Pakistan Economy - News & Updates - Archive

[Neo]

Gwadar an ideal destination for local, foreign investors ​

Saturday, January 10, 2009

ISLAMABAD: With strategic and economic significance, Gwadar is well poised to unleash constructive opportunities for local as well as foreign investment in diverse fields.

Development work and business activities are gaining impetus at a fast pace with the Gwadar site getting transformed into an ideal destination for potential investors.

Gwadar has better potential and investment opportunities. The port has been constructed and recently one ship carrying 60,000 tonnes of wheat has docked. Once this port becomes fully operational, it will have more advantages. Pakistani entrepreneurs along with foreign investors can make joint ventures at Gwadar, which is not only flanked by planned location but is also a vital corridor to rich oil and mineral resources with close immediacy to Central Asian States, observed Chief Executive of Gwadar Business Associates, Col (R) Fazal-e-Maqbool Afridi.

As far as its geographical location is concerned in comparison to the Gulf ports, especially Dubai, it gives more facilities and will handle more cargo and trade because Gwadar is a deep-sea port and is located on a main shipping route. For Dubai, ships have to wait for days for route clearance due to Strait of Hormuz. The landlocked Central Asian States are also dependent on Gwadar, expressed Col Afridi.

China and other countries shall have short route to the world market maintained through Gwadar. The location of Gwadar Deep Sea Port is such that the whole world businesses converge and diverges at this place.

The whole region can also avail trans-shipment facility as the transit cargo (liquid and dry both) can easily be undertaken from Gwadar and transported to any part of the world in short span of time in comparison to other ports, he viewed. Due to trans-shipment there will be lots of requirements of warehousing and container yards, he stated adding, being a deep sea port on a main shipping route it will facilitate the movement of cargo.

The trade and business activities of all kinds and quantity, from needle to ship, will also flourish at Gwadar irrespective of the cost. Import and export of all items and magnitude is possible, because the means of transportation like sea, road, railway line (in near future) are available and linked with all important countries, he maintained.

Being a deep sea port and facilities for transportation available, industry of any kind is feasible, both of raw materials and finished products, the chief executive said continuing, the mineral deposits of Central Asia have no shorter route to transport them to the world markets, than Gwadar.

Similarly, the developed world can also reap these benefits only from Gwadar.

The transport industry will have to import all kinds of vehicles, especially heavy ones for fast delivering of goods at remote destinations as well as in the city limits. Gwadar Port will also be termed as an energy port. The gas and oil deposit of CIS will find their new storage destination in Gwadar because of its natural flow direction. Even Iran can benefit from Gwadar by having opening to the world market for its gas and oil.

The Pacific states and all those countries which are short of energy can easily be supplied Liquid Natural Gas (LNG) from Gwadar. Fishery is one of the most important economic activities in the Gwadar district, in which a vast majority of population is engaged. The district has a 600 kilometres long coast line which provides residents not only the means of income but also the food to subsist.

About one fourth of the total catch of different varieties in Pakistan is found in district Gwadar. On an annual basis there is potential for an additional catch of at least thousands of tonnes. Real-estate is a vibrant industry, he observed adding, there are plenty of chances available starting from construction as every thing new has to be developed and built. It has lot of potential for prices to rise and any investment made will fetch a handsome amount for investors.

The construction industry will also have a boom at Gwadar as there is a dearth of place to live or open an office. Every thing new has to be constructed.

Manufacturing industries will develop, especially automobile, steel re-rolling mills, ship building, refineries, fertiliser and electronic industry, he added.

 

[Neo]

Canada seeks manpower from Pakistan ​

Saturday, January 10, 2009

ISLAMABAD: Pakistan and Canada are enjoying friendly relations and share a common of perception on important international issues of mutual interest.

This was stated by Federal Minister for Labour and Manpower, Syed Khursheed Ahmad Shah in a meeting with a Canadian Minister for Citizenship, Immigration and Multiculturalism, Jason Kenny who called on him here on Friday.

The minister said both countries have the resources, the technological ability, the infrastructure and the manpower to bring about a transformation. There is a need to give substance to bilateral economic relations to fulfill the hopes and aspirations of our people for prosperity.

