Pakistan Economy - News & Updates - Archive

[Neo]

US sanctions $48 million to import wheat on deferred payment ​

ISLAMABAD (December 19 2008): United States of America (USA) on Thursday sanctioned 48 million dollars to provide 200,000-250,000 tons of wheat to Pakistan on deferred payment. Trading Corporation of Pakistan (TCP) will float tender on Friday to import the said wheat from the USA on deferred payment at the rate prevailing in American market.

Addressing a joint press conference, Federal Minister for Food and Agriculture Nazar Muhammad Gondal along with Minister for Industry Mian Manzoor Ahmed Wattoo also announced the decision of fixing Rs 660 per bag of urea to break the cartels and end black marketing of urea. Gondal said that USA had sanctioned 48 million dollars to provide 200,000-250,000 tons wheat to Pakistan on the deferred payment under GSM scheme.

He said that TCP would float tender on Friday to import the wheat from USA. He said that government had fixed the urea price at Rs 660 per bag after a meeting with fertiliser manufacturers here on Thursday. He said that government would offload 290,000 tons urea fertiliser in the market by December 31 to break the cartel of the market players. Private sector will offload 100,000 tons urea fertiliser in the local market to maintain balance between supply and demand.

During the meeting with manufacturers, government has decided to purchase 50 percent urea from the manufacturers during the coming months. He said that total production of fertiliser manufacturers would be 0.7 million tons urea and government would purchase 450,000 tons from them in the coming months. Government would procure 100,000 tons urea from fertiliser manufacturers in the current month whereas 350,000 tons urea would be purchased during January-February 2009. Government would get the urea from the fertiliser manufacturers at Rs 660 per bag whereas the imported wheat price is Rs 650 per bag. The minister said that government would charge Rs 10 per bag additionally on the imported wheat to land at Gwadar.

He said that government would import 390,000 tons urea by January 15 and 190,000 tons urea would reach Pakistan by December 31 to distribute among the farmers. The minister noted that government would float another tender of 350,000 tons urea import on January 15 to ensure the availability for farmers. He warned the black marketers that they will be dealt high-handedly if involved in creating shortage. He said that provincial governments had been directed to lodge FIR against the black marketers.

Manzoor Wattoo said that government was taking different measures to make Pakistan self-sufficient in the wheat. He said that government had spent Rs 64 billion on the wheat import, which could save Pakistan to go to IMF.

He said that government had allocated Rs 32 billion subsidy for the fertiliser during the current year and had given Rs 27 billion subsidy to the fertiliser manufacturers and importers of DAP after capping the price at Rs 3,050 per bag.

Wattoo said that it was decided that government would take action against the dealers who would force the farmers to buy DAP for urea bag. He said that industry department and National Fertiliser Company (NFC) would purchase 50 percent urea production from the fertiliser manufacturers as per decision taken here in the meeting.

He said that local urea production would be seven million tons and government would receive 450,000 tons from them to meet the farmers' requirements. He said that dealers were providing urea at Rs 850 to Rs 950 per bag due to black marketing and now government would provide urea bag at Rs 660. He said that a committee headed by federal minister for industry would determine fertiliser prices in future.

 

[Neo]

Pakistan's foreign exchange reserves up by $244 million ​

KARACHI (December 19 2008): The country's liquid foreign exchange reserves rose by over 244 million dollars during last week. The State Bank of Pakistan statistics show that overall foreign exchange reserves registered an increase of 244.6 million dollars during the week that ended on December 13, 2008.

With current upsurge, the country's foreign exchange reserves have mounted to 9.3396 billion dollars on December 13, as compared to some 9.095 billion dollars a week earlier. The major increase has been witnessed in the reserves held by the central bank, which moved up by 214 million dollars to 6.1299 billion dollars during the last week from 5.9159 billion dollars a week earlier.

Reserves held by banks also showed an increase of 30.6 million dollars during last week as banks' overall reserves reached 3.2097 billion dollars on December 13 as compared to 3.1791 billion dollars on December 6, 2008.

 

[Neo]

GDP growth rate reaches over 50 percent ​

MULTAN (December 19 2008): Punjab's contribution in the overall GDP growth of the country increased to over 50 per cent, in which the share of agriculture sector contributed significantly, an official report revealed. Punjab contributes more than 50 per cent of Pakistan's GDP and is home to 56 per cent of its total population. Punjab's GDP growth rate for FY2007 was estimated at 7.8pc, said the report.

