Pakistan Economy - News & Updates - Archive

[Neo]

Easing budget deficit: World Bank wants government to collect Rs 30 billion revenue through PDL​

ISLAMABAD (January 20 2009): World Bank has asked the government to collect at least Rs 30 billion revenue through petroleum development levy (PDL) on petroleum products during the quarter (January-March) to achieve the revenue target and ease budget deficit.

Sources revealed to the Business Recorder on Monday that a meeting was held in the Finance Ministry on Saturday that was attended by the officials of the ministries of Finance and Petroleum and the World Bank. During the meeting, the World Bank argued that the price differential claims (PDC) should not be accumulated in future as they could cause circular debt problems.

Sources noted that the government was, at present, collecting Rs 15 billion per month PDL on petroleum products and if the current trend in oil prices continued in the coming months, the government would collect Rs 45 billion revenue through PDL from January-March 2009. The government, backed by the World Bank, had changed the oil pricing review mechanism from fortnight basis to monthly basis to enhance revenue collection through PDL on petroleum products, the sources added.

After the decline in the global oil prices, the government had imposed PDL for enhancing revenue collection on petroleum products. The PDL collection on petroleum products stood at Rs 18 billion during July-November 15, 2008.the government received Rs 33 billion PDL from November 15 to December 31 in line with record level reduction in global oil prices.

The government is currently charging Rs 28.15 per litre PDL on petrol, Rs 38.35 per litre on HOBC, Rs 12.95 per litre on kerosene oil and Rs 12.10 per litre PDL on light diesel oil. In addition to PDL collection, the government is charging Rs 7.95 per litre general sales tax (GST) on petrol, Rs 9.94 per litre on HOBC, Rs 7.15 per litre on kerosene oil and Rs 6.62 per litre GST on light diesel oil (LDO).

The present government paid Rs 165 billion PDC to the Oil Marketing Companies (OMCs) on the petroleum products that were pending. Such huge payment resulted in problems for the current government. These pending dues also caused the escalation of circular debt between the OMCs and oil refineries that created hurdles in smooth supply of fuel in the country. Sources said that the OMCs and oil refineries had also pressed the government that there should be no price differential claims in future.

 

[Neo]

Netherlands to reinforce trade ties with Pakistan​

SIALKOT (January 20 2009): 'Strenuous efforts would be made for reinforcement of bilateral trade between Netherlands and Pakistan as both are enjoying very friendly and cordial relations since long and with the passage of time these ties would be further cemented.'

The Ambassador of the Kingdom of Netherlands to Pakistan, T Jeerd De Zwaan said. Addressing the members of Sialkot Chamber of Commerce and Industry (SCCI) on Monday, he said that Netherlands under the Co-operation Plan 2008-2011, would invest in the fields of education, water, sanitation and environment in Pakistan. The Netherlands was the third largest investor after the United Kingdom and United States of America in Pakistan, he revealed.

The Netherlands Ambassador further stated that buyers had become more conscious about the quality control and issues pertaining to labour and it is high time that business community of Pakistan should concentrate on these issues and ensure hurdle free exports to their foreign buyers.

The President SCCI, Hassan Ali Bhatti in his welcome address urged the need of further strengthening the bilateral trade ties between the two friendly countries. He also invited Dutch business tycoons to invest in the second biggest Export Processing Zone of Pakistan adding that the zone provides extraordinary facilities and benefits to both foreign and local investors.

Bhatti pointed out that there was unlimited scope of expanding trade ties between Pakistan and Netherlands and suggested active involvement of Netherlands Chambers, which could serve as resource for exchanging information about trade. He also viewed that exchange of trade delegations and holding of joint trade exhibitions would further help in promoting bilateral trade.

The SCCI Chief proposed that Centre for the Promotion of Import (CBI) should hold training course on export marketing at SCCI for providing tailorised training for the exporters. 'The SCCI would provide all necessary help and support for holding the training course,' he added. Earlier, the Ambassador visited surgical and sports industrial units of Sialkot.

 

[Neo]

Rs 20 billion uplift projects for Islamabad planned: Babar​

ISLAMABAD (January 20 2009): Federal Government has planned mega development projects costing Rs 20 billion for infrastructure development in capital and its rural areas, said Baber Awan, Federal Minister for Parliamentary Affairs, here on Monday. The objectives of the projects are to facilitate people of Islamabad and adjacent rural areas by providing them high standard health, education, water, sanitation and other recreational facilities, he added.

