Pakistan Economy - News & Updates - Archive

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Pakistan pioneer passenger car bites the dust ​

Saturday, September 06, 2008

KARACHI: The odds were seemingly stacked against Feroz Khan when he was born to homeless migrants from India, but the span of 59 years has changed matters. Khan grew up in Lalukhait, one of the lower income areas in Karachi, but has nonetheless travelled far and wide, working in Saudi Arabia, England, and the United States.

After returning to Pakistan, he later became the Chairman and Chief Executive Officer of Adam Motor Company Ltd, maker of Pakistan’s car, the Revo. This plant was forced to close down, but adjacent to it stands another one of Khan’s factories: Omar Jibran (OJ) Engineering Services, the largest supplier of original car parts to Toyota, Honda and Suzuki in Pakistan.

OJ Engineering is the result of a lifelong struggle for Khan.

“I had a very humble beginning,” he says. One of six siblings, Khan studied at a government school. He earned a scholarship to DJ College, and then another to NED University, from where he graduated with a degree in mechanical engineering. After a bad job experience at Karachi Port Trust, Khan decided to move abroad.

Borrowing $300 from a sister, in 1972, he began an arduous journey to Germany by bus. On the way, he paid a visit to shrines in Kabul, Herat, Mashhad, Tehran, Kirmanshah, and Baghdad in the hopes that it would get him a job. However, this was when members of Israel’s Olympic team were killed by Palestinian militants, causing Germany to stop issuing visas. Four months after being on the road and with only $100 in hand, Khan had to come back to Beirut.

Eventually, his luck turned for the better. Without having anyone sponsor him, he managed to get a visa for Saudi Arabia, and got a well-paid job in Saudi Aramco. By the time he left Saudi Arabia in 1978, Khan has earned enough to buy 42.5 per cent shares of a company in England that made thread protectors for oil pipes.

After two years in England, he moved to Houston, Texas and set up a company called Tubular Protection of America. He has not looked back since. He eventually returned to Pakistan, and in 1990, established OJ Engineering, which manufactured car parts for Pak Suzuki Motors. His reputation started to grow and soon, other car assemblers became his customers.

“Pakistan’s auto industry has come a long way,” said Khan. “There was a time when we used to make only tyres, car batteries, seats, and wiring harnesses. Now, we make everything except for the transmission and engine.”

The auto industry, however, is facing a slowdown, and according to Khan, the government needs to bring political stability for it to make a turnaround. Had time remained on his side, he believes he would have taken the country a step further by making engines.

“I am not defeated,” declared Feroz Khan. “What does not break you makes you stronger.” Three years ago, Pakistan launched its first car, the snub-nosed Revo manufactured by Adam Motor Company Ltd, but deteriorating law and order, inconsistent government policies, and a bad business decision forced the plant to close.

Launched in 2005, the Revo had an edge over its competitors. With the exception of the engine and transmission system, all its parts were manufactured locally, rendering it the cheapest car in the market and the pride and joy of Feroz Khan.

The then finance minister Shaukat Aziz had inaugurated the plant in 2003. Even today, outside the closed factory gates of Adam Motors in Bin Qasim Industrial Estate, there is still a plaque carrying the announcement of the inauguration. Three months before the launch of the Revo in 2005, Shaukat Aziz, who had become Prime Minister by then, promised Khan that the car would be on list of the government’s purchases.

“And since it would have been the cheapest, the government would have been able to buy 5,000 to 10,000 cars a year,” recalled Khan ruefully. However, before even the first car was rolled out, the roads became crowded with more efficient imported vehicles.

The Revo was not purchased by the government, and the plant where it was manufactured eventually had to close.

One of Khan’s mistakes was that he did not arrange for a financier before the car was launched. He had believed that the word of the Prime Minister would be enough. “I have learned my lesson. No one should ever trust a political appointee,” said Khan in an interview with The News.

