilities stemming from Pakistan's high debt and debt-service burden, while its impact on aggregate demand is set to extend pressures on inflation and contribute to rising external imbalances," said Standard & Poor's credit analyst Agost Benard, in a report released on Wednesday in Singapore, reaching here from sources in the capital market.

The 2006-2007 budget continues the government's greater emphasis on spending and growth objectives for the second year in a row since 2004-2005 fiscal. The proposed budget aims for a deficit target of 4.2 percent of the gross domestic product (GDP), 0.4 of a percentage point above the planned target (before the October 2005 earthquake) for the current fiscal year.

It is also 0.2 of a percentage point above the upper ceiling imposed by the Fiscal Responsibility Act of 2005, although the excess shortfall is justified by earthquake-related spending.

Much like the current fiscal year's budget, it, however, clearly prioritises growth over deficit and debt reduction, which is manifested in the planned 19 percent increase in total expenditure, including a 52.6 percent ramp up of development spending.

Spending plans focus on several key areas of human and infrastructure capital, including health care, education, and public utilities. Pakistan's spending needs in these areas are certainly significant, given its low ranking of 135 out of 177 on the UNDP Human Development Index. Yet the budget also clearly has an eye on next year's parliamentary elections, with Rs 109 billion (1.2 percent of GDP) relief package that entails a 15 percent increase in the wages of government workers, 15pc-20pc rise in pension payments, and subsidies targeted at petroleum, cement, fertiliser, and food stuffs.

On the revenue side, the attempt to expand the tax base through casting the net wider and improving compliance is a notable development, although it is unambitious in scope.

Measures such as an excise tax on financial services, real estate businesses, and franchise operations, and expanding retail sales taxes to a broader category of goods, are expected to yield additional revenue of Rs 25 billion (0.3 percent of GDP).

Among several noteworthy proposed administrative measures for enhancing compliance are the introduction of a Common Taxpayer Identification Number, and the enabling of sales-tax collectors to obtain third-party information. Even with the new taxes, however, the expected tax collection for 2006-07 would remain below 10 percent of the GDP, and the planned 16.7 percent rise in tax revenues appears somewhat optimistic given that it exceeds the 10 percent average growth for the past six years.

The deficit could rise if the planned revenue increase fails to materialise, as any shortfall will be more difficult to offset with spending cuts given scheduled parliamentary elections in 2007.

With its expansionary slant, the budget will also lend further strength to domestic demand, the managing of which has, for the past two years, been falling disproportionately on monetary policy.

The ongoing fiscal stimulus is thus likely to sustain pressure on inflation, and contribute to deteriorating external balances. Inflation has dropped to 6.2 percent, from last year's peak of 11.1 percent.

Nevertheless, both food and Wholesale Price Index inflation numbers remain stubbornly high at over eight percent, suggesting that supply and demand side pressures will prevail.

The State Bank of Pakistan, which successfully reduced annual private sector credit growth to about 20 percent currently from 30 percent a year ago, also now appears to lean more toward growth objectives and is reluctant to tighten monetary policy further. Therefore, the risk of inflation being reignited remains given strong domestic demand and more so if the State Bank is again enlisted to finance the deficit.

Strong domestic consumption is also feeding into booming imports, more than 60 percent of which are consumer goods. The current account deficit is expected to be 4.3 percent of the GDP for 2006-07 fiscal, up from 1.5 percent the previous year. Based on current trends, the deficit will be closer to five percent of the GDP in 2006-07 fiscal.

Financing the deficit does not appear to be a problem at present, with strong inflows of foreign direct investments reaching three billion dollars for the first 10 months of the current fiscal year. Nevertheless, curtailing excess consumption import demand through tighter monetary policy would be prudent to avoid higher risk to external liquidity.

"The 2006-07 fiscal budget, with its expansionary emphasis, therefore, poses the threat of rising imbalances and increases the chances of having to take more drastic action in the future, should external balances and price stability deteriorate," said Benard.