During the meeting, the Canadian Minister, Jason Kenny said that the purpose of his visit to Pakistan is to explore the possibility of development of more close and cordial relations between both the countries for taking skilled and semi-skilled labour, for the development of agriculture, construction and industrial sectors in some provinces of Canada and discussed with the labour minister to find avenues for employment of different categories of workforce from Pakistan.

The labour minister said that Pakistan attaches importance to its relationship with Canada as it was among the first countries to establish diplomatic relations with Pakistan.

The presence of more than 350,000 expatriate communities from Pakistan plays a constructive role in the socio-economic development of the society, integrating the multicultural society of Canada, he added.

He further said Pakistan has an immense potential for labour force and skilled workers and assured the Canadian minister that the country would try its best to meet their demand for manpower.

 

[Neo]

Energy-saving methods underlined ​

Saturday, January 10, 2009

LAHORE: Economists suggest that it would be a futile effort on the part of government if it concentrates on building gas and electricity generation capacities and wastages in the energy sector are not simultaneously plugged through public sector investment.

They point out that a preliminary survey of basic textile industry reveals that there was unnecessary high power utilisation by 15 to 20 per cent just because entrepreneurs had installed low-rated motors or had not provided proper ventilation in manufacturing processes. In some cases, it was found that slight changes in the process of installation of machines could save substantial power. For instance, a machine needing cool temperature if installed besides a machine that needs high heat would result in more power consumption by both.

According to studies conducted by credible global agencies, these big basic textile units numbering over 370 need investment of Rs1 to 5 million to become power efficient and save on an average 20 per cent electricity. In other words, these units after attaining full efficiency could save power for at least 75 new large textile units. In monetary terms, saving in expenses of efficient mills would range from Rs6 to 8 million annually.

It is true that these private sector mills should have gone for energy audit much earlier when things had been rosy and making investment had not been a problem. The current situation, however, is that all these units and industrial units in other sectors are facing a huge liquidity crunch. Most of them are not in a position to pay even salaries to their staff on time. It would be prudent on the part of government to arrange finances for making these and other industrial units power-efficient.

The amount spent on energy audit and modification could be recovered by charging five per cent higher than monthly energy bill or through tax collectors in manageable installments equal to 5 per cent of their energy bills.

It would be a win-win situation for both the government and the industry. The industry would save around 20 per cent in electricity bills after achieving power efficiency and the government would get additional electricity. At present, the government is investing to produce 100 megawatts but it is consumed by the industry needing only 80MW.

In the same way, gas appliances both in the domestic sector and industry generally have very low energy efficiency ranging from 30 to 40 per cent. The government knows it, but has made no efforts to ensure marketing of standard and efficient gas appliances. Punjab and NWFP face gas shortage of 20 to 25 per cent during winter because we waste most of the gas due to inefficient appliances. It increases the cost of consumers as well as results in unnecessary wastage of precious natural resource of the country.

Replacing inefficient domestic gas appliances with efficient ones would require a long period of time even if the government imposes strict standards for producers. Again an easy way out is to replace gas burners used in kitchens with quality appliances. The cost could then be deducted from the consumer’s bill in easy installments.

Water geysers could be replaced with instant water geysers on an application to the gas distribution company and the cost could be recovered at the rate of Rs500 per month.

This again would save consumers thousands in additional bills and conserve enough gas to feed the industrial sector.

If these investments, which are recoverable, are not made Pakistan would remain a power and energy-starved country for a long time. The cost of power and energy would also escalate both for domestic and industrial consumers.

 

[Neo]

Foreign reserves rise to $10bn​

Saturday, January 10, 2009

KARACHI: Pakistan’s total liquid foreign reserves have increased to $10.0046 billion from $9.6619 billion on December 27, says a statement issued by the State Bank of Pakistan here on Friday. On January 3 foreign reserves held by the State Bank amounted to $6,601.3 million whereas the net foreign reserves held by commercial banks were $3,403.3 million.