With no investor and few orders in hand, Khan had little money available for aggressive marketing. Eventually, he found a Kuwaiti investor willing to help. However, this was when the ongoing political crisis in the country with suicide bombings and assassinations began.

“He waited for two years for situation to improve,” said Khan of the investor. “The same thing happened to another investor from Dubai. Why would anyone invest here when Pakistanis themselves are shifting their capital abroad?” Today, Khan is still searching for someone who will buy the plant that closed down, but he has been able to come to terms with its closure.

“Looking back, I feel that to have a dream, to try it and fail is much better than to never have tried at all,” he said.

 

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Govt may pull out $2bn investment in US ​

Saturday, September 06, 2008

ISLAMABAD: The appalling economic situation has forced the country to actively consider the option of withdrawing over $2 billion foreign currency reserves parked in US Treasury and its capital market, The News has learnt.

In the wake of mounting pressure on foreign exchange reserves, they dipped to its lowest in recent years and stood at around $4 billion, in real terms, keeping in view forward liabilities.

During the previous regime, the government hired fund managers for management of the reserves, who parked money in capital markets, bonds as well as US Treasury.

As total reserves held by the central bank now stand at $4 billion, which can fulfill requirements of one month of imports, the situation has put Pakistan in the ‘danger zone’ regarding its external obligations. In case of non-availability of Saudi oil facility worth $5 to $6 billion, Pakistan may face the threat of default, leaving no other option but to seek the International Monetary Fund’s bailout package to address its balance of payments (BoP) woes.

Unskilled handling of foreign reserves is quite apparent as Pakistan is getting a meagre 1 to 1.5 per cent return on its parked money while on the other side it has floated eurobonds on which it is paying a much higher rate in the range of 7 to 10 per cent. “Pakistan is a net loser in this forex game,” an official commented.

At a time when reserves are depleting rapidly in the range of $250 to $330 million weekly, the finance ministry sources do not rule out the possibility of withdrawal of investment in the US Treasury and other areas.

When the State Bank of Pakistan’s spokesman Syed Wasimuddin was contacted on phone, he asked this correspondent to send questions to his email address and promised to give the central bank’s comments. After several hours, he was reminded regarding the queries but he refused to give any reply to these questions. “No, these cannot be replied,” he categorically said.

Among the questions, the SBP was asked how much foreign currency reserves were parked with the fund managers for the medium term or fixed term.

The second question was whether the SBP was considering any move to withdraw these reserves from the fund managers keeping in view the existing tight situation.

In the third question, the SBP was asked if not when will Islamabad under agreed terms and conditions be able to pull out these reserves after completion of the fixed period.

“The handling of foreign currency reserves poses a big question mark,” an official source said and conceded much could be done to better manage the reserves. However, sources explained that Pakistan’s risk rating was high, resulting in payment of high interest rates on its borrowings and getting less on its investments in destinations like the US where the risk was minimum.

Pakistan is getting less on its $2 billion investment because the fund managers were advised by relevant authorities to invest the amount in ‘AAA’ rated countries. “We have minimised our risks, which resulted in much less dividend,” an official said.

In background discussions, the sources alleged that the finance ministry was never taken into confidence on the issue of forex reserves’ management by the high-ups of the State Bank despite repeated requests by the ministry in that regard in the last few years.

However, according to SBP data released on Thursday, total liquid foreign reserves held by the country stood at $9.129 billion on August 30.

The break-up shows that foreign reserves held by the State Bank stood at $5.759 billion while net reserves held by banks (other than SBP) amounted to $3.370 billion.

 

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Weekly inflation soars 31.55 per cent ​

Saturday, September 06, 2008

ISLAMABAD: The government has totally failed to control the skyrocketing inflation which is not only affecting millions of fixed and low-income households but also hurting the popularity of the present government.

High inflation (the mother of all economic ills) is disturbing the macro-economic indicators, while from the government side, the policy response looks grim. At the moment, Pakistan on the economic and political fronts is passing through a very critical situation, while political parties are engaged in power wrangling instead of adopting a unified line of action to cope with the challenge.