 

[Owais]

State bank disagrees

KARACHI (June 08 2006): The ratio of fiscal deficit and Gross Domestic Product (GDP) increased due to rise in development funds. This was stated by Governor, State Bank of Pakistan, Dr Shamshad Akhtar, while talking to the 'AAJ' TV channel 'Budget Programme' here on Wednesday.

She said that the International Credit Rating Agency, S&P has not correctly extracted and presented the statistics. In fact, revenue deficit has been converted into profit. The governor said that rates of export refinancing would not be increased despite the rise in the rates of T-Bills.

She said that the six months T-bills yield is now 8.40 percent but to increase exports, the rate of export refinance will not exceed 7.50 percent. She added there was a wrong impression that exporters to India and Bangladesh were being offered loans at low mark-up rates.

 

[Owais]

SBP raises 3-, 6-month treasury bills rates
RECORDER REPORT

KARACHI (June 08 2006): The State Bank of Pakistan (SBP), after almost nine months, on Wednesday raised the rates on three-month and six-month treasury bills by 22 basis points and 15 basis points, respectively.

The rates are near five-year high level. The move hints that the government would rely on borrowing in order to reduce the fiscal deficit and to encourage investment flows from banks and institutions in these tenors.

The SBP held an auction on Wednesday of all three maturities of Treasury Bills--3-month, 6-month and 12-month--for settlement on June 8, 2006. The pre-auction target announced by the SBP on June 5 was Rs 21 billion.

Total bids of Rs 31.835 billion were tendered by primary dealers, from which the SBP picked up Rs 27.835 billion. The SBP opted to increase the cut-off yields for 3- and 6-month T-bills by 0.2256 percent and 0.1523 percent bringing the yields to 8.3256 percent and 8.4433 percent, respectively, versus previous levels of 8.10 percent and 8.2910 percent. The 12-month T-bill cut-off yield remained at its previous level of 8.7907 percent.

Maturities flowing into the market on June 8, 2006 amount to approximately Rs 37.44 billion from maturing Treasury Bills. Outflows include the settlement value of the T-bills auctioned ie Rs 25.71 billion. The net inflow, after accounting for the settlement value of the auction, amounts to Rs 11.73 billion on June 8, 2006. During the current week, the overnight market has remained near 9 percent and discounting to the tune of Rs 2 billion has already been witnessed.

The point-to-point differential as it stands now between the three tenures of T-Bills is 0.1177 percent for going from 3 months to 6 months and 0.3474 percent for going from 6 months to 12 months along the T-Bill yield curve.

Salman Jafri, fixed income dealer at Jahangir Siddiqui Capital Markets, said that after a protracted period of ignoring the secondary market's signals, the SBP finally moved up the cut-off yields on the 3- and 6-month T-bills. The move is characteristically lacking in finesse. That said, there is nothing inherently wrong in the move itself. The alignment of shorter maturity T-bill cut-off yields with the secondary market yields on the same instruments.

For instance, the 3-month secondary market yield has remained (for the most part) above 8.10 percent (previous cut-off) since mid-September 2005 while the 6 month secondary market yield has remained above 8.2910 percent (previous cut-off) since early October 2005 (there have been a few sporadic instances when the secondary m ay ask Market yields fell below the cut-offs but these number 5 to 7 occurrences during the entire period).

And while we're looking back, here's an interesting factoid: the 6-month T-bill yield has risen to a four-and-a-half year high (last high was 8.3998 percent set on 15 November 2001). More interesting factoids: The secondary market yield on the 3- and 6-month T-bills has averaged 8.36 percent and 8.52 percent, respectively, since January 2006 with medians at 8.28 percent and 8.47 percent (3-month low/high = 8.06/8.74, and 6-month low/high = 8.31/8.76).

The 12-month T-bill remains well-anchored at 8.7907 percent and a no-change situation is perhaps the most significant feature of the auction since it indicates the same no-change stance for the Discount Rate.