 

[Neo]

Rs 548 billion revenue collection target achieved​

ISLAMABAD (January 10 2009): The Federal Board of Revenue (FBR) has met the over-ambitious revenue collection target of Rs 548 billion during July-December (2008-09), showing 100 percent achievement. According to the latest data, compiled on Tuesday, the FBR managed to collect around Rs 548 billion in the first six months of 2008-2009 against target of Rs 548 billion, indicating the possibility of meeting the annual target of Rs 1.360 trillion by the end of current fiscal.

The achievement of target for the first two quarters of 2008-09 reflected that the tax machinery is plugging the loopholes and improving collection from short-filers, non-filers and potential sectors, including telecom, oil/gas and banks.

The board collected Rs 548 billion in the first six months of current fiscal (2008-09) against Rs 435.1 billion in the corresponding period of last fiscal, reflecting a growth of 26 percent. The monthly collection in December 2008 has crossed the figure of Rs 119 billion against Rs 95 billion in the same period last fiscal, showing an increase of Rs 24 billion.

Sources said that FBR Chairman Ahmed Waqar had directed the tax collectors to ensure 44 percent increase in revenue collection in January-June (2008-09) against the corresponding period last fiscal, reflecting an over-ambitious target for current fiscal.

Tax authorities have issued instructions to the collectors of customs and sales tax for showing an increase of 44 percent in the remaining months of current fiscal against the same period of last fiscal. According to the sources, the FBR Chairman issued letters to the tax collectors to take enforcement measures for amassing 44 percent increase in revenue collection during the period under review. The policy guidelines have also been communicated to the tax collectors. The purpose of the whole exercise is to meet enhanced revenue collection target of Rs 1.36 trillion for the 2009 fiscal year.

Through these letters, the FBR also directed the collectors to launch special enforcement measures for generating maximum revenue in (July-June) 2008-09. Tax authorities have asked the collectors to motivate the tax officials for generating revenue through recovery of arrears and other measures.

Sources said that the minimum benchmark set for the collectors, to judge their performance is 44 percent increase in revenue during January-June (2008-09). Sources said that the FBR also referred to the special pay packages and double pay structure, enjoyed by the collectors, and the board expects that the field formations would take all measures for meeting the enhanced target for 2008-09.

 

[Neo]

Cement export to India comes to a halt​

KARACHI (January 10 2009): Cement export to India has come to a complete halt following the imposition of 12 per cent duties on its import by the Indian government, industry sources said on Friday. With the final shipment by a leading cement manufacturer on January 6, cement export to India has stopped, as the importers has refused to import cement from Pakistan due to high duties, they added.

The Indian cement importers have also sent requests to Pakistani exporters for the stoppage of already booked cement import orders, seeking not to dispatch the cement consignment till the settlement of duty issue.

"The Indian government has imposed 12 per cent duties on cement import: four per cent import duty and some eight per cent countervailing duty to primarily curb the cement import from Pakistan," they said. Sources said that Indian government implemented the duties immediately, which were applicable on imported cement consignment after January 5, 2008.

"Although, we have dispatched our cement export consignment before the imposition of duties, however our consignment reached after the announcement and Indian authorities imposed 12 per cent duty on the sad consignment," a leading cement exporter said. He said that Indian authorities are charging some Rs 28 per 50-kg bag under the head of various duties on the import of cement from Pakistan.

With the imposition of new duties Pakistani cement has become more costly than the local cement, therefore on the request of importers Pakistani exporters has stopped export process. "With recent duties, Pakistani cement price in the Indian markets has surged by Indian Rs 25-30 per bag to Rs 225-235 from Rs 210-215 per bag. Whereas, the locally produced cement is available at Indian Rs 220-230 per bag", he informed.

They said Indian government for the last one month has been taking measures to curb cement import particularly from Pakistan and after reducing excise duty on the cement manufactured domestically by Indian Rs 8 per bag on December 8, 2008, they have imposed new duties on the import of cement, which is largely imported from Pakistan.

Chairman All Pakistan Cement Manufacturers Association (APCMA) Major General Rehmat Khan (Retd) confirmed on Friday that cement export to Indian has come to stand still after imposition of the duties. He alleged that Indian authorities have taken the step after the current escalation in tension between the two countries, which would definitely hurt the cement export.