The slowdown of the national economy is likely to impact Punjab's economy as well. The report says although reliable data on GDP growth projections are not available, revised budget figures for FY2008 and budget estimates for FY2009 provide some insights as to the effects of the economic slowdown on the provincial economy.

This points to a widening budget deficit mostly caused by shrinking revenue receipts as general revenue receipts have decreased by 11pc because of lower tax (ñ18pc) and non-tax (ñ30pc) revenues and lower federal transfers (ñ3pc) and grants (ñ34pc) during FY2008. Total expenditures have been lower than budgeted (ñ8pc), mainly because of lower development spending (ñ13pc).

The provincial budget for FY2009 contains a subsidy package of Rs 13 billion in the form of cash transfers to the poorest, to compensate for higher food prices and maintain affordability of health services. For FY2009, Punjab's share of the national financial commission award will be 25pc higher than in FY2008 because of the federal government's decision to increase general sales tax on consumer goods and services from 15pc to 16pc, which may help meet the additional expenditures.

Provincial tax revenues will increase by 8pc, while total spending will also rise by 8pc. The overall financing gap is expected to be lower than the (revised) figure for FY2008. Against this backdrop of fiscal constraints, Punjab has been able to preserve health sector spending from drastic cuts.

Although starting from a low base, per capita health spending by the public sector has been increasing in recent years. It was $4.4 in FY2007, $5.77 in FY2008 (revised estimates), and $6.38 in FY2009 (budget estimates). Yet, this is far less than the resource allocation in comparable South Asian countries.

Meanwhile, the Asian Development Bank (ADB) report also states that Punjab is the most populous province of Pakistan, with 56pc of the total population. It has the largest provincial economic base in the country, accounting for over 50pc of Pakistan's gross domestic product (GDP). While the province has achieved robust economic growth in recent years, its social indicators have lagged behind those of the other South Asian countries.

The Government of Punjab (GoPb) has placed high priority on the attainment of MDGs, and has recently increased budget allocations to social sectors. The province is likely to achieve all MDGs except reduction of the infant mortality rate (MDG4) from 77 to 40 per 1000 live births, and the maternal mortality ratio (MDG5) from 300 to 140 per 100,000 live births.

More serious efforts are needed to attain these two essential health MDGs. If they are achieved, Punjab can potentially save the lives of at least 11,000 women and 235,000 children by 2015.Recognising the critical need, GoPb has developed a health sector reform framework, and has sought support from the ADB to accelerate attainment of the two health MDGs. At a broader level, it has initiated service delivery reforms as part of the ADB-supported Public Resource Management Programme and the Punjab Devolved Social Services Programme.

The former aims to improve the operational efficiency of the provincial government and thereby create fiscal space for social service delivery, while the latter aims to strengthen district systems and develop necessary service delivery standards for devolved social services, including health, education, water supply, and sanitation.

 

[Neo]

Italian CNG kit maker to establish assembly line ​

KARACHI (December 19 2008): The Italian manufacturer of CNG kit, Landi Renzo (LR) S.P.A. will establish a new assembly line in Pakistan to produce 15,000 CNG kits per month exclusively for export purposes. This was stated by outgoing head of business development LR Pak Ltd Francesco Grillo here on Thursday.

He said the assembly line would be operational in next three months at a cost of Rs 270 million. He said the existing assembly plant of LR Pak Ltd costing 60 million euros or Rs 1.7 billion was producing more than 180,000 kits per annum, catering to the demands of original equipment manufacturers (OEMs) and the market.

"Besides, we are exporting CNG kits assembled in our existing LR Pak plant to China, Myanmar, Bangladesh." The addition of new assembly line will help in expanding CNG kit exports from Pakistan, he observed. He said his company had a market share of 95 percent in CNG kits in Pakistan. "We are meeting 100 percent requirements of OEM for CNG kits", he added.

Grillo said his company had 40 percent market share in CNG and LPG kits world-wide. He pointed out that Pakistan was very important market for Landi Renzo. "We have sold 170,000 kits last year - our second year of operation in Pakistan," he opined.