According to the Federal Bureau of Statistics (FBS) data released here on Friday, weekly inflation measured by the Sensitive Price Indicator (SPI) covering 53 daily-use kitchen items for the week ended on September 4 increased by 31.55 per cent compared to the corresponding week of the last fiscal.

The bulletin revealed that inflationary pressure during the week under review was higher on the lowest income group earning below Rs3,000 per month. For them, the SPI registered an increase of 33.18 per cent. For the income group of Rs3,001 to Rs5,000, it stood at 32.02 per cent, for the Rs5,000 to Rs12,000 income bracket it was at 31.65 per cent and for those earning more than Rs12,000, it stood at 31.54 per cent as compared to the same week of fiscal year 2007-08.

It is worth mentioning that the government’s huge borrowing from the central bank to bridge the gap between its revenue and expenditures was instrumental in increasing aggregate demand and ultimately high inflation, which has become an apparent threat to the country’s economic health.

The State Bank of Pakistan (SBP) has recently also increased its discount rate by 100 basis points to 13 per cent aimed at curtailing demand pressure in the economy and ultimately capping inflation. The governor of the bank Dr Shamshad Akhtar at that occasion blamed the government for heavy borrowings from the SBP, which pushed up inflationary pressure in economy.

Trend of the weekly SPI based inflation with base year 2000-2001 during the last 12 weeks as compared to their corresponding weeks of the last fiscal shows a steep trend. As at the week ending on June 19, 2008 stood at 26.79 per cent, June 26 (26.03 per cent), July 03 (28.37 per cent), July 10 (28.30 per cent), July 17 (30.36 per cent), July 24 (32.22 per cent), July 31 (31.92 per cent), August 7 (31.72 per cent), August 13 (31.48 per cent), August 21 (31.69 per cent), August 28 (30.90 per cent) and on September 4, 2008, it stood at 31.55 per cent.

According to the SPI bulletin, year-on-year, the rise in the prices of some necessities and kitchen items was exorbitant. These items were bananas, onions, chicken, potatoes, LPG, tomatoes, gur, firewood, eggs, beef, fresh milk, rice, wheat flour, ghee, wheat, petrol, diesel and all types of pulses.

The bulletin on SPI, based on the data collected for about 53 items from 17 centers, showed that 16 items registered an increase, whereas, 14 items showed a decline while prices of 23 items remained unchanged.

In a span of one week, prices of bananas went up by 31.59 per cent to Rs 56.11 per dozen, onions 21.33 per cent to Rs31.97 per kilogram, chicken (farm) 3.52 per cent to Rs108.35 per kilogram, potatoes by 2.91 per cent to Rs26.86 per kilogram, LPG by 0.86pc to Rs952.76 per 11 kg cylinder over the previous week.

Further analysis of the data revealed that on year-on-year basis, some items are dearer by double digits. These include; masoor pulse 122 per cent, bananas 76 per cent, LPG 61 per cent, onions 55 per cent, potatoes 50 per cent, bath soap 39 per cent, firewood 24 per cent, curd 23 per cent, fresh milk 21 per cent, chicken 21 per cent and beef by 12pc over the corresponding week of the last fiscal.

Prices of 14 items decreased, yet compared to the prices of the corresponding week of last year, items which showed increase in their prices were; rice IRRI-6 dearer by 98 per cent, kerosene 83 per cent, rice basmati (broken) 67 per cent, wheat 64 per cent, mustard oil 61 per cent, gram pulse 57 per cent, tomatoes 56 per cent, wheat flour 54 per cent, vegetable ghee (loose) 49 per cent, red chillies 31 per cent, egg hen (farm) prices were up 29 per cent.

Though the prices of 23 items remained unchanged, the prices of some items as compared to the corresponding week of the last year are still dearer by double digits. These items include diesel which was costlier by 71 per cent, petrol 62 per cent, cooking oil (tin) 45 per cent, vegetable ghee (tin) 45 per cent, tea packet 45 per cent, washing soap 42 per cent, plain bread 35 per cent and electricity charges were up by 16 per cent over the corresponding week of the last fiscal.