He was addressing a public rally after inaugurating a bridge at Golra Sharif, a sub-urban area of the federal capital. He said that the government is ready to execute these mega projects this year and people will get benefits of these soon. He said that mega projects including hospitals and schools would start this year to facilitate the people of Islamabad and of the adjacent urban areas. He said that Golrra Sharif is an historic place and to maintain its glory, more developmental projects for health and education would be started very soon.

He said that there is full harmony and unanimity of views between President Asif Ali Zardari and Prime Minister Yusuf Raza Gillani on all matters. "People talking about any differences between these two top leaders are living in fools' paradise", he added. Regarding repealing 17th amendment, he said PPP is committed to uphold supremacy of constitution and rule of law and it will support the bills moved in Parliament to repeal the 17th Amendment.

 

[Neo]

Denmark can help enhance Pakistan's energy capability: Envoy​

KARACHI (January 20 2009): Denmark can help enhance the energy capabilities of Pakistan. The Ambassador of Denmark to Pakistan, Anders C Hougaard stated this. He was talking to APP at the Pakistan Institute of International Affairs (PIIA) on Monday. The Envoy said that Denmark has a very strong system of windmills and environmental technology called Green Tech and that they can help Pakistan enhance energy capabilities.

He further said that the Danish specialised companies could find agents in Pakistan to work directly towards enhancing Pakistan's energy capabilities. Hougaard further stated that ties between Denmark and Pakistan are excellent. 'We are very happy about the democratic development in Pakistan and happy that the February 2008 general elections took place in a dignified manner and also we are looking forward to co-operate with the democratic Pakistan in the years to come,' he remarked.

The Envoy pointed out that Denmark has strengthened its Embassy in Pakistan by upgrading it to ambassador level in September last year. The staff would be enhanced this year, he added.

Hougaard emphasised the need of enhancing the bilateral trade between Denmark and Pakistan saying that the existing trade figures are low. He said that he would focus on improving the trade ties between the two countries. Earlier, in an interactive session with the members of the PIIA, the Danish Envoy discussed international and regional issues and also explained the point of view of his government. The Consul of the Royal Danish Consulate General in Karachi, Naheed Irshaduddin was also present on the occasion.

 

[Neo]

Can we defend our past economic performance?​

ARTICLE (January 19 2009): Is the Musharraf government responsible for much of the ills that plague Pakistan both in the field of economics as well as security today? And if so why, given the advent of democracy in the country, in however nascent a form, are key decision-making members of that era not being held accountable?

These are critical questions plaguing the people of this country as we struggle with high inflationary pressures, massive unscheduled load shedding of gas and electricity and last, but not least, the rise in suicide attacks with its prohibitive economic cost both in terms of human and asset destruction and its impact on foreign and local investment levels.

Musharraf defended his government's performance when he was allowed to come on state television to announce his resignation, a defence that left few convinced. He was strangely reticent about a well known fact, accepted by his numerous detractors that would have done much to absolve him of some of the blame: the unilateral decision he took to fully support the US led war on terror was not unconditional as is being alleged by his numerous detractors. But, instead, was conditional on unprecedented levels of foreign monetary support over the nine year period of his rule.

Much of this assistance was not subject to scrutiny. Take the case of the United States where half of the new money was provided through a post-9/11 Defense Department program known as Coalition Support Funds (CSF), that were not closely tracked by Congress. Pakistan's flood of CSF money made it the third largest recipient of all U.S. military aid and assistance in the three years after 9/11; and we trailed only Israel and Egypt. Before 9/11, Pakistan received less military aid and assistance from the U.S. than Estonia or Panama, largely because of punitive U.S. sanctions imposed as punishment for Pakistan's covert pursuit of a nuclear weapons program that culminated in the test in 1998 as well as the democracy deficit as a consequence of Musharraf's military coup. But unfortunately these massive amounts were not available for development purposes.

The US perceptions began to change by 2006. Senator Jack Reed, Democrat from Rhode Island, after his return from Pakistan in October 2006, noted in a report to fellow lawmakers that officials at the American embassy in Pakistan recommended changing the program "to paying for specific objectives that are planned and executed, rather than simply paying what the country bills." The trust hitherto extended to Pakistan under Musharraf had begun to erode.