"Our negotiations are continued with Indus Motor Company, the assemblers of Toyota car to supply dedicated CNG kits for their Corolla model in Pakistan. Meanwhile, we are already selling CNG kits to private CNG conversion workshops for new Toyota cars in Pakistan, which comply Euro II standards."

Grillo said Landi Renzo was also providing free-of-cost training to CNG conversion workshops to enhance their technical expertise and has, so far, trained more than 600 of them in last two years in Karachi, Lahore, Peshawar, Islamabad, Hyderabad.

"We have developed a user friendly testing computerised equipment called "Palm Tester" which locates the problem with the help of ECUs and guide the mechanics to fix it in a prescribed way. He pointed out that an Italian technical manager would be visiting Pakistan next month to set up authorised workshops in Pakistan with "triple S" (sales, spare parts and service) facilities to provide high quality repair facilities.

To a question, he said 2009 would be a tough year for his company due to economic slow down and reduction in auto production in Pakistan, but that would be a temporary phenomenon. Grillo was of the opinion that the government must reduce gas prices after oil price plunge so that CNG sector was continued to get incentives for further expansion.

L R Pak Ltd Chief Executive Mohsin Ali Khan said that a new plant set up in January this year was solely supplying CNG kits to all car assemblers in Pakistan. He said that was a very important market for his company as this country had a big market for CNG kits in the world.

 

[Neo]

Analysis of Pakistan’s macroeconomic situation and prospects​

ADB warns of a balance of payment crisis​

ISLAMABAD: Asian Development Bank (ADB) has warned that desperately defending the Pakistani rupee may lead to the depletion of international reserves, and the situation may worsen to a full-fledged balance of payment crisis.

The rupee is not overvalued and currency depreciation may aggravate inflation and lead to further loss in confidence, so there are reasons to try to moderate it, states "An Analysis of Pakistan's Macroeconomic Situation and Prospects" report released by ADB on Thursday.

Exchange rate: As mentioned earlier, monetary tightening may help contain the depreciation of the rupee, which is facing tremendous pressures as a result of the macroeconomic and political instability. The rupee is not overvalued. Currency depreciation may aggravate inflation and lead to further loss in confidence, so there are reasons to try to moderate it. The government has tried to do this by intervening in the foreign exchange market and increasing interest rates and reserve ratios and monetary tightening. However, the lessons of the Asian crisis a decade ago are such that desperately defending the currency may lead to the depletion of international reserves, and the situation may worsen leading to a full-fledged balance of payments crisis. Increasing interest rates and unduly reducing money and credit may deteriorate firms' balance sheets and lead to financial defaults and a financial crisis (as happened during the East Asian crisis of 1997-1998). In the current situation, the best way to tame pressures for currency depreciation is to lower political instability. Without a return of political confidence and certainty, using monetary tightening in excess may prove futile and ultimately damaging to the economy.

Maintaining a competitive exchange rate is fundamental for Pakistan and is a desirable target policy. Real exchange rate overvaluation is bad for growth, while undervaluation is good. Moreover, a competitive real exchange rate contributes to employment generation through a number of channels. The first is through its impact on the level of aggregate demand (the macroeconomic channel). The second is through its impact on the cost of labor relative to other goods and, thereby, affecting the amount of labor hired per unit of output (the labor intensity channel). The third one is through its impact on investment and growth (the development channel). In an economy characterised by vastly underutilised resources, there are growth-related externalities derived from a policy of maintaining a competitive exchange rate, as the higher demand for exports, as well as the increasing production of import-competitive goods, can spill over into demand for non-tradables as a result of higher income in sectors that produce tradables.

Subsidies: The new government needs to analyse the impact of the subsidy burden on the budget and decide what is crucial to guarantee a minimum living standard to the disadvantaged groups (this calls for well-designed targeted programmes); and what has to be passed on to consumers.

Budget deficit: Pakistan's fiscal deficit is the result of a low revenue-generating capacity, more than fiscal profligacy. Nevertheless, the government has to analyse the structure of spending, eliminate all superfluous categories (including subsidies) and projects with questionable benefits, and get rid of unprofitable state-owned enterprises. These measures will also help address the inflation problem. Likewise, the law should limit (through the Fiscal Responsibility and Debt Limitation Act 2005) the maximum amount that the government can borrow from the SBP.