The move appears to be targeted at encouraging subscriptions of 3- and 6-month T-bills which have been less attractive, when compared to the 12-month instrument's yield. The 12 month T-bill has seen decent subscription volumes throughout the period and remains the favoured offspring while its shorter maturity siblings have mostly been neglected.

It is uncertain at this point whether the increases will result in better subscriptions of the shorter term instruments. Those looking for the carryover trade will still resort to buying and funding the 12-month instrument rather than the shorter ones. The carry spread favours the 12 month T-bill purchase financed via 3 month repo rather than a 3-month T-bill purchase financed by a 1-month repo. Of course the longer carry trade presupposes a static Discount Rate. Given the expansionary nature of the budget FY07, this assumption of a static discount may well be put to the test but we suggest sticking it out for the near term and re-evaluating the stance in Q2FY07 (September-December 2006).

 

[Owais]

Education expanding raised for HRD, says Musharraf

TOPI (June 08 2006): President General Pervez Musharraf said here on Wednesday that Pakistan has made remarkable upsurge in economic development over the past few years and to sustain high economic growth the government has greatly enhanced spending on higher education for human resource development.

Addressing the 10th Convocation of the Ghulam Ishaq Khan Institute of Engineering Sciences and Technology here he underscored the need for further cementing the linkages between human resource development and economic progress, and outlined his vision to achieve the desired goals.

"We have to do a lot of work to produce highly qualified manpower and will seek assistance of foreign countries towards this end", he said. The President said: "Pakistan is no more in the economic stagnation of the 1990s and higher education budget, which was Rs 600 million in the past, has now been raised to over 22 billion rupees."

He expressed hope that the Higher Education Commission (HEC) would fulfil its national obligations of improving higher education under the stewardship of Dr Atta-ur-Rehman. Referring to the situation in the region, he said that despite the turbulent events Pakistan would maintain the pace of economic development.

"We are not facing any external threat; the threat is from within the country in the shape of extremism and terrorism," he said, adding that the government was not scared, and would successfully deal with the problem.

He said that Pakistan had attained paramount status among Muslim Ummah and its progress would have direct bearing on the Ummah. The President condemned the elements exploiting religion for their political ends and said that Islam "is not only a religion but a complete code of life". Islam teaches unity and cohesion, and it is progressive and not retrogressive religion, he added.

He said the GDP of the country had risen from Rs 65 billion to 132 billion over the past five years, which needed to be further enhanced. It is comparatively better in the Muslim Ummah, but far below even a small European country with a population of less than 5 million people.

The President cited lack of knowledge-based economy as prime factor for low GDP. The present government, he said, has adopted a holistic approach to meet the challenges and is focusing on promoting literacy rate, primary and secondary education with special reference to engineering sciences. He called for further strengthening the trilateral bond among industries, technical institutes and development research.

Laying stress on promotion of knowledge-based economy, Musharraf said, "We need to enhance productive capacity of the economy by fully utilising the human resources." The Higher Education Commission (HEC) led by Dr Atta-ur-Rehman, is fully alive to its responsibility of meeting the present-day challenges vis-à-vis higher technical education, he said.

The President said that nine world class science and technology universities would be set up in the country, which would become functional by 2008 with the assistance of Italy, South Korea, Japan France, Sweden, Netherlands, Austria and Japan. These would have linkages with local industries, which would help attract sizeable investment.

He told the audience that to improve the technical education system the government had decided to establish high standard national vocational and technical education centres. He said the nation has all capabilities and talent to excel in technical education, and the world community is also aware of this fact.

The President said the government would take care of external debt liability of GIKI for the next four years, and announced Rs 50 million for the Institute. He also announced to double the cash award for gold medallist students.

Congratulating the passing-out graduates for obtaining Bachelors, Masters and Ph D degrees in different disciplines of engineering sciences, the President said the nation "has great expectations from you for the development and prosperity" of the country.