Be that as it may post 9/11 Pakistan also witnessed a significant increase in the financial inflow for non-military sectors in comparison to previous years. This accounted for unprecedented growth levels in the country and, so allege critics, not to any major economic policy that was devised by Musharraf's factotum, commercial banker Shaukat Aziz, or, in turn, Aziz's gofer, Salman Shah.

As proof of their contention these critics allege that the former government ignored investing in the physical infrastructure of this country, notably energy that is the root cause of current public discontent as well as a significant decline in the country's manufacturing productivity. In this context Salman Shah's statement in a recently released article, reportedly much used by Shaukat Aziz in defence of his government's economic performance, that "while we should be on the right side of the world in the war on terror, the world should seriously help us in our endeavour to build a better economic future for our people" is inexplicable.

While supporting President Zardari's hectic foreign tours prior to going on the IMF programme with the stipulated objective of getting money from anywhere but the IMF, Shah writes that what Pakistan needs is a 'positive brand image' - spoken like an advertising man rather than a de facto finance minister of the former regime. He also maintains that during the former regime Pakistan had a strong brand image.

As proof positive he writes "investors favourably compared Pakistan to India, China and Vietnam. Every time we did a road show we were highly successful in our endeavours whether it was the OGDC flotation of UBL, GDR and Euro bonds or large privatizations, investors flocked to our offerings." He conveniently ignores three facts. One that the privatisation he boasts of was suspect in a number of cases and few, including the superior judiciary, believed that everything was above board. It is also relevant to note that with increasing US trust deficit in our commitment to the war on terror more money was generated through privatisation. Second there was no global recession then as at present which militates against privatising at present.

And finally he must also be aware of another disquieting fact: that portfolio investment is quick to make short term profit though it no way implies that one has sold a brand image successfully; and these speculators are just as quick to exit the country. This was the main grouse of South East Asian countries against speculators who they held responsible for the Asian financial crisis that left thousands homeless and destitute in its wake.

What is also disquieting is that Shah ignores the fact that the international financial institutions were supporting reforms in Vietnam, thereby increasing the share of concessional funding to the country - lending linked to performance - while Pakistan's share of concessional funding declined. He also ignores the fact that India has reached a level of development, unlike Pakistan, where it is no longer eligible for concessional funding from the IFIs.

The Musharraf era thus was marked by India and Pakistan no longer being comparable at any level and this was epitomised by George Bush's reference to different historic realities of the two countries when he refused to extend a nuclear deal similar to what he had offered the Indians. It is extremely unfortunate that our bureaucrats turned politicians refuse to admit mistakes and thereby learn lessons from the past.

Shah's ten point programme released after he left office is symptomatic of our past economic pundits: giving advice to their successors which they themselves did not follow.

These include (i) jump starting Kalabagh Dam, and if a dictator could not jump start it because of a lack of political consensus one wonders how he thinks a democratically elected government with no overall majority in the centre will succeed; he also proposes building dams to access cheap hydel electricity but fails to identify source of funding; (ii) the IMF prescription of tight fiscal policy and lower deficit even though Shah must be held accountable for large subsidies to the oil sector leading to the huge deficit; (iii) deregulate agricultural prices based on his assessment that agriculture commodity prices have moved in favour of farmers but, if followed, this would lead to higher inflationary pressure to be borne by the poor; (iv) he adds we should stop cribbing about the consumer economy thereby showing ignorance of basic economic theory namely that high domestic savings fuelling domestic investment are preferable to borrowing from abroad to invest as was evident during the Musharraf era; (v) he insists FBR must generate more revenue and he like his successors did not have the courage to take on the sacred cows; (vi) we must privatise to create a vibrant economy and continue to grow at 7 to 8 percent - amazing words given the global recession; (vii) development projects must be completed but with a depleted treasury that Shah must be held accountable for development expenditure had to be curtailed; (viii) deregulation and privatisation must continue, bold words that are not being followed by even the capitalist giants of our world due to recession; (ix) social safety nets must be made foolproof to protect the poor - also an IMF prescription; and (x) our bankers are second to none he maintains and urges that we must further increase the reach and competitiveness of the financial sector with microfinance playing a major role - a prescription much supported by development institutions.

Be that as it may Shah argued correctly in the article that inflation would begin to come down and that the oil bill will decline lessening pressure on our balance of payment position. In Shah's defence one has to stipulate that the article is dated and hence some of its conclusions not based on the current global and domestic economic scenario. Secondly he may also argue that there were several decisions he was forced to undertake by Musharraf.