 

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Pakistan needs ‘substantial external financing’: IMF ​

Saturday, September 06, 2008

KARACHI: Pakistan needs “substantial external financing” to stabilise its economy and rebuild fast-shrinking foreign currency reserves, a senior IMF official said.

The economy has been hard hit by soaring world prices for oil and food, which have cut the reserves to a six-year low and pushed the rupee down a fifth against the dollar this year alone.

IMF Director of the Middle East and Central Asia Department Mohsin Khan said Pakistan’s five-month-old government was preparing its own strategy to steer the economy away from the rocks and had not requested a fund programme.

In an email reply to Reuters received on Friday, Khan said he had yet to see all the details of the Pakistani strategy, but it had outlined its plan to raise funds and put finances in order.

“They are looking at accelerating privatisation, obtaining donors’ support, and tapping the international markets by issuing GDRs (global depository receipts) and exchangeable bonds,” he said.

Khan said the strategy included letting interest rates rise if necessary, allowing greater exchange rate flexibility, reducing the fiscal deficit and cutting government borrowing.

The government has said it will cut quarterly net borrowing from the central bank to zero, in order to help control inflation already running at close to 25 per cent.

“If the measures outlined in the comprehensive policy strategy are implemented, and sufficient financing is secured quickly, the Pakistani economic authorities could stabilise the economy this year and start to build up reserves,” Khan said.

Investors dislike so many ifs, and the international bond market has been pricing in the risk of Pakistan defaulting on its debt early next year. Currency reserves have been falling at a rate of around $800 million a month since peaking last October.

Latest data released by the Finance Ministry showed reserves fell from $9.13 billion on Aug. 30 to $8.89 billion on Sept 3, the lowest level since 2002, of which the central bank’s reserves accounted for $5.5 billion. Some bankers have suggested that the civilian government should turn to the IMF for support.

Because of Pakistan’s frontline role in fighting terrorism and backing for the NATO mission in Afghanistan, bankers anticipate international help to avert a default and a balance of payments crisis.

Analysts, however, see Pakistan entering a fresh phase of political instability, highlighted on Wednesday by an apparent assassination attempt on Prime Minister Yousaf Raza Gilani. Gilani was not in his car that was stuck by bullets on a highway near Islamabad.

The rupee hit an all-time low of 77.45 to the dollar the same day but steadied to close on Friday at 76.40/50, marking a drop of more than 19 per cent from the end of 2007.

Central bank Governor Shamshad Akhtar issued a statement on Thursday saying the World Bank was seeking to speed up close to $1 billion in investments in Pakistan.

A Finance Ministry official has said the Asian Development Bank (ADB) is also expected to $500 million from a $1.3 billion loan programme. Pakistan has also agreed in principle with Saudi Arabia to defer payments on oil imports estimated at $5.9 billion.

 

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Pakistan fails to lay electricity lines: Iran CG ​

Saturday, September 06, 2008

KARACHI: Consul General of Iran to Pakistan, Masud Mohammad Zamani has said that according to a pact signed between the two countries, Pakistan has failed to keep their part of the promise to lay down electricity transmission lines, and therefore Iran has also not been able to fulfill its agreement of supplying 1,100MW electricity to Pakistan.

During a meeting with Deputy City Nazim, Nasreen Jalil on Friday at the KMC building, he also informed that Iran has already provided 35MW of electricity to the province of Balochistan.

He added that regarding the trilateral gas pipeline project, Pakistan and Iran have already agreed on the project, nevertheless Tehran is still in discussions with India on the matter. He articulated that as soon as the rates of gas are decided between India and Iran, work on the project would begin in a few months.

Zamani also said that Pakistan and Iran have many opportunities to enhance their trade. He voiced that he has been in Pakistan for a year and witnessed “beyond imagination progress in the country’s economic development.”

