Pakistan Economy - News & Updates - Archive

[Neo]

Foreign investment in Pakistan falls 9.67 pct in Q1​

KARACHI, Oct 18 - Net foreign investment inflows to Pakistan fell 9.67 percent to $938.21 million in the first quarter of fiscal year of 2008/09 , according to the State Bank of Pakistan.

Foreign private investment fell 12.12 percent to $940.41 million in the July to September period, compared with $1.01 billion in the corresponding period, the central bank said on its Website.

Out of the total foreign investment inflow, foreign direct investment was worth $1.11 billion, up 9.5 percent from the year-ago period.

There was a $172.75 million outflow if foreign portfolio investment, meanwhile, compared with an inflow of $24.15 million in the year-ago period.

There have been outflows from the stock market due to political uncertainty and economic and security concerns.

 

[Imran Khan]

Rs270bn bailout plan for banks: SBP eases monetary policy


By Shahid Iqbal

KARACHI, Oct 17: The State Bank on Friday eased its tight monetary policy and announced a plan to inject Rs270 billion into the banking system to help the sector tackle a credit crunch and restore depositors’ confidence.

Governor Dr Shamshad Akhtar told media that with her fresh decision, Rs180 billion would be injected into banks on Saturday.

The banks are facing a serious liquidity shortage in making large payments and continuing to extend credit to the private sector. Bank-to-bank lending has also dried up while large banks have stopped lending to small banks altogether.

The liquidity will help banks ease depositors’ fears and scotch rumours that the government was considering seizing all deposits or that some banks could wind up operations. The governor dismissed all such apprehensions.

The Cash Reserve Requirement (CRR, which banks keep with the State Bank as reserve money) was reduced by two per cent to six per cent. It would be brought down to five per cent from Nov 15.

The SBP exempted time deposits of one-year tenure and above from the Statutory Liquidity Requirements (SLR), yielding another Rs120 billion to the market.

The governor said the central bank was examining the monetary policy and would bring corrections, if required.

The SBP had been maintaining a tight monetary policy for the past two and a half years, raising the interest rate and making money costlier for borrowers.

Although the bank argued that the interest rate was increased to check inflation, prices have gone through the roof over the past six months.

More easing of monetary policy is on the cards as the governor said that more media conferences would be held to provide details about further steps.

However, she maintained that the measures were temporary, aimed at accommodating extraordinary liquidity requirements of the banking system and “should not be construed as a change in the monetary policy stance”.

Ms Akhtar said the SBP was working with banks and was aware of the situation.

“The liquidity shortage is not because of what is happening in US banks and other countries.”

She said the problems here had local reasons. Withdrawals made by depositors had started coming back into the system, she added.

The governor also blamed excessive government borrowing for credit problems.

The meltdown in the US and Europe has cast shadows the world over, but the governor expressed confidence in Pakistani banking system. “Our banking is on sound footing and quite capable of facing shocks.”

The governor restricted the press briefing to the liquidity issue. She said the central bank had also been providing temporary liquidity through open market operations (OMOs). About Rs300 billion were injected through OMOs.

The governor said the inter-bank money rate, which was 30 per cent on Oct 4, fell to 16 per cent on Oct 16 because of the central bank’s decisions on liquidity generation.

“The State Bank will monitor the liquidity flow after the injection of massive liquidity into the banking system,” she said. “We want to be assured that liquidity is being effectively utilised.”

She said massive liquidity would be required for commodity operations, which would be at their peak next month. She advised banks to maintain an advance-to-deposit ratio of at least 70 per cent. The governor gave six months to all banks to bring the ratio up to 70 per cent.

She asked the media to be cautious in reporting about the liquidity ratio because panic could deal a body-blow to the sector.

 

[Imran Khan]

Pakistan can raise up to $50bn, says Burki: Taxation system criticised


By Anwar Iqbal

WASHINGTON, Oct 17: Pakistan can raise $40 billion to $50 billion from international donors to recover from the current economic crisis, says a former World Bank vice-president Shahid Javed Burki.

“There’s an appetite in the world for helping Pakistan,” he told Dawn. “What we need to do is to come up with credible programmes that can translate this interest into financial assistance.”

Mr Burki, who also is a former finance minister of Pakistan, believes that much of these $40 to $50 billion can be uploaded, with international donors providing funds for the first two or three years of a five-year programme while Pakistan matching the rest in the remaining period.

Mr Burki believes that eight to 10 donors — the US, Japan, UK, Saudi Arabia, UAE, Kuwait, possibly Germany, the World Bank and the Asian Development Bank — are eager to help Pakistan, “some for strategic reasons”.

“Both Republican and Democratic candidates in the US election describe Pakistan as the most dangerous place on earth,” said Mr Burki, and would not like to create a situation that destabilises this “dangerous place”.

Mr Burki believes that some Arab nations have “a genuine interest” in helping Pakistan and their interest in the country is not linked to its strategic location.