The President conferred degrees on 196 BS graduates, 40 MS graduates and five Ph D scholars. He also awarded gold medals to the outstanding students.

The Rector of the institute, Dr Abdullah Sadiq, in his address, said that the NWFP and Balochistan governments, the Institute's alumni and some of its friends, and more recently the Government of the Punjab, were supporting the studies of deserving students at GIKI.

The Institute has succeeded in its endeavour to impart quality education to the students, he said. "Over the years the Institute has been able to attract from abroad highly qualified professionals, both Pakistani and foreigners. Many of them are now serving in leading positions in the country. Shams-ul-Mulk, Chairman of Board of Governors of GIKI, read out the special message of late President Ghulam Ishaq Khan.

The Ph D degrees were awarded to Sirajul Islam, Asifullah Khan, Abdul Majid, Hassan Fawad Junejo and Muhammad Siddique. Sana Arif and Bilal Riaz bagged the Ghulam Ishaq Khan Medal and the Quaid-i-Azam Medal, respectively, for distinction in academics and overall best performance.

Faculty-based gold medals for BS programme went to Murtaza Shabhir Safri (Computer Science Engineering), Sana Arif (Electronic Engineering), Shakeeb Bin Hassan (Engineering Sciences) Ta1ha Qamar Yazdani (Mechanical Engineering) and Muhammad Salman Saif (Metallurgy and Materials Engineering).

In MS programme, the gold medals were won by Muhammad Umar (Computer Science), Gulzaib Rafiq (Electronic Engineering), Fazal Harj (Engineering Sciences) and Muhammad Bashir (Metallurgy and Materials Engineering).

Earlier, the President inaugurated Hostel No 8 of the Institute. NWFP Governor Ali Muhammad Jan Orakzai and Chief Minister Akram Khan Durrani, Chairman, Higher Education Commission, Dr Atta-ur-Rehman, parents of students and various officials attended the Convocation.

 

[Owais]

SHC summons Pakistan Petroleum Limited

KARACHI (June 08 2006): Sindh High Court has issued notice to Pakistan Petroleum Limited (PPL) for June 8, 2006, in a declaratory and damages suit of a petroleum gas company against termination of contract by PPL.

Wak Ltd, a bottling liquefied petroleum gas company, under the name of 'Wakgas', submitted in its petition that it had entered into an agreement with PPL in 1990, which expired in 2000 but was subsequently renewed on same terms and conditions.

The plaintiff 's counsel, Nafees Siddiqui, said that the defendant on March 9, 2006 without discussing with the plaintiff sent a draft agreement for renewal of the contract for three years on profit sharing basis, and subsequently the plaintiff agreed to accept the terms and conditions of the profit sharing basis.

However, on May 11, 2006, the counsel submitted, a letter was sent by PPL to the plaintiff stating that plaintiff's agreement could not be renewed whereas the signed agreement was already delivered by PPL on May 12, 2006.

He said that an advertisement was given in national dailies by PPL inviting offers from licensed LPG companies for the quota within ten days of publication, but surprisingly on May 13 the supplies of plaintiff were disconnected and the same was being supplied to other companies without even waiting for 10 days after advertisement.

The counsel said that the defendant with ulterior motive and mala fide intention did not renew that agreement and the same was given to other company without merit and transparency.

He further submitted that PPL despite being subject to compulsory and overriding provisions on public procurement contained in the Public Procurement Rules and PPRA Ordinance did not follow prescribed criteria for open and competitive tendering in seeking to award plaintiff's portion of gas to another bidder without following due process and rules.

He requested that contract be renewed for three years as per agreement and for issuing decree against defendant in sum of Rs20,000,000 for the time its supplies remained disconnected. The SHC single bench comprising Justice Zia Pervaiz, after preliminary hearing of the suit issued notice to PPL for June 8.