"We are considering the whole situation and would announce our strategy very soon, however at present we are unable to continue cement export to India", he said. He said that cement exporters are already paying some Indian Rs 2 per tonnes BIS fees on the export of cement and at present some 12 Pakistani cement manufacturers were exporting cement to India.

 

[Neo]

Power projects: Chinese company seeks security assurance, repayment guarantee​

ISLAMABAD (January 10 2009): Chinese insurance company, Sinosure, has sought security assurance and Government of Pakistan (GoP) guarantee of repayment for the power projects to be established with Chinese investment, official sources told Business Recorder.

Presently, four projects ie Neelum -Jehlum hydropower project, Nandipur, Chichokimalian and Guddu thermal power projects are in different stages of approval. The sources said a high level team of Pakistan Electric Power Company (Pepco) is scheduled to visit Beijing shortly to finalise financing arrangements with the Chinese companies.

Expor-Import (Exim) Bank of China, HSBC Bank, BNP Paribas (China) and Harbin Power Engineering (HPE) China are the main stakeholders, which will provide financial and insurance facility for the projects under process, the sources added.

The sources said Exim Bank has agreed to finance 85 per cent of project cost,k which constitutes equipment to be imported from China. The bank is also willing to work as co-arranger for the balance required to purchase equipment, which will likely be imported from the GE (USA) or France.

However, the Exim Bank has set a tough condition: it would only provide finance for the project if Pepco first provides 10 per cent advance payment and the remaining five per cent before the Bank starts disbursement, the sources added. Another surprising development for Pakistan was that the Sinosure (China Export and Credit Insurance Corporation) has clearly indicated that it would provide insurance cover for only Chinese content and GE USA/ France gas turbines will not be covered.

" We can provide insurance cover for three to nine years' period as we can cover up to 10 year repayment period," the sources quoted Zhang Hui, project underwriting department, Sinosure, as saying during the last meeting held between Pepco and Chinese officials in Beijing. The sources said Beijing-based BNP Paribas office, an internationally reputed French bank, was not willing to finance those power sector projects which are not part of the list that was presented by Pakistan government to the Chinese government.

The sources said Guddu, Nandipur and Chichokimallian projects were not included in the list given to the Chinese government.

Regarding Nandipur, HSBC was of the view that the project had been approved by Sinosure, but this approval was not enough as there were certain other approvals needed, including the approvals of Chinese Ministries of Commerce and Finance. This process may take three to six months further. Sinosure, China's first wholly state-owned policy insurer can insure both China's overseas investments and overseas investments in China, guaranteeing either shares or loans. The sources said all the confronted issues have been discussed with the Chinese officials who recently visited Pakistan and the government was very much hopeful that the bottlenecks in the way of Chinese investment would be removed very soon.

Prime Minister, Syed Yousaf Raza Gilani has also approved a summary of the Ministry of Water and Power regarding to dispatch a team to Beijing to finalise financing arrangements with the Chinese companies.

 

[Neo]

Potential of Chinese investment highlighted​

ISLAMABAD (January 10 2009): Senator Waqar Ahmed Khan, Minister for Investment, Raja Pervez Ashraf, Minister for Water and Power and Dr Asim Hussain Advisor to Prime Minister on Petroleum and Natural Resources held a meeting with the Chinese Ambassador Luo Zhaohui, who was accompanied by the Economic Counsellor, Embassy of China.

Siddiq ur Rehman Rana and Li Hong, CEO China Dong Fang Electric Company made the presentation highlighting the potential of Chinese investment in the power and energy and industrial sector. Zhou Zhencheng apprised about the problems/issues being faced by the Chinese companies, ie China Mobile, China Petroleum Engineering & Construction Corporation, Sichuan Electric Imp & Exp, and trade disputes of four Chinese entrepreneurs.

Advisor to Prime Minister for petroleum and natural resources advised the representatives of the companies of early resolution. The advisor will also look into the security concerns of the investors.-PR

 

[Neo]

Canada urged to enhance manpower recruitment​

ISLAMABAD (January 10 2009): Prime Minister Syed Yusuf Raza Gilani has called for enhanced recruitment of Pakistan's manpower by the Canadian entrepreneurs involved in development of the new agricultural lands in Canada's labour scarce provinces.