But “lack of confidence, absence of credible programmes for donor-funding and of a medium-term framework”, prevents this interest from translating into financial assistance.

Pakistan, he said, “needs to make a serious effort for structural adjustment and economic reforms” to encourage donors to come forward and help.

At a recent meeting, some World Bank officials, involved in talks with Pakistani officials on its effort to get the bank’s assistance for economic recovery, expressed similar views.

They said that Pakistan’s inability to raise revenues forced Pakistan to take measures that hurt the ordinary people.

They noted that the government “levy taxes on what can be taxed, not what should be taxed”, as one official said.

“Salaries are taxed. Cars are. But agriculture income is not. Real estate is not taxed as thoroughly as it should be because people are not willing to pay taxes and the government does not have the infrastructure to make them pay,” the official said.

Explaining why the country was facing a power shortage, the official said Pakistan still had the capacity to produce enough electricity to meet its requirements but was unable to do so because private electricity producers were not producing electricity.

“This is because the government is unable to pay them,” the official said.

The government, the official said, could make enough money to pay private producers by selling electricity if it could force all the consumers to pay. “But millions of consumers across Pakistan never pay their bills and the government cannot force them to pay.”

This situation, he said, forced the government to levy indirect taxes, which pinched the poor more.

The World Bank officials also strongly backed the government’s decision to withdraw subsidies on fuel, food and electricity.

Mr Burki agreed with this suggestion but he also urged the government not to borrow from the IMF.

“The IMF conditions will constrain Pakistan,” he said. “At this stage, Pakistan needs to avoid constraints. The government should have a free hand to spend on power-development, creating employment, and on other similar measures.”

Mr Burki also advised the government to start income generating programmes for the poor to neutralize the effect of ending subsidies on oil and fuel.

He urged the government not to go “door-to-door, asking for help as it hurts the country’s image.”

Instead, he said, the government should make credible programmes that encourage donors to give.

Mr Burki noted that recently, the UAE, Saudi Arabia and Qatar invested a lot of money in large agricultural programmes in Kazakhstan and other Central Asian states.

“Although Pakistan is ideally suited for such investments, it failed to attract investors,” he regretted.

 

[Imran Khan]

IFIs link $4b aid to tough steps
WB, ADB, IDB discuss options to avert crisis | Pakistan in dire need of economic support

ISLAMABAD: International Financial Institutions (IFIs) have pledged to provide over $4 billion to Pakistan in the near future to meet its short and medium term requirements, official sources said.

The international community has assured Pakistan of providing the money to avoid bankruptcy, but in return Islamabad will have to introduce some tough economic reforms. American and diplomatic sources in Washington said that Pakistan had started negotiating with international financial institutions and friendly countries soon after realising that it might have to default on its payments without foreign help.

US played a vital role in these talks. A US official present at the talks said there was real panic in the Pakistani side, adding Pakistani diplomats had made 10 visits to the US during the last 10 days. The final negotiations were undertaken during Financial Adviser Shaukat Tareen's visit to Washington who arrived here to attend the annual meetings of the World Bank.

During these talks, the World Bank, Asian Development Bank, Islamic Development Bank and other IFIs discussed various options for providing short to medium-term support to Pakistan.

During the current financial year, the World Bank will provide $1.4 billion. If Pakistan's programmes are approved, its IDA share will also be front-loaded. This includes a total $3 billion of international development assistance over three years, from 2008-2011.

The Asian Development Bank is negotiating assistance of another billion dollars. The Islamic Development Bank is negotiating a proposal to raise its trade facility from $500 million to one billion. This brings the total pledges to about four billion dollars.

"Pakistan urgently needs this money to stabilise the falling economy. At this stage, $3-5 billion will do for us. We do need more money afterwards," a senior official at the Finance Ministry told The Post.

"The IFIs have pledged around $ 4 billion to give us a cushion. Shaukat Tareen's US trip is bringing some good news at last." Pakistan needs some $10 billion to tide over its short to medium term requirements, for which it is taping several sources.

The frontline ally in the US-led campaign against Al-Qaeda and Taliban militants has been forced to seek $10 billion from western backers to stave off the threat of going bankrupt as early as February 2009.

The Finance Ministry official said the government will "definitely" have to accept the terms and conditions of the IFIs to get the required money.

"At this point, we are not in a good bargaining position. We need the money and we just are cashing in on our lead role in the war on terror. That's the only point which we are concentrating", he said.

The government had started negotiations with IFIs and friendly countries soon as the economic crisis surfaced with fears of default on its payments without foreign help.

The official said, "The US has been helpful in these (financial) assistance pledges. They (the US) have praised our role in the war on terror and advocated for us".

During the talks in the US, the official said, the Asian Development Bank, Islamic Development Bank, the World Bank and other IFIs put forth various options for immediate help to Pakistan.

"They also discussed the terms and conditions. One of them is to withdraw subsidies to improve the economy", said the official.