 

[Owais]

Azgard 9 seeks more time for PAFL bid money

ISLAMABAD (June 08 2006): Azgard 9-led consortium has approached the Privatisation Commission to seek more time for the payment of bid money for Pak-American Fertiliser Limited (PAFL).

Sources told this correspondent on Wednesday that the Commission was inclined to accept the request. However, since it's a default case, the Cabinet Committee on Privatisation (CCoP) will be the right forum to take decision on Azgard 9's request.

The sources added that the Privatisation Commission is preparing a case for presentation at its board meeting here on June 12, and subject to its approval the case will be referred to the CCoP for endorsement.

An official of the Privatisation Commission said, " We have received a request from Azgard 9 for extension in deadline for payment of bid money for PAFL but since it had failed to meet the first deadline now the CCoP only can decide the issue. The Commission will follow the CcoP guideline."

The sources said the CCoP is likely to soon decide the fate of Pak American Fertiliser Limited (PAFL) privatisation.

After Ibrahim Fibers' default on payment of bid money, Azgard 9 led consortium, the second highest bidder, had showed willingness to buy the PAFL on offer of Rs 16.11 billion. It had paid the earnest money and then the first instalment of 25 percent of the bid money (Rs 4 billion) as per schedule in April. However, it could not pay the remaining amount on time.

As per schedule, the consortium was required to pay 75 percent amount of the bid money by May 17, 2006.

The sources said Azgard 9 representative has conveyed to the Privatisation Commission that the consortium was making all-out efforts to raise money from the banks for payment of bid money and guaranteed to meet the extended deadline.

The third highest offer of Tariq Saigal's group has already expired on May 28, 2006.

 

[Owais]

Pakistan gives $3 million for Hamas government

ISLAMABAD (June 08 2006): Foreign Minister Khurshid M Kasuri on Wednesday while reiterating Pakistan's full support to the Palestinian cause and the need for its resolution offered a dollars three million donation to help mitigate the sufferings of the Palestinian people.

Talking to Palestinian Foreign Minister Dr Mahmoud Al Zahar - who is here on a two-day visit, Foreign Minister Kasuri hoped the new Palestine government would enter into a constructive dialogue with all stakeholders to move the peace process forward.

Kasuri said Pakistan continued to extend unstinting support to all recent efforts aimed at resolving the Palestinian issue including the relevant UN Resolutions, the Quartet Roadmap and the Abdullah Peace Plan adopted by the Arab League Summit on March 2002 in Beirut.

Pakistan has consistently extended diplomatic, political and moral support to the Palestinian people since the inception of the conflict, which would be maintained till its resolution, the Foreign Minister added.

In the formal delegation level talks, Foreign Minister Kasuri expressed Pakistan's total solidarity with the people of Palestine in their quest for statehood. He said the government and people of Pakistan continued to follow the events in the region with concern.

"We attach great importance to an early negotiated settlement of the conflict. The leadership in Pakistan has repeatedly raised the Palestinian issue at the international fora, urging the international community to co-ordinate efforts to finalise the Middle East Peace Process," Foreign Minister said.

Dr Mahmoud Al Zahar comprehensively briefed Foreign Minister Kasuri and the Pakistani side on the current economic hardships being faced by the Palestinian people as a result of the withholding of international financial assistance.

Foreign Minister Kasuri announced a donation of dollars three million by the Government of Pakistan to mitigate the plight of the Palestinian people.

Dr Mahmoud Al Zahar expressed his gratitude for this timely and friendly gesture.

 

[Owais]

Five percent excise duty not to crimp banks earnings

KARACHI (June 08 2006): Imposition of 5 percent excise duty on fee income is likely to be passed on to the consumers and, in the worst case, if the banks take the hit on their books then, on an average, banks' profits will be affected by average 2 percent listed at the Karachi Stock Exchange.