It is important to note that budget deficits are not sins if they are well understood and adequately managed. More over, they need not always reflect loose fiscal stance, but may signal stagnation in a destabilised economy. Government expenditure and fiscal policy in general should be seen from the point of view of how to keep the total spending in the economy at the rate that would buy all the goods that is possible to produce. Fiscal policy should be conceived as a mechanism that balances the system, exogenously increasing aggregate demand (e.g., by injecting expenditures) whenever private sector spending falls short of a full employment level of effective demand.

 

[Neo]

‘Pakistan expecting over $40 billion investment’​

KARACHI: Pakistan is expecting over $40 billion investment with at least half expected soon, said Minister of State and Chairman Board of Investment Salim Mandiwala.

BoI has been revamped to become pro-active in all aspects and is fully committed to attract, encourage and protect foreign investment. The government has ensured that BoI becomes a functional one-window operation so that new and existing foreign investors are provided total support in their ventures across the country, he said while speaking at dinner hosted by Pakistan-Japan Business Forum here.

He said in spite of few negative perceptions among foreign investors, the fact is that BoI received a lot of favourable enquiries from foreign investors, which bodes well for future investment in the country.

Salim Mandiwala assured that proposed industrial and commercial enclave would be set up in Karachi by PJBF soon. He felt Japanese investors should also look into possibility of establising such estates in other provinces too.

PJBF Chairman, Abdul Kader Jaffer, said interim government had promised 2500 acres land for industrial and commercial enclave and Japanese are very serious in making sure it becomes functional soon.

PJBF senior vice chairman, M Domichi, said automotive sector in Pakistan is facing lot of problems and called for favorable policies and removing irritants. ppi

 

[Neo]

Cement exports increased 72% during July-November 2008​

KARACHI: Cement exports continued to show increasing trend, rising by a considerable 72 percent Year-on-Year (YoY) in 5 months FY09 amounting to 4.5 million tonnes.

This increase has changed the sales composition, as exports now comprise 36 percent of the total dispatches. Exports performance can be attributed to depreciating rupee, and global demand-supply gap. However, exports declined by 4 percent Month-on-Month (MoM) in November 2008.

Exports are expected to register decelerating growth, as the global economic slowdown deepens. On the supply front, the demand-supply gap in the international market is expected to narrow down further as other countries gear up with more capacity, thus reducing export demand, analyst said. "Declining freight charges are also eroding the edge Pakistan possessed due to geographical proximity," analysts believe. Moreover, the downward slide in local demand is also expected to prevail as a result of tightening fiscal policies, particularly after entry into the IMF SBA.

Local demand continued its downward slide, declining by 16 percent YoY in 5 months FY09. However, it is noteworthy that the local dispatches registered a 7 percent increase. "Pressure is being exerted on local demand, primarily due to macro-economic slowdown, high interest rate environment, sky high cement prices, which leaped by 65 percent YoY in 5 months FY09, currently hovering around an average retail price of Rs 367 per 50kg bag (Rs 7,340 per tonne) and a retention price of Rs 255 per 50 kg bag (Rs 5,109 per tonne), inflationary pressures and unfavorable economic conditions effecting commercial projects," Rommesa Mirza, analyst at Invest Capital said.

Local dispatches in North zone, constituting 83 percent of the local demand in 5 months FY09, fell by 20 percent YoY. In addition to the above reasons, the dispatches in the North zone declined because of unstable law and order situation, and winter season hindering construction activity.

In the short-term, the onset of winter is likely to aggravate the situation. These factors, coupled with the prevailing financial risks, have led to a rating downgrade by PACRA, of 4 cement companies (Pioneer cement company limited, maple leaf cement, Kohat Cement Company Limited and Dewan cement). However, GMs are still expected to get a breather, primarily due to fall in coal prices (61 percent FY09).

Capacity utilisation of the industry was slightly down by 1 percentage point, to settle at 77 percent, while local capacity utilisation fell to 49 percent down by 12 percentage points YoY, as the demand surge fails to match the levels of incremental rated capacity. Lucky prevailed as the market leader, with a share of 18 percent, followed by DGKC (13 percent). Lucky also makes it mark on the export front, with a share of 27 percent, followed by Maple Leaf Cement (13 percent) and DG Khan Cement (12 percent). The 5 cement magnates, (Best way cement, Lucky cement, DG Khan Cement, maple leaf cement and Pioneer cement company limited) cumulatively accounted for 59 percent of the market share (58 percent in 5 months FY08).