During the current financial year, the World Bank will provide $1.4 billion. The ADB is negotiating assistance of another $1 billion. The IDB and other institutions are discussing things and are expected to contribute $ 2-3 billion. The IDB's possible share includes a total $ 3 billion of international development assistance over three years from 2008-2011.

The State Bank of Pakistan meanwhile expects to receive the first tranche of the approved 50 million pounds from UK-based Department for International Development (DFID) in the current month.

The SBP and DFID have already signed a Memorandum of Understanding (MoU) for Financial Inclusion Programme (FIP) and both sides are now working out details for the release of the amount out of the total 50 million pounds.

The programme, under which money will be disbursed to FIP through SBP, will focus on mobilising much-needed market-based resources for the micro finance sector.

The DFID will provide first loss guarantee of up to 10 million pounds from its grant financing. The programme will heavily invest in innovative technology-based products for the poor and will also support liquidity in the micro finance sector under the prevailing cash crunch situation in the financial market.

Also, China International Water and Electricity Corporation (CWE), a prominent Chinese power-generating entrepreneur, has pledged an investment of up to $ 1.7 billion for generating low-cost hydroelectricity in Pakistan.

The assurance for investment was given to President Asif Ali Zardari when a delegation of CWE held a meeting with him in Beijing on Friday.

China satisfied with Pakistan security: Asif

Agencies

BEIJING: President Asif Ali Zardari has said that the heads and senior executives of major Chinese companies who met him during his first state visit to China had expressed no security concerns about Pakistan. "I met with many companies and 99.9 percent of their chief executives told me they felt secure", said President Zardari in an interview with leading Chinese newspaper Peoples Daily. The mouthpiece of the party published prominently and extensively President Zardari's interview on Friday.

"No doubt Pakistan has some problems but the government was giving full attention to address the situation," the president said while responding to a question as to what steps his government has taken to fight terrorism. He said the entire world was confronted with this problem which is the legacy of the Second World War and Cold war as well as the fallout of the breakdown of the Soviet Union.

"However, the world is now alive to the situation and wants to fight out this scourge," he said, adding that he had very productive talks with Chinese President Hu Jintao who also assured him of his government's help in this regard.

The president said he was trying to convince everyone that terrorism was a regional as well as international problem and the international community should come forward as Pakistan could not fight it alone.

He said: "We are looking to the world for cooperation in curbing this menace." President Zardari said China has always been very cooperative, adding that during all difficult times "we have been supportive to each other."

He said his talks on the subject with the Chinese president were very productive.

"I think I am trying to make everybody realize that it is an international problem," he said, adding that it is also regional issue which can not be resolved by Pakistan alone or just America or other countries that had fought war in Afghanistan.

President Zardari said that regional ownership was needed to tackle the issue of terrorism and extremism and Pakistan tends to take on board China as well.

Asked as to what changes he observed in China during this visit as compared to his previous visits, President Zardari said that his last visit to China was with his wife (Ms Benazir Bhutto Shaheed) so it brings some sad memories also, but at the same time "I am proud that with the passage of time my Chinese brothers have done remarkable progress".

President Zardari said that it was 1988 when he first visited China. He said at that time, China was coming out of its old system to introduce a new form of market economy.

The president pointed out that Pakistan has been following China's progress and "we take pride in their success, because we are like a family."

"Chinese and Pakistani people are like a family", he said. "We see their progress with pride and are happy to see our friends strong. If China is strong, we are strong."

To another question on Sino-Pak relations, President Zardari said that he was amazed at the wisdom of our forefathers --- Chairman Mao Ze Dong, and Shaheed Zulfikar Ali Bhutto who at that time realised what the relationship means.

He said that these leaders transformed the neighborly contacts into best and brotherly friendship.

"So I am proud of the heritage and proud of the farsightedness of our leaders who realised our future relations," he said.

He said Pakistan and China were two brotherly nations, having strong, historic, deep-rooted and time-tested ties.

To another question regarding what kind of steps the new government was contemplating for the betterment of Pakistani people, the president said that again he looked forward to the Chinese economy, adding that sometime ago "overheating" was the expression used in the financial world for China.

He said that for a country to become economically balanced was a lesson that one could learn from China. The president said that he would head an inter-ministerial committee which would look at China-Pakistan cooperation and future business relations. The president said that he intended to hold the body's meeting after every month and the Chinese ambassador would also be invited to this meeting.

Zardari meets CPPCC chief: President Zardari Friday met Chairman of Chinese People's Political Consultative Conference Jia Qinglin and exchanged views to strengthen the multi-faceted, time-tested and strategic ties between Pakistan and China.

During the meeting at the State Guest House, President Zardari said Pakistan and China had deep-rooted, strong relations spanning three generations.

He vowed to take these forward to the next generation for the mutual benefit of the two countries. Zardari said he was in China to take forward the legacy of Shaheed Zulfikar Ali Bhutto and Premier Zhou Enlai who laid the foundation of Pak-China friendship.