Depending on the size or balance sheet of the listed banks, in the worst scenario, which is unlikely because the five percent excise duty would certainly pass on to the consumers, would range from 0.5 percent to 4.5 percent, based on listed banks' 2005 results.

Tax on cash withdrawals is to document the economy, and analysts do not see a major impact of these cash withdrawal on banking deposits. An aggressive bank borrowing target bodes well for the banks as it is likely that higher interest rates (6-month T-Bill of 8.3 percent & 6-month KIBOR of 9.6 percent) will be maintained in the next 12 months.

Banking sector has been one of the best performing sectors of 2005, in which growth in profitability of the sector was recorded at 99 percent and market cap reached Rs 60 billion. In recently announced Budget FY07, some neutral to positive measures have been taken for the banking sector.

As expected, banking sector corporate tax has been reduced to 35 percent from 38 percent in the current budget, in line with the tax rate on other corporate entities.

Mohammad Imran, research analyst at Jahangir Siddiqui Capital Markets Ltd, said that many incentives have been announced in the Budget FY07 for the development of agriculture and SMEs. This may further increase lending of commercial banks in these areas. Five percent withholding tax has been imposed on the fee, commission and brokerage income of the banks.

Reduction in corporate tax rate is likely to result in after-tax profitability growth of 5 percent, keeping other things constant.

Measures to promote agriculture and SMEs are likely to result in increased credit demand from these sectors. Increase in NSS rates is not likely to result in a massive transfer of fund from the sector, as most commercial banks have also started to offer double-digit rates on their deposit schemes. Moreover, the superior service quality of banks will also strengthen the assumption that the deposits growth would not hurt from the rise in NSS rates.

Imran said: "Our 'Overweight' stance is maintained on banking sector. Bank's profitability is likely to grow by 44 percent in 2006 and 20 percent annually for next 4 years. The spread of banking sector is likely to remain favourable (that is, above 7 percent) in the year 2006. After this, we expect the spread to squeeze mainly due to rising competition for deposits and advances. However, large commercial banks will be affected less from it as they have excess liquidity with them and their costs of deposits is also on the lower side.

 

[Neo]

Friday, June 09, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\06\09\story_9-6-2006_pg13_7

* Some reservations over civilian quota and money refund
* DHA invites applications through open ballot for the first time
* Submissions till tomorrow

By Noshad Ali

LAHORE: People submitted applications for the open balloting of Defence Housing Authority’s (DHA), Lahore, Phase-VII enthusiastically, hoping to get a kanal (4,500 square feet) plot for the relatively cheap price of Rs 80,000, learnt Daily Times on Thursday.

DHA Lahore has invited applications for Phase-VII through open balloting for the first time, and several queues were seen in and outside different private declared banks.

A businessman, Jahangir Bhatti, submitting his application with a private bank said he was applying in an attempt to avail the fiscal opportunity. “I would lose Rs 5,000 if my application is not picked, however that is not a significant loss considering the plot of land I might get will be worth over Rs 3 million,” said Bhatti.

He said he could easily afford the Rs 75,000 development charges as an investment because they would be refunded by September – if he did not get the land.

“There is no harm in taking a risk over the processing fee if I can get a kanal plot in DHA by investing just Rs 80,000,” said a police constable, asking not to be named. He said that civilians had been allowed to enter the balloting directly for the first time and people should avail the opportunity.

Karamat Ali, a retired government official, said that he had reservations about the civilian quota and return of money but would take his chances with the balloting. “I have communicated my reservations to the DHA administration but have not received a satisfactory answer,” he said.

All serving civilian gazetted officers, semi-government officers, public representatives of federal and provincial legislative bodies, overseas Pakistanis below 65 years of age and above 18 years of age, senior civilian and armed forces personnel and recognised journalists can apply till June 10, 2006 (tomorrow).

The DHA has established 15 categories for application with the first ten categories (A to J) directly or indirectly related to Pakistan Army officials and the remaining categories (K to O) for other Pakistani citizens.