 

[Neo]

Bad loan recovery drops 100pc ​

Saturday, December 20, 2008

ISLAMABAD: Owing to higher interest rates and sharp slowdown in economic activities, cash recovery against non-performing loans (NPLs) dropped by over 100 per cent in the first quarter (July-Sept) of the current fiscal year 2008-09 compared to the last quarter (April-June) of previous fiscal, The News has learnt.

An official document of the State Bank of Pakistan (SBP), a copy of which is available with the correspondent, reveals that cash recovery against bad loans in public sector banks fell massively by around 500 per cent during the first quarter of the current fiscal year compared to the last quarter of the previous year.

“Cash recovery against NPLs in public sector banks stands at Rs290 million during July to Sept compared to Rs1.33 billion in April-June period,” the document shows. Loan recovery by local private banks also recorded a sharp decrease in the first quarter of 2008-09 compared to the last quarter of previous year.

Private banks recovered Rs4.97 billion in the first quarter compared to Rs6.66 billion during April to June, registering a decline of around Rs2 billion. The document further shows that cash recovery by all banks and Development Finance Institutions (DFIs) against NPLs stood at Rs6.97 billion in the first quarter of the current year compared to Rs12.29 billion in the April-June period of 2007-08, showing a drop of around 100 per cent.

The recovery of all banks against bad loans was Rs6.66 billion during July to Sept against Rs11.91 billion in the previous quarter. All commercial banks recovered Rs5.44 billion against bad loans in the first quarter compared to Rs8.2 billion during April to June.

Cash recovery by foreign banks against bad loans stood at Rs17 million in the first quarter of the current year compared to recovery of Rs201 million in the last quarter of previous fiscal.

The performance of specialised banks also witnessed steep decline in cash recovery of bad loans in the current fiscal year as it stood at Rs1.22 billion in July-Sept period of FY 2008-09 compared to Rs3.71 billion in April-June period of previous FY 2007-08.

The cash recovery done by the DFIs against bad loans was Rs301 million in the first quarter of the ongoing fiscal year compared to Rs379 million in April-June period of previous financial year 2007-08.

When State Bank of Pakistan Governor, Dr Shamshad Akhtar was asked about factors behind this massive decline in cash recovery against bad loans few days back when she was visiting Islamabad, she said that the financial and banking sector showed great resilience in Pakistan when the economic meltdown could be witnessed all around the world even in the developed world. She further said that when overall economic situation would be stabilised then the cash recovery against NPLs would be improved. “It is a temporary phenomenon which will be improved in the coming months,” she concluded.

 

[Neo]

Textile exports dip by 2.3 percent in five months​

ISLAMABAD (December 20 2008): Textile exports of the country has dipped by 2.3 per cent during the first five months of current fiscal over the same period of previous year due to negative growth in seven out of the total 13 exporting sectors, reveals Federal Bureau of Statistics ((FBS) on Friday.

Official trade figures released by the FBS for July-November, 2008 showed that export growth fell to $4.377 as compared to $4.477 billion for the same period of last year, because growth in cotton yarn, cotton carded and comb and yarn other than cotton have declined by 17.72, 10.04 and 41.68 per cents respectively during the period under review.

Also negative growth of 10.70 per cent was registered by bed wear, 27.57 per cent by canvas, tarpaulin and other, 13.54 per cent readymade garments, and 13.58 per cent by other textile materials.

The sectors that have shown positive growth are raw cotton by 181.22 percent, cotton cloth by 8.39 percent, knitwear by 1.71 percent, towels by 24.58 per cent, art silk, synthetic textile by 16.15 percent and made up articles, towels and bed wear by 4.26 percent.

The exports of raw cotton have increased to $48.943 million from $17.404 million for the same period of last year, cotton cloth to $842 million from 777 million, knitwear to $826 million from $812 million, towels to $292 million from $235 million, art silk and synthetic textile to $243 million from $209 million and made up articles to 225 million from 216 million for the same period of last year.

After a substantial decline, export of cotton yarn exports decreased to $483.943 million from $587.037 million, whereas exports of cotton carded and comb have declined to $3.550 million from $4.279 million for the same period of last year.