He thanked the Chairman CPPCC for inviting him and said this provided an opportunity of exchanging views on various matters of bilateral cooperation.

The CPPCC chairman congratulated President Zardari on his election as Pakistan's democratic head of state and said CPPCC welcomed him on the state visit.

He said President Zardari's choice of China as the destination for his first state visit reflected the importance of Pakistan-China relations.

China to invest $1.7b in hydropower

Associated Pres of Pakistan

BEIJING: A prominent Chinese power-generating entrepreneur has said that it will make investment to the tune of $1.7 billion for generating low cost hydroelectricity in Pakistan. The assurance for investment was given to President Asif Ali Zardari when a delegation of China International Water and Electricity Corporation (CWE) held a detailed meeting with him here on Friday. "We just met with President Zardari and ours talks focused on Bhasha and Kohala dams", said Deputy General Manager of CWE Jin Zheping, while talking to the media after meeting the president here at the State Guest House. Jin said for Bhasha Dam CWE was developing a concept with Chinese hydropower groups and also with WAPDA since it was a gigantic project. He said a memorandum of understanding has already been signed in this regard. Jin pointed out that president had shown high vision on cooperative relations in the economic sector between the two countries. The CWE deputy general manager said the president told him that he would make sure that a conducive environment was created for Chinese entrepreneurs in Pakistan.

President Zardari particularly mentioned that he would lift China-Pakistan trade economic cooperation to new heights to encourage Chinese companies to invest and come to Pakistan for setting up of various projects. CWE has been working on water resources and hydropower engineering for over 50 years.

The company has been active in international contracting, foreign economic aid, international trading and manpower export sectors.

CWE is recognized one of the major state-owned enterprises in China. By the end of September 2007, the company has completed over 600 international contracts in more than 60 countries.

 

[Neo]

No ‘danger’ of Pakistan defaulting: Shaukat​

ISLAMABAD (Agencies): There was no risk of Pakistan defaulting on international debts as funds were being lined up to cover a balance of payments deficit and rebuild currency reserves, the country's newly appointed economic troubleshooter said on Saturday. "I am very confident that I have plans to make sure, whatever it takes that we should build our reserves and that we do not default," Shaukat Tarin said a day after returning from overseas visits to Washington and Beijing to drum up support.

"Now, there is no danger," he told journalists after a news conference in Islamabad. Tarin, appointed last week as adviser to the prime minister on economic affairs, had attended the annual International Monetary Fund meeting in Washington and later joined President Asif Ali Zardari on a visit to China earlier this week.

"If we want to go to the IMF, we can ... but only as a backup," Tarin said, adding that he was confident Pakistan had a viable plan to work through its problems. Tarin said he planned to bridge a financing gap for the balance of payments deficit in the fiscal year ending June 30, 2009, mainly through other multilateral lenders the World Bank, Asian Development Bank front-loading disbursements from development assistance programmes.

The Islamic Development Bank and Britain's Department for International Development are also expected to virtually double their planned assistance, he said. There was also a plan to securitise workers' remittances from overseas to the tune of $1.5-2.0 billion. "We think we will be in a very good shape within the next 30 to 60 days," Tarin said of the prospects of sewing up funds to cover a financing gap that the IMF estimates at up to $4.5 billion, and Pakistan reckons at $3.0 billion.

Neither Tarin or Foreign Minister Shah Mehmood Qureshi divulged whether China had given any firm commitments on loans, though there were uncorroborated media reports that Zardari asked China for close to $3 billion. Potential donors, including China, are expected to gather in Abu Dhabi in mid-November, under the banner "Friends of Pakistan".

Qureshi told the news conference that senior Chinese bankers were coming to assess Pakistan's needs, and Chinese firms had pledged to invest $1 billion by June 2009. Aside from seeking financial support from multilateral lenders and friendly governments, Pakistan has asked oil suppliers in the Gulf to accept deferred payments.

The international bond market had already priced in a Pakistani default on a $500 million bond maturing in February, though there had been widespread expectation that the international community would rally round a nuclear-armed Muslim nation returning to democracy, while under threat from Islamist militancy. Pakistan's stock market has been moribund since late August, when authorities imposed a floor that blocked off investors exiting a market that has dropped 35 percent this year.

 

[Neo]

USAID to provide technical assistance in energy sector ​

Saturday, October 18, 2008

ISLAMABAD: USAID has agreed to provide financial and technical assistance to Pakistan to develop the energy sector in the country.

A four member USAID delegation led by Anne Arnes, Head of the USAID mission to Pakistan, met on Friday with Federal Minister for Water and Power Raja Pervez Ashraf and informed him about the action plan in this regard.

The delegation submitted that USAID’s Empower Pakistan Energy Development Program would consist of two activities. The first is Empower Pakistan Energy Policy (EPEP) programme which will assist Pakistan by providing two full-time technical experts supported by short-term technical assistance for energy strategy formulation, implementation and support for transactions.