He further stated that annual trade balance between Tehran and Pakistan stands at $600 million according to which Iran imports rice, textile products, fresh fruits, etc, from Pakistan, whereas Pakistan imports petrol and chemical products from Iran. Nasreen Jalil said that there are many unexplored territories where trade between the two countries can be improved. She suggested that there should be increased interaction between the citizens of Pakistan and Iran, and special concentration should be given towards augmented knowledge sharing of the culture and history of the two nations.

 

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Land acquired for IT park ​

Saturday, September 06, 2008

ISLAMABAD: Pakistan Software Export Board (PSEB) has acquired around 15 acres of land at prime location in the Federal Capital to construct IT park in order to nourish the rapidly growing sector.

The construction of this park will commence in January 2009 and is expected to be completed by January 2011, said an official at PSEB on Friday. The official also said a Letter of Intent (LoI) has already been issued to a consortium of international consultants, for the establishment of IT Park at Chak Shahzad, to be developed on Built Operate and Transfer (BOT) model.

He said with an expected development cost of more than Rs9 billion, the IT Park will provide 1.5 million sq ft of contemporary office space to the local and international ICT companies and service providers. PSEB is currently managing ten IT Parks across Pakistan and is in the process of constructing three new in major cities.

The purchase of land measuring six acres each, for the establishment of parks at Lahore and Karachi Airports is also in process of acquisition. He said PSEB has also joined hands with Shaheen Foundation to set-up a new state-of-the-art IT Park in Lahore. Operational from this November, the facility will be one of the largest IT Parks in the country with redundant connectivity, power backups and top-of-the-line civic amenities.

The park, measuring 360,000 square feet, will be used for the international branding of Pakistan’s IT industry and can house more than 30 medium-sized IT companies at affordable rents.

 

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US transfers $365m for Fata war support​

WASHINGTON, Sept 5: The United States has transferred $365 million to Pakistan as reimbursement for the country’s efforts to fight terrorism in Fata.

The money comes from the Coalition Support Fund which provides assistance to US allies in the war against terror.

The money transferred covers the expenses incurred during the first quarter of the current year.

Pakistan maintains about 120,000 troops in Fata to combat Taliban and Al Qaeda militants.

Under the arrangement, Pakistan submits bills for expenses incurred during each quarter to the US Department of Defence which reimburses the bills after proper scrutiny.

Recent payments have been delayed because of US objections to some of the bills. The issue of reimbursement was also raised in the US Congress where lawmakers blamed Pakistan for exaggerating expenses.

Recently, PPP co-chairman Asif Ali Zardari also had claimed that money sent from the Coalition Support Fund was misappropriated by the Musharraf government but he later withdrew his allegation.

The US administration, however, accepted Pakistan’s claims with minor adjustments.

 

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$810m ADB assistance for power sector​

ISLAMABAD, Sept 5: The Asian Development Bank will provide a $810 million financing facility to the country’s power sector.

The funds, to be released in several tranches over 10 years, would support the $5.2 billion Power Distribution Enhancement Investment Programme (2008-2017), said an ADB statement issued here on Friday.

The country’s national power sector is currently short of generation capacity and suffers from insufficiently-maintained transmission and distribution systems, resulting in supply interruptions. System losses of distribution companies range between 10 and 33 per cent above the international best practice.

The ADB funding will support the ongoing power sector reform programme designed to provide a safe and reliable supply of power, meet an annual eight per cent growth in GDP from 2005 to 2015 and expand power coverage to rural areas.

“A secure and predictable electricity supply will lead to social and economic benefits and improve conditions for schools, hospitals and other social services,” said Rune Stroem, principal energy specialist at the ADB Central and West Asia Regional Department.

The bank’s investment programme will focus on the distribution sector which is burdened with worn-out and overloaded infrastructure, power losses, capacity shortfalls and other constraints.