DHA Marketing Director Rukham Khan said that DHA was among the country’s best housing societies, which was why its land sold like hot cakes. “People have their reservations because they fail to understand how the authority works,” he said. Most of the beneficiaries were civilians - not armed forces personnel, he added.

Khan said the DHA did not buy or sell land but bartered it from the landowner. “The DHA has used around 56 percent of the total land on developing infrastructure and the remaining has been given to land owners, who are usually civilians,” he said. The DHA administration barters an acre of land and gives two kanals to the previous landowner, two kanals to the authority and the rest is used to develop infrastructure, he explained. The DHA marketing director said the number of army officials living in the DHA was a small percentage of the authority’s total population. “The DHA offers several services which is why people want to live here,” he said. The high prices of land plots were not the authority’s doing, but caused by market forces, he said, adding that the DHA had no role in pricing its land plots and just charged development costs without any mark-up for profit. “I cannot reveal the exact number of land plots available in Phase-VII, but it is bigger that Phase-VI and that had 12,000 1-kanal plots.”

DHA Secretary Colonel Amir Ayub said the DHA specified categories to facilitate civilians. “The total number of plots is confidential,” he said, while assuring that all applicants would be treated equally.

DHA Spokesman Tajamal Hussain Anjum said no quotas had been assigned for any category and such details would depend on the number of applications.

However, queries about quota made to DHA Islamabad (when it invited similar applications for land plots last year) were reportedly not entertained. Finally, a question was asked in the Senate on September 16, 2005. It transpired that 52 percent of the plots were reserved for serving army officers and 10 percent for retired army officers. Serving Pakistan Air Force and Navy officers were allotted five percent of the plots. Civilian employees of all grades, members of parliament and journalists had five percent each while senior citizens above 65 years had a quota of three percent.

 

[Neo]

QUETTA (June 08 2006): Governor Balochistan Awais Ahmed Ghani said the provincial government had obtained a grant of dollars 205 million from the Asian Development Bank (ADB) on soft conditions for which it was eligible to be felicitated.

The grant will be spent on improvement of social infrastructure including education, health and potable water in the province, he said. Speaking at the opening session of two-day consultation workshop under ADB here on Wednesday, he said the schemes designed under the loan would be implemented through the district governments for which the Nazims' role was very important. He called upon the Nazims to implement the schemes with diligently and honestly.

Referring to the local government system, he said the system was moving ahead successfully and gray areas of that system would be removed with the passage of time. He said the federal government had recently distributed Rs three billion under the Prime Minister Fund among the district governments in the province and urged the heads of the district governments to spend those on welfare of the people indiscriminately.

 

[Neo]

ISLAMABAD (June 08 2006): As many as 3,300 Pakistani workers would be sent to South Korea in next 12 months after inclusion of Pakistan in the list of its source countries, said Minister for Labour, Manpower and Overseas Pakistanis Ghulam Sarwar Khan while addressing a press conference here on Wednesday.

State minister for Overseas Pakistanis Raza Hayat Hiraj and Secretary Labour Asif Hayat Malik were also present. He said Pakistan had received demand from Saudi Arabia and Bahrain for the professional services of doctors, nurses and skilled manpower.

The minister said that a poly-technical institute in every district and vocational institute at every tehsil would be set up following the directions of President General Pervez Musharraf and Prime Minister Shaukat Aziz.

He said the professional training institute would be opened in the country with the technical assistance of National Technical and Vocational Training Commission (NVTC).

In the first stage, a technical training institute is being established with an amount of Rs 14 million in Kashmore, he added. He said that five remittances cards (silver card, silver plus card, gold card, gold plus card and platinum card) having different benefits would be issued to overseas Pakistanis. "Silver and golden cards will be for one year while silver plus, golden plus and platinum cards will be for the period of three years," he added.