Technical assistance will also supply targeted feasibility studies in energy resource development, energy efficiency, transactions support and pricing.

The other programme is the Empower Pakistan Energy Efficiency and Capacity (EPEEC) which will develop the private-sector market for energy efficiency by, 1) facilitating firms that conduct energy audits and engage in energy efficient building and construction,(2) conducting public information campaigns on energy efficiency and (3) including plans to minimize damage to businesses from blackouts by developing coordinated schedules for outages.

Capacity building activities will assist human resources departments in power-sector entities to develop and implement coordinated training programmes for staff, in part through twinning arrangements between US and Pakistani power sector entities, the minister was informed.

The delegation told the objectives of these programme which are to improve institutional framework for power sector policy, planning and implementation, increase private sector investment in energy generation to help meet 5,00 MW energy deficit, integrate functioning of supplemental energy agencies and institutions through creation of a single power entity, to help 3-5 distribution companies implement advanced demand side management and power rationing techniques, to develop and implement energy conservation plan for 15 industrial sectors and to help create 10 profitable, unsubsidized private sector energy service companies that provide energy audits to at least 300 industrial users and help them upgrade equipment to conserve energy.

The minister lauded the action plan of the USAID delegation and thanked the delegation for this cooperation which would improve the energy system in the country.

 

[Neo]

British paper for supporting Pakistan ​

Saturday, October 18, 2008

LONDON: A leading British newspaper has urged the international community to support Pakistan, saying that the case for propping up the country’s civilian government under Asif Ali Zardari is strong.

In an editorial comment titled ‘Pakistan needs support’, The Daily Telegraph described the new government as a bulwark against both extremism and a return to military dictatorship. However, the paper was of the view that if President Zardari is to get $ 10 billion which he is seeking over the next 18 months to avoid defaulting on debt payments and other liabilities, there should be conditions.

“First and foremost is the stiffening of the fight against the Pakistani Taliban and al-Qaeda, which have established a springboard in the country’s tribal areas. Second is the strengthening of the technocratic element in a government faced with minimal foreign exchange reserves, an investment drought and a currency which has reached an all-time low against the dollar. Improvements in the second obviously depend on success in the first,” the editorial said.

The paper noted that Zardari has been more forthright on combating terrorism than his deeply ambivalent predecessor, General Pervez Musharraf. On the economic front, it said, Shaukat Tarin, a banker, has been appointed economic adviser to the prime minister.

The Telegraph further said at their forthcoming meeting in Abu Dhabi, the Friends of Pakistan Group should give Zardari the benefit of doubt. “The case for supporting a democratically legitimate government could be compelling,” it said.

 

[Neo]

Chinese companies offer $5bn investment​

BEIJING, Oct 17: Chinese entrepreneurs have offered to invest $5 billion in Pakistan’s defence, banking, oil exploration and mining sectors, develop Thar coal, build Bhasha and Kohala dams and launch PakSat-1R in 2011. The offers were made during meetings with President Asif Ali Zardari, who concluded his four-day official visit and left for Pakistan on Friday.

Heads of the business delegations said they were ready to intensify cooperation in defence production, oil and gas, energy, poly-technologies, electronics, hydropower generation and other sectors.

They took deep interest in business, trade and investment opportunities in Pakistan.

Among leading industrialists and business tycoons who called on President Zardari at the State Guest House included chairman of Northern Industries Ma Zhigeng, chairman of Poly Technologies Zhang Liansheng, chairman of the CETC Yan Lijin, president of Sinohydro Fan Jixiang and Liu Minkang of the Chinese Banking and Regulatory Authority.

A delegation of China International Water and Electricity Corporation (CWE) met President Zardari and offered to invest $1.7 billion in Bhasha and Kohala dams.

“We just met President Zardari and the talks focused on Bhasha and Kohala dams,” the deputy general manager of CWE, Jin Zheping, told the media after the meeting.

Mr Jin said CWE was involved in “conceptual development” of Bhasha dam with Chinese hydroelectric power generating groups and also with Wapda, adding that an MoU had already been signed.

Mr Jin said the president had told the delegation that the government wanted Chinese entrepreneurs to visit Pakistan to acquaint themselves with the investment climate.

Ma Zhigeng, the chairman of Norinco, offered cooperation of his company in oil exploration and defence production sectors.

He said that new ventures in oil and gas sectors were also discussed during the meeting with the president.

He said that the company had already invested $30 million in oil exploration which would be further increased.

The Chairman of Poly Technologies, Zhang Liansheng, offered technical assistance and investment in oil exploration and generation of electricity from coal-fired power plants.

He said his company could also play an important role in expanding bilateral cooperation in media and education.

The business leaders said Chinese banks would set up branches in Pakistan to take advantage of the country’s economic growth potential.

SATELLITE LAUNCH: Earlier a spokesman of the China Great Wall Industry Corporation (CGWIC), the space industry concern, said that a Long March 3B rocket would be used to put the satellite into orbit. It will be launched from the Xichang satellite launch centre in China’s southwestern Sichuan province.