It will help distribution companies to provide an additional 12,000 gigawatt-hour (GWh) of electricity to meet an expected peak demand and give 30 million more people access to power from the national grid.

The programme will ensure timely subsidy payment by the government to distribution companies.

It will also improve financial management and corporate governance standards in distribution companies and help attract more private firms to invest in the sector.

 

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Reserves slip to $8.89bn​

ISLAMABAD, Sept 5: The foreign exchange reserves fell to $8.89 billion as of Sept 3, down from $9.13 billion on Aug 30, the Finance Ministry said, as the rupee remained under pressure having lost almost 20 per cent against the dollar this year.

The central bank’s reserves fell to $5.5 billion from $5.76 billion, while those held by commercial banks rose slightly to $3.38 billion from $3.37 billion, the ministry’s finance division said in a note to media received by Reuters on Friday.

Pakistan’s foreign reserves hit a record high of $16.5 billion in October last year but have since been depleted by high payments for oil imports, and foreign investors withdrawing money because of the country’s political uncertainty.—Reuters

 

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‘Pakistani authorities have not requested an IMF programme’​

ISLAMABAD: International Monetary Fund (IMF), while endorsing the Policy Measures developed by Syed Naveed Qamar and his economic team in Pakistan, has said that if these are implemented and financing gap is secured this would go a long way towards addressing the country’s macroeconomic vulnerabilities. Masood Ahmed, Director External Relations Department, IMF said this during a media briefing held at Washington. I don’t have any updated comments on Pakistan’s economy beyond the ones we have already made recently, except on specific point. The authorities have not requested a Fund programme, and what we have said is that in terms of the next year that the authorities have announced that, in principle, Saudi Arabia has agreed to provide an oil facility which would defer the payment of part of the oil import bill for Pakistan, and they have also announced a series of policy measures to correct the situation. We have said if these are implemented and the external financing to fill the financing gap is secured, then this would go a long way towards addressing the country’s macroeconomic Vulnerabilities, Masood Added.

David Hawley, Senior Advisor, External Relations Department, IMF Washington, DC in another media briefing has had said that one of the important issues in Pakistan is that net international reserves have declined by about $6.5 billion since the end of June, 2007 to about $7.7 billion, and the Pakistani rupee has depreciated by 20 percent against the US dollar over the same period. Now a significant tightening of both fiscal and monetary policies to contain inflation and reduce the external current account deficit is needed in our view. In particular, fiscal consolidation should include the phasing out of energy subsidies, and moreover there is a need to stop central bank financing of the government, which has been large since October 2007. The Minister of Finance, I would note, has announced that, in principle, Saudi Arabia has agreed to provide an oil facility, deferring payment of part of Pakistan’s oil import bill. But the terms, I understand, are still under discussion.

 

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World Bank refuses to provide 'emergency package' ​

ISLAMABAD (September 06 2008): The World Bank has categorically refused to entertain a request of the government of Pakistan (GoP) for granting it a $500 million emergency package to bail it out of the worsening financial crisis, and has advised the policy-makers in Islamabad to approach International Monetary Fund (IMF) for any such support.

The World Bank has disconnected negotiations with the economic team of the government for the 500 million-dollar 'emergency package' with the comment that it was not its job to provide any 'emergency package' or 'support' to any country, and if Pakistan needed a special emergency financial support to get some breathing space on the economic front it could approach IMF whenever it wished.

The officials in Islamabad, who were the part of the negotiation team that held a series of talks with World Bank officials in and out of Pakistan for securing 500 million-dollar 'emergency package' during last three months have been found totally upset over the new development. The World Bank's 'no' to Pakistan for special financial support package has been a cause of serious concern to them.

The government economic team is confused as no other option is available with it to explore any other window for having any emergency financial support to offset the pressure on the ailing economy.

Pakistan had made a formal request to the World Bank some three months back for getting from it a $500 million emergency package when 'Finance Minister' Ishaq Dar led a delegation to visit Washington for talks with World Bank and IMF. This was followed by a number of meetings between government officials and World Bank authorities.