The Prime Minister also took up the issue of inordinate delay in the processing of immigration cases of Pakistani nationals by the Canadian authorities and urged that they should be treated at par with the immigrants from other countries. The Prime Minister was talking to the Canadian Minister for Citizenship, Immigration and Multiculturalism, Jason Kenney, who called on him on Friday at Prime Minister's House, Islamabad.

The Prime Minister expressed his gratitude to the Canadian government for doubling its economic assistance to Pakistan from 30 million dollars to 60 million dollars and hoped that Canada would also provide Pakistan with technical and financial assistance for upgrading the universities and vocational training institutions to train Pakistani manpower in order to bring their capabilities up to the required standard of Canadian employers.

The Prime Minister while expressing his condolences for more than 100 casualties of Canadian Armed Forces deployed in Kandahar, in the past five years, underlined the need for Canada's continued engagement with Nato/ISAF forces in Afghanistan.

He pointed out that Pakistan is still hosting millions of Afghan refugees while the international community seems to have forgotten them. He said that restoration of peace in Afghanistan will not only enable the refugees to return to their homeland but will also open new vistas of bilateral and multilateral trade and economic co-operation between Pakistan and Afghanistan as well as between Central Asian states and South Asian countries.

The Canadian Minister for Citizenship, Immigration and Multiculturalism termed Pakistan as a significant source of immigrant workers for Canada. He agreed that there had been prolonged delays in processing the immigration cases of Pakistanis in the past but promised that the Canadian government henceforth will try to reduce the processing period of these cases.

Terming Pakistan's diaspora in Canada as a natural bridge between the two countries, he undertook to consider increasing the number of recruitment of Pakistan's manpower for Canada. He commended Prime Minister's decision to appoint, for the first time in Pakistan's history, a representative of minorities as the federal minister of minorities and the role of its government in protection of minorities' rights.

The Canadian minister requested assistance of the government of Pakistan in grant of regulatory provision to a Canadian company's bidding to explore copper and gold in Balochistan and stated that the Canadian corporate sector would be encouraged to consider Pakistan's market for joint ventures and investments.

Dilating on bilateral relations between the two countries, the Canadian minister noted that Pakistan was amongst the first few countries visited by his Prime Minister Harper after assuming his office in 2006. He agreed with the Prime Minister on the need for increased exchanges at government and peoples to people level to further strengthen the existing ties.-PR

 

[Neo]

Volume of trade with Italy not up to full potential: MCCI​

MULTAN (January 10 2009): The volume of trade between Pakistan and Italy, Mexico, Kenya, Brazil, Malaysia and other countries is not up to full potential while these countries present offer plenty of opportunities to enhance bilateral trade. This was stated by Anis Ahmed Sheikh, President, Multan Chamber of Commerce and Industry (MCCI) while talking to newsmen here on Friday.

The MCCI President said our bilateral trade is limited to certain areas, however, these countries are blessed with lot of natural resources and offer good opportunities to enhance their business relations by tapping different sectors of the economies of these states and Pakistan. He called upon the businessmen of different countries to look for entering joint ventures in different sectors as well as hold trade fairs in each other country for further boosting bilateral trade.

He further said presently volume of bilateral trade is tilted heavily in favour of Kenya, which needs to be made balanced by enhancing Pakistan's exports to Kenya. He said MCCI is building an Export Display Centre where foreign companies will also be given space to display their products and invited foreign businessmen and investors to take advantage of this opportunity. Anis Ahmed Sheikh said that Pakistan and Iran, Afghanistan, Turkey, Malaysia, United States, France, and Central Asian states (CAS) has historic bilateral trade as well as friendly relations.

 

[Neo]

'New agricultural policies being followed to strengthen sector'​

FAISALABAD (January 10 2009): Punjab Minister for Agriculture Malik Ahmad Ali Olakh has said that the Punjab government is following multi-dimensional new agricultural policies for the strengthening of agricultural sector under the able guidance of Punjab CM Shahbaz Sharif.