The company said ground control facilities for the satellite would be delivered to Pakistan’s Space and Upper Atmosphere Research Commission (Suparco) after it entered into orbit.

The satellite will have a lifespan of 15 years and Pakistan will use it for domestic telecommunication and broadcast services.

The president was seen off at the airport by Chinese Assistant Foreign Minister Hu Zhengyue.

During his four-day stay, President Zardari held talks with President Hu Jintao and Premier Wen Jiabao on issues of regional and international concern.

The talks focused on strengthening Pakistan-China strategic partnership and cooperation in trade, investment, defense, banking sector and science and technology.The president also met the Chairman of the National People’s Congress, Wu Bangguo, and the Chairman of the Chinese People’s Political Consultative Conference, Jia Qingling.

Business executives, heads of financial institutions and corporate leaders called on Mr Zardari.

 

[Neo]

Steel plant​

KARACHI, Oct 17: The estimated investment of the DRI plant of Al Tuwairqi Steel Mills in Karachi due to start production in the middle of next year amounts to over $265 million. The total cost of the project is estimated to be above $740 million and not $100 million as reported in an App report published in Dawn, says a press release.

 

[Neo]

The helping hand of China​

Editorial: The foremost crisis facing Pakistan on the eve of President Asif Ali Zardari’s visit to China is the financial gap that points to a possible default at the beginning of 2009. The US-India nuclear deal too has taken place but this is not the crisis on which to ask our friend China for a bailout. Therefore, it is wrong on the part of important people, including some officials, to surmise loudly that China will surely come up with a balancing nuclear deal with Pakistan. The joint communiqué after the Zardari visit is framed in general terms, so the world can go on wondering what actually transpired between President Zardari and President Hu Jintao.

The “promise” came informally and in the form of a “report” on the meeting between the two presidents: “China vowed on Thursday to do what it could to help Pakistan avert financial disaster as President Asif Ali Zardari continued an official visit aimed at rustling up crucial Chinese investments”. There was also the standard reference to “strategic partnership” which will be interpreted differently in different quarters, but definitely wrongly in the warlike quarters of Pakistan. The more concrete fact is that Pakistan’s foreign exchange reserves stand at $7.7 billion, hardly enough to finance the country’s imports in the coming months.

The Washington Post says Pakistan is seeking $3 billion from China as emergency aid. China has promised to help and may come up with less than that and Pakistan will have to look for help from other sources too. An estimate says Pakistan needs an immediate $4.5 billion and is targeting multilateral and “forum” sources for it. The World Bank has already committed $1.4 billion for the current financial year while pledging $3 billion over the next three years. The US assistance of about $900 million is in the pipeline and the “Friends of Pakistan” forum is said to have committed $4 billion before convening in Dubai.

But all these financial “commitments” may not materialise as easily as we might think. The Saudi “deferred facility” has still not materialised although hopes remain high. The Friends of Pakistan may pledge many things but find it difficult to actually shell out the funds because most of them are tight on liquidity. In these circumstances, China can help significantly “if it is within China’s capacity”, as the Chinese side told President Zardari. Of course, Chinese investments could have come in larger volume had not its experts working in Pakistan been targeted by the terrorists. China had to pull out of a dam-building project in the Tribal Areas after its engineers were kidnapped by Abdullah Mehsud following his release from Guantanamo Bay. Chinese repairmen were target-killed in the NWFP and a Chinese massage shop was attacked in Islamabad by the extremists of Lal Masjid in 2007. There is no denying that the state moved quickly to assure China that it had taken the attack seriously, but later developments in Islamabad in favour of Lal Masjid must have deterred more Chinese investment.

What Pakistan has to realise is that, even as the people of Pakistan think of China as their perennial friend, Al Qaeda thinks of China as an obstacle in their project of dominating the state of Pakistan. Unfortunately, not many people look at Al Qaeda from this perspective. China has a strategic interest in Pakistan but it is more economic than military. China is deeply involved in the Gwadar development project and looks at the new gas pipelines and road connections with the oil-rich region of the Gulf with great interest. Pakistan realises this too and often there are futuristic statements about how China will rely on the trading corridor of Pakistan for its energy demands. But most politicians are not intellectually prepared to abandon their warlike projections to think in trading terms. In their minds China and America are locked in a potentially military standoff in Pakistan. But China is more likely to help Pakistan out of its current crisis because of Pakistan’s trading potential than its capacity to go to war.

The world will surely aid Pakistan in these times of scarce cash if Pakistan is willing to tackle its terrorism problem single-mindedly. For any economic remedy to succeed Pakistan must have enough internal sovereignty — read law and order capacity — and less division of opinion among its institutions. But the sad story so far is that it is not only the politicians who are divided because of the incapacity of some to think of the national economy, some state institutions too have developed the habit of ignoring the country’s economic survival while developing new strategies of national security.