That maybe true but the fact remains that he always had the option of resigning if he did not support coercive policy measures including heavy subsidisation of oil and products. His failure to do so reflects the fact that he gave greater weight to sustaining his own position than to the country.

Half a year down the line and almost a year since the time Musharraf had a vise like grip on all economic activity the government is continuing to struggle against the ills that plague the country. The question people are now beginning to ask is whether one must continue to blame these ills on the Musharraf era or can we reasonably hold the new government responsible? Prime Minister Gilani's statement delivered on the floor of the House categorically stated that he and his government must take full responsibility for what is happening in the country today.

With Asif Zardari's popularity rating at as low as 19 percent, lower than that of George Bush, the answer is that Pakistanis have begun to hold him personally responsible for the ills that beset us. Perhaps the factor most responsible for President Zardari's rating is that at least 40 percent of the energy crisis is attributed to a doubling of the inter-corporate debt during the current dispensation. Add this to the perception that nepotism and cronyism continues and one has the ingredients of disillusionment. It is time for a change from the past that must be made manifest through statements as well as not protecting the past managers.

 

[Neo]

Per capita healthcare spending​

EDITORIAL (January 19 2009): The State of the World's Children Report 2009, launched by Unicef's representative in Pakistan, Martin Nogwanja, provides a disturbing peep into the per capita healthcare spending in Pakistan, i.e. only $18 per annum, of which only $4 is spent by public sector.

While launching the report, Nogwanja has called on Pakistan to raise the per capita allocation to at least 45 dollars. However, according to Mogwanja, even the existing meagre allocation is not being properly utilised. Lack of equipment, absenteeism among the staff, and inadequate training have created a vicious circle which has further handicapped the system.

According to Nogwanja, mothers and children have been badly affected due to the worsening law and order situation in the country, which has further restricted their access to medical services, especially in NWFP and Fata. The statistical data provided in the Report portrays a very dismal picture of the state of the country's healthcare system. For instance, an estimated 216,000 new-born babies die annually in Pakistan before they reach the first month of their age, which represents 58 percent of deaths of children under five.

This means that there should be greater focus on post-natal specialised care. Pakistan has the eighth highest rate of new-born deaths, which makes it rank below only Afghanistan and Iraq among the Asian countries. Of every 1,000 live births, 53 infants would not survive their first month of life. Further, 94 out of every 1,000 Pakistani children die before the age of five years, while 78 of these children die before they are one year old. About 38 percent of the children under five in Balochistan are moderately or severely underweight and about 59 percent of rural Pakistanis do not have access to adequate sanitation facilities. Pakistan is one of the four countries where polio cases are still found.

Most of the deaths can be prevented through adoption of an integrated approach to mother and child healthcare, hygiene, nutrition and protection. Among the major reasons for death of new-borns is that mothers are not given proper medical care during pregnancy and childbirth, with lack of literacy, restricted access to medical services and low status of women in Pakistani society making things much worse. Early marriage of girls is said to be a major cause of premature births. A survey has shown that although there has been a decline in the number of teenage marriages in Pakistan, one out of six women, aged 15-19 is already married. Further, women in rural areas run twice the risk of dying of maternity-related complications than their urban counterparts.

Economic Survey for 2005-06 had acknowledged that Pakistan lagged far behind other countries in the region with regard to indicators on children, while Save the Children had reported that approximately one-third of the population lived in poverty in Pakistan, 70 million did not have access to healthcare, with children being the worst victims of this social sector disaster. The government policy of shifting healthcare responsibility to the private sector has meanwhile made healthcare increasingly expensive, thereby putting it out of financial reach of a majority of the Pakistanis, particularly women and children.

This is clearly a grave infringement of the rights of the child, as guaranteed under the UN Charter. Unicef's 2007 report on the State of the World's Children had ranked Pakistan 47th among 157 countries in terms of basic indicators for child welfare.

Incidentally, Pakistan had ratified the UN Convention on the Rights of the Child that includes access to quality healthcare, way back in 1990, and was one of the six initiators for holding the World Summit for Children the same year. It is also a signatory to such important international instruments as the Stockholm Declaration and Agenda for Action, the UN Millennium Development Goals, 2000 and various ILO conventions. Further, Articles 11(3), 379(e) and 3(1) of the Constitution of Pakistan have set specific parameters concerning welfare and protection of children, that includes provision of proper healthcare.