The Minister said protection of labourers' interests as well as measures to protect industry was imperative for industrial promotion. He said under Companies Profit Workers Participation Act, the organisation, which had not so far established Trusts would be given an opportunity. "If they establish trust in the stipulated time frame, they would be exempted from fines and the interest of Trust Fund," he added.

Ghulam Sarwar Khan said the volume of investment was being increased from Rs two million to Rs five million for new companies while the limit of fixed assets was being increased from Rs four million to Rs 20 million. Such companies would be exempted from Workers Participation Act, he added.

 

[Neo]

ISLAMABAD (June 07 2006): The government will provide Rs 55 billion subsidy during 2006-07, against Rs 44 billion in 2005-06, to keep electricity prices at affordable level.

According to the 'budget brief', distributed among journalists in the post-budget press conference on Tuesday, the subsidy would be provided from budget allocations. But it was not clear if the subsidy would be given to Wapda only, or KESC would also be given its share.

An official told Business Recorder that the government's decision to keep electricity prices at affordable level was being considered for the last few months on Wapda's proposal.

He said that Wapda's distribution companies had sought Rs 4 to Rs 4.5 per unit increase in tariff, but Nepra allowed only Rs 2 to Rs 2.25 per unit raise.

According to him, the government has also approved a subsidy of Rs 1.2 billion for KESC to keep the tariff frozen, but the mechanism would be finalised by a committee, the notification of which would be issued by Prime Minister Secretariat.

Other sources said the government might extend Rs 10 billion subsidy for the three financially weak companies--Hyderabad Electric Supply Company (Hesco), Quetta Electric Supply Company (Qesco) and Pershawar Electric Supply Company (Pesco)--for improvement in their transmission system.

Wapda had asked the federal government to take up the deficit of Rs 36 billion and convert it into equity, in addition to sale of Wapda's rest of the shares in Kot Addu Power Company (Kapco) and extension of Rs 6 billion subsidy.

Sources quoted Wapda Chairman Tariq Hameed as saying recently that the utility had sought a financial package from the government to offset the soaring gap piled up due to high furnace oil prices and heavy purchase of power from the independent power producers.

However, the World Bank was stressing for the issuance of tariff notifications for the Discos which, the bank said, were the key sector reform steps which have yet not been completed and uniform tariffs applicable since November 2003 were still in force.

 

[Neo]

Thursday, June 08, 2006

KARACHI: TMT Ventures, Pakistan's pioneering venture capital and private equity company, signed on Wednesday an agreement to jointly launch and manage a $100 million private equity fund with SEAF, a Washington DC-based global investment management firm.

The new fund will provide growth capital, operational support and global market access to select Pakistani companies with high growth potential.

Speaking at the signing ceremony, Sohaib Umar, CEO of TMT Ventures, said: "The joint venture signifies the interest of foreign investors in Pakistan as an emerging market with tremendous latent growth. For the last five years we have invested in Pakistan's budding entrepreneurs through our flagship Incubation Fund and now it is time to merge our learning and SEAF's global experience to unlock value in promising local ventures with strong management teams operating in traditional but high growth sectors".

Present at the signing ceremony was Hubertus van der Vaart, President and CEO of SEAF. "Pakistan is at the threshold of an economic growth curve that favours the entry of focused private equity funds. By combining TMT's extensive local experience with SEAF's global best practices in managing investments hands-on in over 20 countries, I believe we have formed a formidable partnership for the future success of the fund," said Mr van der Vaart. "The keen interest of international financial institutions in the TMT/SEAF Private Equity fund is a clear indication that the investment community is taking notice of the economic potential of Pakistani companies and entrepreneurs.

He said: "Pakistan will be an important addition to SEAF's international network of 15 offices in Central and Eastern Europe, Asia and Latin America. A senior SEAF professional will be based in Pakistan to augment the excellent local team of TMT Ventures." Private equity in its purest form operates on Islamic Shariah principles of partnership with sharing of risk and reward. "It is our intention to make the fund Shariah-compliant", said Sohaib Umar.