Interestingly, the World Bank had set a number of harsh conditionalities for Islamabad to qualify for $500 million special emergency package, and the government had taken a number of measures to meet most of them. These included deletion of subsidies the government was picking up on petroleum products and rising electricity rates out of any proportion for all consumers categories.

The PPP-led government felt level of urgency and wasted no time to pass on major portion of the oil subsidy to the consumers and at the same time revised power tariff more than one time during the last few months. These harsh decisions have brought severe criticism from all quarters of the society but they could not help the government to secure much- needed emergency package from the World Bank.

 

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Foreign portfolio investment outflow continues ​

KARACHI (September 06 2008): The outflow of foreign portfolio investment from the country's equity market continued as the offshore investors withdrew another $3.305 million during the week ended on September 5, 2008.

According to the data released by National Clearing Company of Pakistan Limited (NCCPL), the cumulative outflow of this mode of investment from the local equity market increased to $353.830 million during the current calendar year, from January 1, 2008 to date.

Analysts believe that the prevailing uncertainty on political front is the main reason, which forces the foreign investors to offload their holdings. Weakening economic indicators, depreciating local currency value and downgrading country's outlook also created negative sentiments, they said.

Although the start of the week was positive as an inflow of over $1.552 million was witnessed on Monday as the foreign investors took fresh positions on some select stocks. However, this trend could not continue and the foreign investors withdrew over $0.332 million on Tuesday.

A meagre inflow of $0.144 million of portfolio investment was recorded on Wednesday. However, the foreign investors remained cautious and withdrew $1.422 million on Thursday. This trend continued and an outflow of over $3.247 million was witnessed on Friday.

 

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13.1 percent growth recorded in Pakistan's commercial spending in 2007 ​

KARACHI (September 06 2008): The annual commercial spending in Pakistan grew to an estimated $190,166 million in 2007, an increase of 13.1 percent from $168,131 million in 2006, according to data from the Commercial Consumption Expenditure (CCE) index released by Visa.

Annual commercial spending in Asia Pacific grew to an estimated $18.9 trillion in 2007, an increase of 13 percent from $16.8 trillion in 2006, according to data from the Commercial Consumption Expenditure (CCE) index released on Friday by Visa.

Global annual commercial spending grew to an estimated $77.3 trillion in 2007, representing an increase of 12.2 percent from $68.9 trillion in 2006. The top five Asia Pacific economies in size of total business and government spend were Japan ($5.2 trillion), China ($4.9 trillion), India ($2.3 trillion), South Korea ($2 trillion) and Australia ($1.2 trillion).-PR

 

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Focus on non-traditional exports: Senate body wants government to give more incentives to exporters ​

ISLAMABAD (September 06 2008): Senate Standing Committee on Commerce on Friday urged the government to focus on increasing non-traditional exports, calling for simplifying procedures and providing more incentives to exporters.

The committee met at the Parliament House under the Chairmanship of Senator Muhammad Amin Dadabhoy to discuss the contours of the export policy, like gems and precious stones, seafood, handicrafts, herbal health supplements, horticulture to promote floriculture exports, which have a big market in addition to pharmaceuticals, furniture, minerals etc, said a statement issued here on Friday.

It was observed that export diversification was necessary to achieve the country's export target. The committee expressed satisfaction that the country's exports increased from 17 billion dollars in 2006-07 to 19.22 billion dollars in 2007-08 registering a growth of 13.23 percent.

Some members of the committee observed that "on the one hand, we are keen to increase and expand exports, but on the other, the cost of doing business is increasing rapidly due to high interest rates and ever increasing prices of gas and electricity."

They urged the government to overcome this apparent dilemma by innovative policies. Earlier, the Commerce Secretary informed committee that Pakistan's export achieved a growth of 13.2 percent during 2007-08, crossing 19 billion dollars.