Similarly, the data released showed that exports of yarn other than cotton have declined to $12.823 million as compared to $21.989 million of last year, and bed wear went declined to $740.800 million from $829.597 million, tenants, canvas and tarpaulin to $25.878 million from $35.728million. The readymade garments and others textile exports have declined to $524.134 and 106 millions respectively against $606 and 123 million of last year.

A marginal increase of 0.58 per cent was recorded in textile export in November, 2008 over previous month with total exports going up by $10 million. The exports in November have increased to 838.122 million against $828.029 million of October 2008. The growth was seen in raw cotton, knitwear, bed wear, caravans and tarpaulin, readymade garments.

 

[Neo]

India an unreliable source of raw material ​

Saturday, December 20, 2008

LAHORE: Every time when tension mounts between India and Pakistan, the former loses its credibility as a reliable supplier of industrial raw material putting an effective brake on bilateral trade between the two countries.

Pakistan and India have a history of erratic trade relationship. India, in fact, was Pakistan’s main raw material supplier till 1965. But the Indians suspended all supplies immediately after the start of 1965 war between the two countries.

“Sudden stoppage of trade by India severely impacts Pakistani industries dependent on Indian raw material,” said Sheikh Saleem Ali, former president of Lahore Chamber of Commerce and Industry.

He said it took Pakistan’s industries a few months to find alternative and reliable sources of raw material from other parts of the world.

The unilateral action by India in 1965 almost eliminated any meaningful trade between the two countries for almost three decades, though successive governments from both sides tried to revive trade links. The trade ties starting improving gradually in the mid-90s when Pakistan and India supplied sugar to each other in times of shortage. Pakistan also imported cement from India in the 90s to overcome domestic shortage.

However, the progress in trade got another setback during the Kargil episode when Indian suppliers stopped export of certain raw materials citing war-like situation between the two sides. Reliance Industries of India, for instance, stopped supply of plastic granules despite a written long-term commitment, though the actual reason was a sudden increase in prices of all petroleum-based products in the global market.

Other supplies where the Indians had an advantage continued unabated. That created more doubts in the minds of Pakistani buyers about the reliability of Indian suppliers.

Economic experts pointed out that India due to its developed industrial base and proximity to Pakistan was its most suitable and competitive supplier of industrial raw materials which its western neighbour imported from Europe, America and the Far East. The situation suits both countries but is more advantageous for India which could increase its exports 10-fold if its government and entrepreneurs succeed in creating confidence among Pakistani importers about their ability to continue supplies irrespective of political tensions.

Economists pointed out that the trade between the two countries picked up sharply after 2003-04 as Pakistan gradually enlarged the list of items that could be imported from India. However, they added the actual potential of trade could not be exploited because the two countries were in the process of formulating an agreement to allow free conduct of trade through land route which would have reduced the transportation cost drastically.

Pakistan is currently not benefiting much from these imports because most of the raw material produced in central India is imported through sea route and has to be transported from Karachi to the upcountry at an unnecessary additional cost instead of direct delivery through road link between the two sides.

After 1999, local entrepreneurs have avoided depending completely on Indian raw materials. Former senior vice president of Lahore Chamber of Commerce and Industry said “industries now do not depend solely on Indian raw materials,” adding they kept a non-Indian supplier as well to be able to revert back in case of any disruption of supplies from India.

However, he said when trade between India and Pakistan started picking up the local industrialists gradually increased raw material imports from India. Had the situation remained smooth, they would have completely stopped import of raw materials from other countries in the next three years.

He said unpredictability of relations between the two countries “has now forced them to keep other options open.”

Out of total bilateral trade of $2,225.4 million between India and Pakistan in 2007-08, Pakistan’s exports amounted to $287.80 million, a decline of 10 per cent over previous year. Indian exports totalled $1,999.17 million, a surge of over 44 per cent over previous year. Indian exports are expected to jump by $1,500-2,000 million in the current fiscal year after further openings provided to them in the budget.

However, the expected jump in Indian exports would be impacted after the tension over recent Mumbai attack.

 

[Neo]

Foreign investors may get legal cover ​

Waqar says UAE, S Arabia to initiate corporate farming with 100pc repatriation of yield​

Saturday, December 20, 2008

ISLAMABAD: The government is all set to provide legal cover through parliament to protect foreign investors and their investment in all sectors particularly agriculture.