He stated this while inspecting the green, grain markets and office of the market committee here on Friday. He said that comprehensive solid lines of action are being implemented for the development of the markets and especially with reference to facilitate the growers. He directed the market committee officials to mend their attitude and improve their departmental performance for raising the income of market committee and warned that there was no room for the lethargic, negligent, careless and inefficient officials in the Agriculture Department. He advised that all relevant records should be maintained properly and measuring machines should be working accurately.

The minister also inspected the local office of Agriculture Engineering Department and directed the officials to carry out their duties with high responsibilities for the protection and operational of agriculture machinery. He cautioned that misappropriation and embezzlement of POL and machinery parts would not be tolerated and department would be purged from the dishonest and fraudulent officials.

Later, the minister while talking to the mediamen at Circuit House, informed that the Punjab Chief Minister had given attractive incentives for the competition of 'Grow More Wheat' among the growers and announced prizes of 100, 75 and 50 Tractors to the first, second and third place wheat growers respectively. He said that 10,000 tractors were being distributed among the tillers on subsidised rates under the Punjab government Green Tractor Scheme and subsidy of Rs 2 lac was being given on each tractor besides providing other latest agricultural tools to the farmers on half price.

The minister said that the resources were also being mobilised for the rehabilitation of barren land in Punjab. Adding that 300 bulldozers of Agriculture Engineering Department had been repaired and rent of the bulldozers been reduced for the facility of land owners in addition with free diesel provided by the Punjab government.

 

[Neo]

SECP unveils road map for demutualisation of stock exchanges​

ISLAMABAD: Securities and Exchange Commission of Pakistan here on Friday unveiled the structure and road map for demutualisation of stock exchanges under which foreign stock exchange; investment bank or Central Depository Company could acquire management of any stock exchange.

National Assembly Standing Committee on Finance and Revenues met in the parliament house under the chair of Fauzia wahab. Secretary Finance, Dr Waqar Masood Khan and SECP Chairman, Razi-ur-Rehman Khan were present on the occasion.

Chairman, SECP, briefed the committee on salient features of the proposal and said that demutualized stock exchange shall comprised of strategic investor with 40 percent shares, general public with 20 percent shares and existing brokers with the remaining 40 percent. Explaining the term of strategic investor, chairman SECP said that it can be stock exchange of foreign country having capital and latest technology, investment bank and central depository company. The strategic investor would be allowed to obtain 40 percent shares with total neutral management control.

Local institutions will be getting shares from the remaining after sale of shares to strategic investor and general public. However, strategic investor may acquire more shares from general public by not exceeding its holding from 51 percent of paid up capital(further acquisition not before 3 years of acquisition), Razi explained. Trading Rights Entitlement (TRE) certificate holder and their connected persons shall not hold majority on the board of any stock exchange. Chairman of the board of any stock exchange shall not be a director who represents TRE certificate holder.

The commission may direct divestment of shares by initial shareholders, a member of public or TRE certificate holder if the holding exceeding 1 percent shares of a stock exchange. The same is applicable for any financial institution whose holding period exceeds 5 percent. The shares of stock exchanges shall be listed on any stock exchange and within time, as may be prescribed by the SECP and consultation with board of directors of stock exchanges. Stock exchanges shall not issue any new TRE certificate to any person until June 30, 2010 unless two third of TRE certificate holders decide otherwise. Thereafter 15 TRE certificates shall be offered for issuance from July 1, 2010 to December 31, 2019.

The SECP would have powers to order for integration of two or more stock exchanges after their submission of scheme of integration and compliance with procedures.

Offence & Penalties: The Commission would have powers to suspend the privilege and or hold a stock exchange liable to a penalty of Rs 20 million, in case offence is committed by it under the act. The same is applicable for any director, shareholder, TE certificate holder, and committee member to the limit of Rs 1 million.

Stock exchanges shall not make any amendment in Memorandum and Articles of Association, commence any proceeding of winding up, or sell immoveable asset, without approval of the SECP.

Time Lines: Within 30 days of promulgation of the bill stock exchanges would be required to constitute demutualisation committees fully authorised to approve valuation of stock exchanges, enter into negotiations with strategic investor and determine offer price for offer of sale of shares to general public.