Pakistan should increase the per capita health spending to at least $45 per annum, as proposed by Unicef country representative Martin Nogwanja. Although the proposed increase does not amount to much, it will certainly make a big difference in provision of public sector healthcare. Secondly, the government should ensure that the funding is spent only on actual provision of healthcare, and is not diverted to meeting administrative expenditure etc. The government should ensure that the benefit of raise in per capita healthcare spending is translated into provision of better health services to the common citizens.

 

[Neo]

Pakistan's textile sector crisis​

EDITORIAL (January 18 2009): The president of Pakistan Economy Watch (PEW) has said in a statement that Pakistan's textile sector is fast losing its ability to compete in international market due to the prevailing energy crisis, which has resulted in closure of a record number of manufacturing units. The data quoted by him is indeed quite disturbing.

Volatile international cotton rates and the rising interest rates have delivered a hard blow to our textile sector, which accounts for 46 percent of the country's manufacturing sector, 11 percent of the GDP and generates 60 percent of Pakistan's foreign exchange earnings. Further, Pakistan's textile sector lags far behind in the growth as well.

The average annual growth of India's textile sector, for instance, is 11.6 percent, but in Pakistan it has averaged 3 to 3.5 percent. According to PEW chief, despite being the world's fourth largest producer of cotton, Pakistan has yet to introduce insect-resistant cotton varieties and take other measures for strengthening the textile sector.

For instance, Pakistan's primitive ginning units have the capacity to produce only 10 to 12 bales per hour, against the international standard of 60 to 65 bales. The PEW president has urged the government to provide the textile sector immediate "oxygen" of direct subsidies to enable it to survive in the highly competitive global environment.

Incidentally, the global demand for textiles, which stands at around $19 trillion, is growing at a rate of 2.5 percent per annum, in which Pakistan's share stands at less than one percent! This provides a measure of Pakistan's place in the global textile market.

Viewed in perspective, it is also reflective of the "performance" of our textile sector over the decades despite hefty subsidies and bailouts advanced to it by various governments. What has made things worse has been the phasing out in 2005 of special protection granted under WTO to textile and clothing sector, which had resulted in the opening up of export markets internationally, thereby further sharpening competition for our textile exports.

A closer look at the structural composition of Pakistan's textile sector will help put things in proper perspective with regard to PEW chief's demand for "oxygen" of more subsidies. The textile industry comprises a large-scale organised sector, and a highly fragmented small-scale (or cottage) sector.

The organized sector has integrated textile mills, ie, spinning units with shuttle-less looms etc. while the downstream industry comprising weaving, finishing, garment, and hosiery units, etc, fall in the unorganised sector. The country's textile sector is indeed facing numerous problems, including lack of adequate investment in R&D, the export houses' shortage of capacity to meet bulk orders, and the levy of high protective tariffs with a pronounced anti-export bias.

Its other handicaps include absence of a strategic plan, shortage of professional manpower, use of old plants and equipment, the high cost of operations, the multiplicity and a high rate of taxes, the high cost of financing, inferior quality and low productivity, lack of adequate marketing expertise and inadequate infrastructure.

All these factors have discouraged investment in this export-oriented industry, for which the industry magnates should share the blame, because they have traditionally demanded (and been provided) the cocoon of protectionism, which has seriously eroded the sector's competitiveness in international market.

Lack of requisite competitiveness in terms of adherence to the contracted product quality, largely driven by the profit motive, and their general failure to stick to delivery schedules are the other major reasons that have dented our textile exports.

(It will be recalled that Japan's ambassador in Pakistan had told business leaders at a Rawalpindi Chamber of Commerce and Industry meeting in 2006 that "Pakistani textile products have failed to compete with those of India and China. Hence India has been able to capture some of the textile market in Japan, which was previously held by Pakistan.")

As trade and industrial sectors are undergoing rapid transformation in compliance with the WTO guidelines, there is an urgent need for Pakistan to improve the quality of its textiles. Despite establishment of a separate Ministry of Textile, and the proposed "textile cities" the loss suffered by the sector is not only reflective of poor quality control, but also of the high input cost, and the exorbitant profit margin exacted by a majority of our textile exporters.