“We are in talks with investors from Gulf states, particularly Saudi Arabia, for investment in corporate farming. Investors will be ensured repatriation of 100 per cent crop yield to their countries even in case Pakistan faces food deficit,” Federal Investment Minister Waqar Ahmad Khan unveiled this while painting future investment landscape of the country.

To ensure maximum investment in the country, the government is also planning to extend life insurance facility to foreign investors in the wake of law and order situation that has worsened because of suicide attacks and militants’ other activities.

Following the recent global food commodities’ crisis, the policy-makers of Gulf countries have started thinking about food security. Since Gulf countries are devoid of any agriculture land, they want to initiate corporate farming in any Muslim country having fertile land such as Pakistan.

“We have plenty of government land in provinces and to this effect the central and provincial governments are vigorously working to identify government land that will be allotted on lease to foreign investors.”

“Foreign investors would cultivate hybrid seeds in addition to utilising modern and innovative technologies for corporate farming,” the minister said.

“They will be extended the facilities of tax holidays for 10 years period also. Moreover, they will be allowed to take back their full crops to their countries. This will have nothing to do with Pakistan food yields,” Waqar said.

The farmers will be given lucrative incentives to enhance the productivity, he said

Regarding the Bilateral Investment Treaty with USA which is running into snags for the last many years, the minister also disclosed that both the countries are set to ink the BIT once the new administration headed by Barak Obama gets installed in White House.

Right now the fast track work on BIT draft has been kicked off. The draft is lying with Ministry of Law for ratification before formal approval of the government.

To a question on arbitration clause of the BIT, the minister said that in case of any dispute, a body comprising International Chamber of Commerce and one member each from Pakistan and USA will decide the dispute that both countries would be bound to honour the verdict of the august body. However, none of the any country either USA or Pakistan will be allowed to play or influence the decision of the arbitrator. He said that the decision would be made exclusively on commercial ground not on political grounds by the arbitration body. “The BIT will help make Pakistan investment destination country.”

Talking about the investment of Friends of Pakistan, the minister said that next meeting of Friends of Pakistan is to be held in Islamabad on January 11-13 where in the projects with feasibility and detailed engineering would be identified by Friendly countries for their investment. For this proper presentation would be made before the FoPs.

 

[rubyjackass]

Bad loan recovery drops 100pc ​

How can something fall by more than 100 percent?

 

[Neo]

Rs 150 billion set as January-June withholding tax target​

ISLAMABAD (December 20 2008): One of the major revenue generation measures would be the ambitious target of over and above Rs 150 billion for withholding tax (WHT) during the remaining months of the current fiscal year. Sources told Business Recorder on Friday that WHT would be used as an effective tool to generate additional revenue in the remaining months of current year.

The actual projections of WHT for January-June (2008-09) would be set in view of collection in first six months of current fiscal year. The WHT collection in July-June (2008-09) would determine the realistic position for setting target for the remaining months of current fiscal year. The position would be clear in the first week of January when figure would be compiled pertaining to WHT.

Sources said that the department needs at least Rs 150 billion as WHT for meeting the annual target of revenue collection in 2008-09. The projection for WHT could range between Rs 150 billion and Rs 160 billion, depending upon the collection during the first six months.

Sources said that the estimates of Rs 150 billion would help in generating additional revenue. In the remaining months of current fiscal year, WHT collection is expected from Public Sector Development Projects (PSDP), sales and supplies of goods.

The board had collected a record amount of around Rs 206 billion from withholding taxes (WHT) during 2007-08, against Rs 116 billion in 2005-06. An additional amount of Rs 90 billion was collected from withholding taxes during previous fiscal year. Directorate General DG WHT has prioritised important sectors in view of their contribution in the form of WHT.

The sectors are banks/financial institutions; national saving schemes; Public Sector Development projects (PSDPs); importers/exporters, government departments; oil exploration and marketing companies; cement; textile; developers and contractors (construction sector); real estate; rental property ie domestic and foreign missions; motor vehicles and other potential sectors. The department would also take measures to generate WHT from the sales and supplies made within the manufacturing sector. This sector would be given top priority for which action plan is ready to be implemented.