 

[General Fujita]

China to invest to generate hydel electricity

Written by Pakistan Daily: Breaking News, Pakistan, World, Politics, Business & Sports News

Saturday, 18 October 2008 11:41
A prominent Chinese power generating entrepreneur has said that it would invest $1.7 billion for generating low-cost hydel electricity in Pakistan.

The assurance for investment was given to President Asif Ali Zardari when a delegation of the China International Water and Electricity Corporation (CWE) held a detailed meeting with him here on Friday.

We just met with President Asif Ali Zardari and the talk focused on the Bhasha and Kohala Dams, said Deputy General Manager of the CWE Jin Zheping while talking to the media after meeting the president at the State Guest House.

Jin said the CWE was developing concept with Chinese hydel power generating groups and also with the Wapda for the Bhasha Dam. He said the MoU in this regard had already been signed.

Also, China will launch a telecommunication satellite, named PakSat-1R, for Pakistan in 2011. The satellite’s chief contractor, the China Great Wall Industry Corporation (CGWIC), said on Friday that a Long March 3B rocket will be used to put the satellite into orbit. It will be launched from the Xichang satellite launch centre in the south western Sichuan province.

Meanwhile, leading industrialists, business executives and investors called on President Zardari and discussed prospects and opportunities for augmenting Chinese investment in important sectors.

Those who called on the president along with their respective delegations included Chairman NORINCO Ma Zhigeng, Chairman Poly Technologies Zhang Liansheng, Chairman Chinese Banking and Regulatory Authority Liu Minkang, Chairman CETC and President Sinohydro Fan Jixiang Yan Lijin.

Zardari said that the heads and senior executives of major Chinese companies had expressed no security concerns about Pakistan. “I met with heads of many companies and 99.9 per cent told me how secure they were feeling,” said President Zardari in an interview to leading Chinese newspaper.

He said though Pakistan had some problems but the government was giving full attention to address the situation. The president said he was trying to convince everyone that terrorism was a regional as well as an international problem and the international community should come forward as Pakistan could not fight it alone. “We are looking towards the world for cooperation in curbing this menace.”

The president said he would head an inter-ministerial body that will look at the China-Pakistan cooperation and future business relations. About the inter-ministerial body, the president said he intended to hold this meeting after every month and the Chinese ambassador would also be invited to this meeting.

Meanwhile, Zardari met Chairman of the Chinese People’s Political Consultative Conference Jia Qinglin and discussed further strengthening the multi-faceted, time-tested and strategic ties between Pakistan and China.

During the meeting at the State Guest House, Zardari vowed to take these ties to the next generation for the mutual benefit of the two countries. He thanked the chairman CPPCC for inviting him and said this provided an opportunity of exchanging views on various matters of bilateral cooperation. Jia Qinglin congratulated Zardari on his election as Pakistan’s democratic head of state.

 

[General Fujita]

Sixteen Malaysian Companies to attend Expo Pakistan 2008

Written by Pakistan Daily: Breaking News, Pakistan, World, Politics, Business & Sports News
Friday, 17 October 2008 17:31
High Commissioner for Pakistan in Malaysia, Lt. General (Retd) Tahir Mahmood Qazi has announced in a press statement issued in Kuala Lumpur today said that Expo Pakistan 2008 provides a great venue for forging new alliances and business ventures to foreign businesspersons including Malaysia.
Malaysia is being representing by sixteen (16) companies in Expo Pakistan being held in Karachi, Pakistan on 27-30 October 2008, which is an event of commercial and cultural diversity of Pakistani products and services and provides an ideal ‘showcase’ venue for sourcing value products to satisfy consumers the world over including Malaysia. According to Trade Development Authority of Pakistan (TDAP), around 450 international buyers from 46 countries have confirmed their participation in Expo Pakistan 2008. TDAP has further said that the exhibitors were showing great enthusiasm and so far more than 50% confirmed booking has been received from Textile and Garments, Food, Auto parts, Engineering Goods, Pharmaceuticals, Surgical Goods, Sports Goods, Rice, Furniture, Sea Food, Fruits, IT, and Women Entrepreneurs.

Mr. Qazi said that the representation of 16 Malaysian companies in Expo Pakistan is a reflection of the confidence of Malaysian businesspersons reposed on business friendly environment of Pakistan and lucrative trade and investment regime of the country, as Geo-commercially Pakistan has emerged as an international hub for trade and commerce; which augurs well for structuring business relationships and investment opportunities the high commissioner said that Trade Development Authority of Pakistan (TDAP) has specifically been requested to accord a rousing welcome to Malaysian businesspersons and facilitate them to see first hand what Pakistan has to offer but also learn about its people, customs, culture, arts and crafts that have a 5,000 year old history, tradition and richness of heritage.

He termed the aim of this mega event as to provide an unprecedented opportunity for its participants to display quality and value added products to a wide range of high value buyers, establish new business leads, strengthen existing contacts and maximize business portfolios and expressed the hope that Malaysia traders and investors would fully exploit this opportunity, he added.