Two additional factors, ie, the current slump in international market and the Pakistani rupee slide have hit our textile exports. A third factor that has restricted growth of textile value addition is lack of adequate focus on fashion garments, which has become a multi-billion industry in the world. Pakistan has hitherto been mostly engaged in toll manufacturing for foreign buyers, which has restricted growth of the value-added in its textile sector.

This has also been responsible for our failure to develop our own brands, instead of copying foreign brands. Fortunately, Pakistan's textile sector still has the potential to increase its share in the global market if it concentrates not only on modernisation of infrastructure and machinery, but also on developing a skilled workforce.

The PEW president's call for immediate and proper government intervention to salvage this key sector of the economy will make sense only when the textile industry tycoons too come half way through to demonstrate their commitment to improving the sector's lot.

We propose that instead of extending more subsidies, the government should advance soft-term or interest-free conditional loans to the affected units, to allow them to develop greater sustainability. But first of all, the government should initiate urgent measures to ensure uninterrupted supply of power not only to textile sector, but also to all other sectors of the economy.

 

[PakForce Unlimited]

Talking about Denmark and Pakistan on wind energy few posts above.

Pakistan, Turkey to work together on wind​

ISLAMABAD, Pakistan, Jan. 20 (UPI) -- Longstanding allies Pakistan and Turkey will work together on wind power development.

Raja Pervaiz Ashraf, Pakistan's federal minister for water and power, and Murat Sungar Bursa, president of Turkish company Zorlu Enerji Ltd., signed the energy deal in Islamabad, Xinhua reports.

Zorlu Enerji Ltd. will establish a 50-megawatt wind farm in Pakistan, worth an estimated $120 million. The wind farm later will be expanded to 250 megawatts.

Ashraf said Pakistan and Turkey historically have enjoyed cooperative relations, and he expressed confidence that the agreement will pave the way for more foreign and private investment in the power sector.

Link: Pakistan, Turkey to work together on wind - UPI.com

 

[Neo]

Pakistan-China Investment Zones, Special Industrial Zones: FBR notifies zero rated duty on capital equipment import​

ISLAMABAD: The Federal Board of Revenue (FBR) here on Tuesday allowed sales tax and customs duty free import of capital equipment including plant, machinery, equipment and accessories for setting up industrial units in Pakistan-China Investment Zones and Special Industrial and Economic Zones.

Pakistan-China Investment Zones means special industrial zones located in the territory of Pakistan notified by the Board of Investment having not less than forty percent by approved Chinese investors.

Earlier the government was charging minimum import duty of 5 percent on the import of capital equipment including plant, machinery, equipment and accessories imported in industrial zones. From now onwards the import of capital equipment including plant, machinery, equipment and accessories would have zero percent sales tax and duty for these zones.

This decision has been taken due to the efforts made by the Federal Minister for Investment, Waqar Ahmed Khan who had approached the Economic Coordination Committee (ECC) of the Cabinet for formal approval of this incentive. Ministry of Investment hopes that with these incentives and other initiatives taken at federal and provincial levels the country would attract $20 billion foreign direct investment in next two fiscal years.

Pakistan-China Investment Zones: The Federal Government is pleased to direct that capital equipment shall be exempt from the whole of customs duty and sales tax if imported for the development of Pakistan-China Investment Zones and for establishing projects in these Zones, subject to the following conditions: locations and perimeters shall be notified by the Board of Investment of Investment Division; only such projects or joint ventures would be entitled to this exemption as are certified by the Board of Investment to have at least forty percent foreign equity from Chinese Companies; capital equipment imported for the zones will not be removed from the zones without the permission of the FBR within five years of their importation.

Special Industrial and Economic Zones: Capital equipment if not manufactured locally, shall be exempt from the whole of customs-duty and sales tax if imported for the development of projects in the Special Industrial and Economic Zones and for establishing projects in these Zones, subject to the following conditions: Locations and perimeters shall be notified by the Board of Investment of Investment Division; the benefit of this notification shall be admissible only for capital equipment and not for raw materials; in case of partial shipments of machinery and equipment for setting up a plant, the importer shall, at the time of arrival of first partial shipment, furnish complete details of the machinery, equipment and components required for the complete plant, duly supported by the contract, lay out plan and drawings.

 

[Neo]

Short-term renewable energy policy extended​

ISLAMABAD: Alternative Energy Development Board (AEDB) on Tuesday approved the extension of short-term renewable energy policy till December this year; this was decided in a meeting of AEDB Board of Directors chaired by Minister for Water and Power, Raja Pervez Ashraf.