 

[Neo]

‘Global recession is an opportunity to attract investment’​

ISLAMABAD: The current global economic recession provides great opportunity to Pakistan for attracting investment as the country provides better chances of returns as compared to the Western and other countries of the world, Federal Minister for Investment Senator Waqar Ahmad Khan said.

"Due to financial recession, there is a negative trend in returns all over the world but very positive in Pakistan. This trend has enabled Pakistan to emerge as strong profit provider in terms of returns," the federal minister for investment said in a panel interview on Friday. Senator Waqar said that Pakistan provides 35 to 40 percent profit returns besides offering a conducive atmosphere to invest in various sectors of economy. He said that investors are in search of safe and profitable markets and are afraid to invest in the countries facing financial recession, however, Pakistan was not directly hit by the recession, hence offering a promising opportunity for them. Economic experts believe that although the increasing prices of oil and edible commodities at international market affected Pakistan negatively, however, it was not directly hit by the financial recession as the other countries experienced. However, the investment minister stressed the need for taking comprehensive strategic measures to exploit this opportunity for the betterment of the country's sustainable economy.

He said that government realised this favourable situation and was engaged in preparing strategies and policies to attract more and more investment. "The government has a vision to promote investment and that was why it has upgraded the Board of Investment into a full-fledged Ministry of Investment for facilitating and safeguarding investors' interests," he remarked.

He said that government would bring legislation through Parliament soon for the protection of investments for next 10 years and would ensure continuation of investment policies to build investors' confidence. In addition, a special task force, comprising officials from ministries of interior, defence, investment and finance, would be formed to protect investment and providing security to potential investors in the country. app

 

[Neo]

Asking government for construction authority: ‘Production from Marble City to start in 2010’​

KARACHI: The federal government has already sanctioned funds for the development of Marble City, but due to red tapism, the project has been in the doldrums.

All Pakistan Marble Mining Processing Industry and Exporters Association (APMMPIEA) said Friday the PC one of these projects was approved last year by the former government in June 2007. Former chairman APMMPIEA, Sanaullah Khan said that around $260 billion construction projects are about to start in new cities in Saudi Arabia and they are interested in Pakistan’s fine marble.

He said, “If the government gives us full-flash authority for the construction of the Marble City then we will make investments on our own behalf and within a short period of time till 2010 production will initiate.”

He said the government has approved Karachi Marble City proposal submitted from APMMPIEA and around 350 acres of land on Northern Bypass has already been allocated for this project.

He said this during a meeting with Sindh Minister for Commerce and Industry, Rauf Siddiqui. The minister assured him of an early resolution of the issue and start of Marble City project on war footing basis.

He said during July to October 2008, the marble sector’s export stood at around $13.30 million as compared to $7.5 million during the same period last year.

He said the export target for 2008-09 was fixed at $35 million and under such situation the need of Marble City was imminent.

He said after setting up of Marble City, the marble exports would enhance to $2.5 billion in the next 10 years.

Under vision 2016, in Marble City the number of industrial units would be increased up to 5,000.

Pakistan has great chance of marble export as Saudi Arabia is also one of the top 10 globally competitive investment destinations and has initiated the development of complete and new cities in the Kingdom.

He said Saudi Arabia is to build world’s tallest building at around 1,000 metres, new town in Jeddah, Emaar developing a $7 billion Saudi project and $120 million for Saudi port improvement. More than 285 civil construction projects worth $260 billion are currently underway or in design in Saudi Arabia, according to the latest analysis.

The database of active civil projects under construction or in design illustrates the extent of the continuing boom in Saudi Arabia’s property development industry with the top 10 alone valued at over $200 billion.

King Abdullah Economic City with $93 billion is under construction by Emaar Economic City Company.

Prince Abdulaziz Bin Mousaed Economic City with $53 billion is under construction. The project includes a logistics centre, airport, an agricultural and entertainment zones, a mining city, a petrochemical zone, a business centre, an educational zone and a residential area. The project is expected to be completed by 2025.

Jizan Economic City worth $30 billion, Jeddah Project Mile High Tower with $10 billion and the Kingdom Holding Company is designing a 1,600 metres skyscraper to form part of the Jeddah project, north of the city.

Shamieh project includes Makkah project worth $9.3 billion and includes residential apartments, commercial centres, hotels, schools, mosques, hospitals and related facilities, car parks and transport corridors to carry pilgrims. razi syed