The companies so far agreed to take part in Expo Pakistan includes Sunlite Textile Sdn Bhd, Sayma Trading (M) Sdn Bhd, Pollution Engineering, (M) Sdn Bhd, Sunshine Amanjaya Sdn Bhd, Rahmat Maju Sdn Bhd, Intelek Istimewa Sdn Bhd, Lonepark Corporation Sdn Bhd, I-Kartini Sdn Bhd, Sehreis Sdn Bhd, N.A.Z Medical Supplies Sdn Bhd, Expomal Sdn Bhd, Baidura Hodling Sdn Bhd, MenaraCekap Sdn Bhd, Abdul Hamed Car & Co, and Bareeza etc.

 

[General Fujita]

Azerbaijan offers Pak to provide low cost electricity

Written by Pakistan Daily: Breaking News, Pakistan, World, Politics, Business & Sports News
Friday, 17 October 2008 17:57
Azerbaijan expressed its interest in investing in water and power departments and offered Pakistan to provide low cost electricity via Iran.
Azer diplomat, Ainullah Madtalli, has expressed these views in meeting with Federal Minister for Water and Power, Raja Pervez Ashraf on Friday.

Federal Minister appreciated the offer and said that Azerbaijan should invest in the projects of generating power through water reservoirs. "Government will provide all kind of facilities to investors", he added.

He also notified that power crisis had become serious in Pakistan and in this prospective, government was working on emergency basis in order to generate power through coal, water and other alternate sources.

"We are trying to make in use coal reservoirs in order to meet the energy requirements, while government has established Thar Coal Development Board to obtain low cost electricity through this project", he said.

Federal Minister also stressed to enhance tourism, trade and public contacts between the two countries.

 

[General Fujita]

Risk free banking can change the fate of Pakistan

Written by Pakistan Daily: Breaking News, Pakistan, World, Politics, Business & Sports News
Friday, 17 October 2008 17:47
Pakistan Economy Watch has said that government can attract huge local and foreign investments by taking necessary steps to secure the interests of accountholders by ensuring risk-free banking in Pakistan.
Banks needs to be transformed from risk-taking institutions to risk less entities protected by government.

Steps to enhance the confidence of depositors as well as investors will not only negate rumors that have gripped international market as well as Pakistan but also attract immense capital from other countries, said Dr. Murtaza Mughal, President, Pakistan Economy Watch.

He said that such steps would help government to overcome budget deficit and current account imbalances etc.

"After the slide in US markets, people as well as businesses are no more trusting banks and other financial institutions and the assurances by top government officials are viewed by majority of stakeholders as insufficient," he said.

In this scenario, the capital will naturally flow where it is more secure. It is impossible to stop flight of capital and bar people from opening accounts in other countries in the age of internet banking.

Pakistan is experiencing flight of capital towards Dubai and Malaysia, which could not be stopped despite best efforts of departments concerned. Similarly, the capital of other countries with less secure banks can travel towards Pakistani banks, provided they are more secured.

Dr. Murtaza Mughal said to make this possible; government will have to provide a little bit of more security to depositors and investors as compare to other countries. Government can ensure deposit insurance products and can consider nationalizing some banks.

The capital will now flow to the banks having government guarantees and regulators can charge extra fees against state guarantee.

Such steps will boost confidence but it will increase expanses of lenders. To cope with this depositors and investors can be given some liberty.

Non-nationalized banks with good reputation and solid background can also be given some relaxations

 

[General Fujita]

Pakistan Telecommunication Company Limited offers free Internet service from today

Written by Pakistan Daily: Breaking News, Pakistan, World, Politics, Business & Sports News
Saturday, 18 October 2008 19:43
Pakistan Telecommunication Company Limited (PTCL) has decided to offer free Internet service to all its customers, effective from today (Saturday).

PTCL SEVP (Commercial) Dr Sadik Al-Jadir stated, “With this perspective, PTCL, the largest IP service provider in Pakistan, now brings a revolutionary offer for all its landline subscribers, which is unmatched anywhere in the world.”

He said, “We strive to create value for our customers. We put value creation first and pursue it with a passion to achieve excellence and facilitate our customers.”

Effective from October 18, all landline subscribers will have dial-up Internet services free of charge, he added.

He said that all PTCL landline subscribers could now experience the best dial up speeds with unlimited Internet usage during night hours from 10:00 p.m. to 07:00 a.m. Furthermore, subscribers can also avail up to 100 hours of free dialup Internet on monthly basis from 07:00 a.m. to 10:00 p.m. everyday.

In order to access the Internet, the subscriber can simply dial 131-77777 with ‘ptcl’ as login and password, he added.

From October 18, PTCL customers availing unlimited dial up Internet package of Rs199/month would not be charged anymore, however, customers exceeding 100 hours of free Internet during daytime would be charged as per the existing tariff of PTCL dial up Internet at Rs6 per hour, he said.