The short-term policy was to be replaced by a more comprehensive medium-term policy, which is under the process of formulation.

The short term policy approved by the federal cabinet in December 2006 was meant for successful business and technology demonstration, appropriate regulatory framework, market and resource assessment, rural energy programme design, pilot testing of decentralised energy provision.

The board decided to approach provincial governments for provision of wasteland for bio-diesel plantation. Several private sector organisations have shown interest in bio-diesel production and have sought land for plantations. Bio-diesel can be extracted from sunflower, Canola, Mustard, Rapeseed, Soybean, Pongame (Sukh-Chaien) and Castor Seed.

It is estimated that the country can cut its import bill by Rs 80 billion if only 10 percent of the diesel consumed in the country (0.8 million tons) is switched to bio-diesel. The board also reviewed the progress on wind energy projects and directed that all bottlenecks in the expeditious completion of the projects be removed.

It was also decided that AEDB would carry out a survey in the areas proposed by the parliamentarians for rural electrification through solar energy. These schemes will be implemented on the criteria defined for rural electrification projects. The feasibility study will be submitted to the sponsors for arrangements of funds.

 

[Neo]

France, Punjab to cooperate in agriculture sector: Shahbaz​

* French ambassador offers technical assistance in environment, water treatment, solid waste management, livestock and dairy development​

LAHORE: There is a wide scope of mutual interest between France and Punjab in livestock, dairy development, agriculture, and other sectors, Chief Minister (CM) Shahbaz Sharif said on Tuesday.

He was talking to French Ambassador to Pakistan Daniel Jouaneau during a meeting that was held to discuss matters of mutual interests and cooperation in various sectors.

Shahbaz said the Punjab government was paying full attention to waste management and the recycling of waste materials for energy generation. Negotiations were being held with a number of local and foreign companies in this regard, he added.

Agreement: Sharif said an agreement had been signed between the Punjab government and Beijing Environment Sanitation Engineering Group, under which the latter would provide advisory services regarding waste management and energy generation. The Chinese company would also provide experts, equipment and other facilities.

He said negotiations were underway with a French company for a water treatment plant. He said the Punjab government has provided a favourable atmosphere for foreign investment and possible facilities were being extended to entrepreneurs. He said local engineers could also be sent to France for joint ventures.

Jouaneau said he recently returned from France and the investors there had shown keen interest to invest in Pakistan. He said concrete steps would be taken for cooperation among various sectors between both the countries. He said Punjab was the biggest province of Pakistan and offered a wide range of investment opportunities.

Technical assistance: The ambassador also offered technical assistance in the sectors of environment, water treatment, solid waste management, livestock and dairy development. He said France was an agricultural country and had rich expertise in these sectors.

He said he had also visited and urged concerned universities to introduce farm management training courses in the province.

He said joint ventures launched between France and the Punjab government could promote trade and economic relations. Honorary Counsel General of France in Pakistan Ashiq Hussain Qureshi, Task Force Chairman Haroon Khawaja, former MNA Pervez Malik and his wife, Planning and Development chairman, LDA director general, Housing secretary and Commerce secretary were also present at the meeting.

 

[Neo]

Japan to provide Pakistan $480m financial assistance ​

ISLAMABAD (January 21, 2009): Pakistan will receive $480 million in financial assistance from Japan during current fiscal year 2008-09.

Finance Advisor Shaukat Tarin lauded Japanese assistance in a meeting with Japan Ambassador Chihiro Atsumi. Tarin said Japan wants to assist Pakistan in major development projects.

He discussed economic stability and development projects with Atsumi. The economy has improved after loan given by International Monetary Fund, Tarin added.

 

[Neo]

World Bank blocks assistance on low Pakistan's ratings​

ISLAMABAD (January 21 2009): The World Bank has blocked lending for two key loans, of at least $834 million, market-based loans due to the country's low credit ratings, an official said. "This project will be placed on hold until further notice", says a WB document about the national expressway project.

And, about $200 million National Trade Corridor (NTC) Improvement Program, the Bank document says: "Pending improvement of the macro-economic situation, this project will be put on hold until further notice". The WB is processing 12 loans of $1258 million for Pakistan, of which, most are of IBRD (WB) or market based, and only around $200 million is concessional credit from IDA--a subsidiary of WB.