For the current year, a target of 22.1 billion dollars has been set, ie a growth of 15 percent despite unfavourable international economic situation, the government is confident to achieve the target by not only enhancing competitiveness and productivity, but also diversification of products and markets. He said that to reduce cost of manufacturing and to make our exports more competitive, it is proposed that plant, machinery and equipment, imported to set up a unit in DTRE scheme, would be exempt from duty and taxes.

This will reduce the cost of investment and encourage investment of exports and generate employment and inputs in DTRE would also be allowed to be imported from India, even if these were not included in the importable items form India, or manufactured locally.

The government, he said, was also committed to provide "zero rating" to exports by refunding of indirect taxes on input cost incurred on manufacturing of merchandise, which is exported and a study would be conducted jointly by the Federal Bureau of Revenue (FBR) and the Ministry of Commerce to quantify the extent of refund, which would become due on this account.

The Senators expressed the confidence that Pakistani businessmen and exporters had the potential to overcome the expectations of the people and the government, provided they were given the right kind of incentives, duly supported and governed by conducive policies.

 

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Pak-UAE bilateral relations progressing steadily: ICCI ​

ISLAMABAD (September 06 2008): Pakistan was the first country to accord formal recognition to UAE on its achieving independence while bilateral relations and mutually beneficial co-operation, have progressed steadily ever since. This was stated by Muhammad Ijaz Abbasi, President of Islamabad Chamber of Commerce and Industry (ICCI).

While exchanging views with Hisham Al Shirawi, second Vice Chairman, Dubai Chamber of Commerce and Industry during his recent visit to Dubai at the head of an ICCI business delegation. He said Pakistan and the UAE enjoy close and fraternal relations, founded on deep-rooted cultural affinities, shared faith and traditions and geographic proximity and identity of interests.

He said these relations date back to the UAE's formation in 1971 and have since evolved into wide-ranging co-operation, particularly in economic field. The ICCI President said UAE is the one of the largest economic and trading partners of Pakistan and has been a major donor of economic assistance to Pakistan.

He said a large number of Pakistani expatriates are gainfully employed in UAE and they have contributed significantly to the promotion of bilateral understanding and to the economy of Pakistan through their home remittances. He said trade between the two countries is on the rise as trade volume, which was $1.4 billion in 1999-2000 increased to $2.8 billion in 2004-2005, depicting 20 per cent growth per year while it has crossed $5 billion in 2007. Abbasi highly appreciated the role of UAE investors in promoting Pakistan's economy.

He said UAE's leading corporate entities like Etisalat, Warid, Wateen, Bank Al Falah, Dubai Islamic Bank, Emirates Global Islamic Bank, Al-Ghurair Giga and Emaar have made billions of dollars investment in Pakistan's telecom, banking and construction and real estate industries respectively while Al-Ghuran another UAE based real estate giant that plans to invest Rs 45 billion in construction and real estate business Pakistan and other UAE investments in Pakistan are in the fields of airlines, financial business, hotels and tractors.

He also said these investors are not only earning high returns on their investments, they are also providing plenty of job opportunities to Pakistan's human resource talent. The ICCI President said many Pakistani investors have also invested in UAE, particularly in real estate and construction sectors that shows that business to business relations between the two countries are increasing between both countries.

He said to further promote these business relations, ICCI had proposed Dubai Chamber of Commerce for signing of MoU, which will be signed in near future and expressed his hope that it will further cement our economic relations. Abbasi further said Pakistan is an agricultural country and it offers vast investment opportunities in this field.

He invited UAE investors to bring their capital and latest agro-technology to Pakistan, where they have the potential to reap very high returns. He invited Dubai Chamber delegation to visit Pakistan to explore more business opportunities, especially in agriculture sector in Pakistan.

Speaking on the occasion Hisham Al Shirawl, the second Vice Chairman, Dubai Chamber of Commerce and Industry said that Pakistan is a growing market for investments creating a win-win situation, outlining greater investment opportunities for both the countries.