Within 45 days of promulgation of the bill every stock exchange shall submit its valuation, revaluation. Propose authorised paid up capital, name of the proposed members and director, proposed plan for segregation of commercial and regulatory functions, draft memorandum, article of association and five year development plan.

Within 30 days of the receipt of the aforementioned information, the SECP shall approve the aforementioned and nominate six directors for each stock exchange.

Within 30 days of receipt of the aforementioned approval, a stock exchange shall adopt memorandum and article of association, allot shares to initial members, and deposit 60 percent of shares in block account, issue certificate and TRE to share holders.

Within 7 days of adoption, a stock exchange shall submit copy of resolution, certificates from auditors and CDC for allotment and deposit, respectively, of shares to initial shareholders. And within 7 days of receipt of aforementioned information, the registrar shall issue a certificate of re-registration, first directors shall replace the previous directors from such date and stock exchange shall stand demutualised.

 

[Neo]

Inflation likely to ease off during ’09​

KARACHI: The consumer price based inflation is likely to ease off during 2009 after touching 30-year high during the 1QFY09, triggering a cut in interest rate.

The high inflation syndrome has left a crippling effect on the economy in general and particularly the common man, who was the worst victim of record inflation.

This expected downward trend in the inflation may trigger interest rate cut – though not immediate in the monetary policy statement at the end of the current month – in the coming months, believe the analysts.

Albeit inflation will be receding a bit but it would be still much higher from the official target of 12 percent set at the time of the federal budget.

Analysts were predicting it to settle around 20 percent since the start of current financial year.

“Higher base effect, oil prices reduction and declining commodity prices will be reflecting the receding trend in the inflationary pressures during the coming months,” analyst Muhammad Imran at First Capital Equities Ltd (FCEL) said.

In this regard, first indication of softening in inflationary numbers has already been observed in November 2008 when CPI was 12 basis points down on MoM basis and settled at 24.7 percent, he said and added that In December 2008 the inflation woul decline by 130 basis points MoM basis. “Yearly growth is likely to be 22.3 percent.”

“A pleasant surprise may be witnessed in June or July 2009 when the CPI could plunge to single digit,” Imran said.

Nonetheless, the very next Monetary Policy Statement (to be announced at the end of January 2009) may skip any announcement for cut in interest rate. However, general interest rate scenario is expected to show a sign of reduction.

Moreover, an interim cut in key policy rate (between Jan-Jul 2009) cannot be ruled out, Imran added.

 

[Neo]

Forex reserves increase by $343 million​

KARACHI: The country's liquid foreign exchange reserves rose by over $343 million during last week.

The State Bank of Pakistan's statistics show that overall foreign exchange reserves registered an increase of $343 millions during the week that ended on January 03, 2009.

With the current upsurge, the country's foreign exchange reserves have mounted to $10.004 billion on 03 January 2009 as compared to $9.661 billion a week earlier. The major increase has been witnessed in the reserves held by the central bank as it showed an increase of $232 million during last week. The central bank reserves reached $6.601 billion on 03 January as compared to $6.369 billion on December 27, 2008.

Reserves held by the banks (other than SBP) also showed an increase of $111 million to $3.403 billion during the last week from $3.292 billion a week earlier.

 

[Neo]

Abu Dhabi’s IPIC delays Pakistan refinery plans ​

Saturday, 10 Jan, 2009

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ABU DHABI: Abu Dhabi's government-owned International Petroleum Investment Co (IPIC) has delayed plans to set up a refinery in Pakistan, its CEO said on Saturday.

Khadem al-Qubaisi told reporters the planned project was delayed due to various ‘problems’, according to FReuters.

The board of IPIC had approved last year plans to build a $5 billion refinery with a capacity of 250,000 barrels per day in Pakistan.
IPIC invests in oil-related projects for the government of Abu Dhabi, the capital of the United Arab Emirates, which is the world's fifth-largest oil exporter.
Qubaisi said IPIC plans to increase its stakes in Austrian energy firm OMV and Spain's Cepsa after his company finalised a deal to acquire 70 percent of industrial services firm MAN Ferrostaal AG, part of German group.

IPIC also plans to invest $20 billion in the petrochemical industry of Abu Dhabi, Qubaisi said.