"After Pakistan's rating went too low, there was no option with the bank to block its aid, which is based on costly market based IBRD loans, and these two loans suffered it directly", said the official. Another $300 million IDA facility of Poverty Reduction Strategy Credit (PRSC) is under process, which is likely to be approved before June 2009. Advisor to PM on Finance Shaukat Tarin is hopeful to get this credit during the current quarter.

Standard & Poor's had fixed Pakistan's sovereign rating at CCC-plus in December 2008, and Moody's set B2 negative rating in September 2008. The two direct loans, hit by this low ratings, are National Expressway $634 million IBRD loan, and NTC program loan.

The list of World Bank's projects in pipeline for Pakistan includes $100 million IBRD Higher Education Support Program; $50 IDA million Mineral Sector Technical Assistance; $26 million IDA Thar Coal and Power Technical Assistance; $124 million IBRD Rural Telecommunications and e-Service; $100 million IDA Second Sindh Structural Adjustment; $50 million IDA Support to Safety Nets; $634 million IBRD National Expressways; $25 million IDA Trade and Transport Facilitation II; $200 million IBRD National Trade Corridor Improvement Program; $100 million Punjab Large Cities Development Policy; $120 million Second Punjab Barrages Rehabilitation and Modernisation.

 

[Neo]

Services sector faces deficit of $2.3 billion​

KARACHI (January 21 2009): The country has faced a deficit of 2.3 billion dollars in services sector mainly due to high payments of transportation, travel and finance during the first half of the current fiscal year 2009. Although, the deficit is some 30 percent less than the deficit faced in same period of last fiscal year 2008, in which services sector deficit stood at 3.29 billion dollars.

Central bank statistics revealed that overall Pakistan has earned 1.847 billion dollars on account of services sector exports against the imports of some 4.15 billion dollars during the first half of the current fiscal year, depicting a deficit of 2.303 billion dollars.

The imports went down whereas exports registered a positive growth during the first half. Imports of services sector have declined by 11 percent to 4.15 billion dollars in July-December of the current fiscal year as compared to imports of 4.687 billion dollars during the corresponding period of last fiscal year 2008.

Services sector exports have surged by 33 percent to 1.847 billion dollars in the first half of 2009 over the exports of 1.391 billion dollars in the same period of fiscal year 2008. Major contributor in services trade deficit was witnessed by transportation, travel, and financial services, as only transportation sector has contributed around 50 percent share in overall deficit faced by services sector during the first half.

Transportation sector has witnessed a deficit of some 1.3 billion dollars with import of 1.927 billion dollars and exports of some 590 million dollars during the July-December of fiscal year 2009. Similarly, some 633 million dollars deficit has been recorded in the travel services, as its imports stood at 745 million dollars against the export of 112 million dollars during the period.

Economists said that with government's efforts the services sector deficit is on the decline, which would also help to reduce the current account deficit. The declining trend in services sector deficit would also save the country's foreign reserves, they added. Economists said the country does not have any shipping line except the one flag carrier Pakistan National Shipping Corporation (PNSC).

Therefore exporters and importers are compelled to hire and pay to the international shipping lines, which resulted in the transportation deficit increasing gradually. However, they hoped that during current fiscal country's services deficit might be lower than last fiscal due to decline in imports and increase in exports.

 

[Neo]

Government to facilitate investors: minister​

ISLAMABAD (January 21 2009): The government is committed to support and facilitate domestic and foreign investors in all sectors and is endeavouring to resolve all sorts of bottlenecks. Syed Naveed Qamar Federal Minister for Privatisation stated this during a meeting with Abdul Rahim Al-Nooryani Chairman & Chief Executive Officer ETISALAT International Pakistan here Tuesday.

Syed Naveed Qamar said that Pakistan accorded equal treatment and level playing field for both local and foreign investors without any discrimination. Liberal investment policy included 100% foreign equity in all economic sectors, with attractive incentives, he added.

The Minister assured the Chairman Etisalat that all out efforts were being made on fast track basis to resolve the outstanding issues relating to Pakistan Telecommunication Company Limited (PTCL) The interest being shown by UAE investors in Pakistan economy and the privatisation activity reflected the close ties between the two brotherly countries, he stated.

Al-Nooryani appreciated the government's efforts in resolving the outstanding issues and expressed his satisfaction over the progress being made by PTCL after its privatisation He assured the Minister that PTCL would continue to further progress and contribute to the economy of Pakistan.