Pakistan Economy - News & Updates - Archive

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Pakistan, Yemen agree to consolidate commerce and economic ties
ISLAMABAD (updated on: April 10, 2006, 22:47 PST): President Pervez Musharraf and his Yemeni counterpart Ali Abdullah Saleh on Monday agreed to invigorate private sector participation for increased bilateral commerce and economic ties and also reaffirmed their commitment to forging co-operation in terrorism jointly.

President Musharraf and his counterpart Saleh, whose visit marks first by a Yemeni leader to Pakistan in almost two decades, went into an exclusive meeting immediately after the formal welcome ceremony for the visiting leader at the Aiwan-e-Sadr.

Later, senior aides from the two sides joined their leaders at bilateral talks, which focused on consolidating economic and trade ties.

President Musharraf, later, told a joint press conference that Pakistan and Yemen have tremendous scope for investment, joint ventures and their private sectors can identify products for bilateral trade.

"The government will facilitate the private sector, which should explore new areas of commerce and economic co-operation - this way we will be able to give further strength to our excellent political and diplomatic relations - we will have broad-based ties with Yemen," he stated.

The Pakistan leader said his country would also co-operate with Yemen in meeting needs of Yemeni police and security forces.

"We will also co-operate with Yemen in the area of defence production and security related areas."

Musharraf said, the two countries have agreed to intensify intelligence co-operation to combat terrorism and extremism jointly.

"We have decided to closely co-operate in the intelligence field so that we can have a joint strategy against terrorism."

President Musharraf, who visited Yemen in December 2005, also vowed to open doors of Pakistani universities to Yemeni students, especially its new soon-to-be-established science and technology institutions of higher learning.

President Musharraf also thanked the visiting leader, for Yemeni nation's support in the wake of October 8, 2005 earthquake.

The Yemeni leader, in his post-talks comments, described the bilateral talks as extremely productive and positive vis a vis setting pace for diverse relations between the two countries.

"We have agreed to explore more horizons for giving depth and expansion to our bilateral ties," he said.

Ali Abdullah Saleh praised President Musharraf's efforts for socio-economic uplift of the Muslims.

"I fully support President Musharraf's call for increasing intra-OIC trade as the Muslim world has both potential and resources to bring about their collective economic well being.

He said bilateral co-operation in the field of security would be beneficial for both the countries.

The balance of trade between the two countries has remained favourable to Pakistan and exports have registered continued increase in the last few years. In 2004-05, Pakistan's exports to the Arab country stood as US dollars 57.8 million, while its imports totalled just US dollars 5 million.

Yemen is among the top ten rice-importing countries from Pakistan. Other major export items from Pakistan include medicines, garments, fabrics footwear, woven cotton fabrics, electrical fans, electrical equipment etc.

 

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ISLAMABAD (April 11 2006): Minister of State for Environment Malik Amin Aslam has said that Prime Minister Shaukat Aziz during his visit has convinced the Spanish businessmen about the potential business advantages in Pakistan and they were found very keen to invest in the country.

Amin Aslam who accompanied the Prime Minister during his visit was talking to PTV late Sunday night. He said there had been certain misunderstandings among the businessman in Spain about Pakistan, which the Prime Minister Shaukat Aziz has effectively removed.

During their interaction with the PM, some of the Spanish traders committed to turn Pakistan within a month to invest in power generation, Information Technology and many other areas, he said.

He said the PM effectively highlighted Pakistan's economic achievements and the flow of foreign investment in the country adding an advanced level of interest was witnessed among the Spanish businessmen.

Pakistan was moving ahead on way to economic progress from zero position and the world leadership and international organisations consider Prime Minister Shaukat Aziz an architect of this journey, the minister said.

He said Pakistan's experiences are now being discussed internationally by the experts and think tanks.

Pakistan's withdrawal from the regime of International Monetary Fund has surprised many in the world, the minister said.

To a question, he said the environment has emerged as a global issue in contemporary world, which requires a global management.

He said a number of treaties and agreements were evolved during the decade of 90s, which should duly be implemented to achieve the targets.

The United Nations is concentrating in these areas and the topic is included in the reform agenda of the World Body, he said.

Pakistan on its part is committed to abide by the international conventions in this regard and to cooperate the world community in reformatory efforts, he added.

 

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Tuesday April 11, 2006
ISLAMABAD: Pakistan Telecommunication Authority (PTA) has announced reduction in annual regulatory fees for WLL for the province of Balochistan. The decision will have positive impact on the growth of wireless local loop, says a PR issued by PTA, here today.
As per details, annual regulatory fee for WLL for Western Telecom Region (WTR) has been reduced from 0.5% to 0.25% in subsequent two years.

Similarly, annual spectrum fee has been cut down to 10% of the total amount to be paid as per WLL license.

These reductions have made to facilitate the spread of WLL services in Balochistan and to improve the teledensity in scattered places of the province.

It may be mentioned that PTA was taking a number of steps to improve the telecom facilities in unserved and underserved areas of the country.

 

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Work on six dams to begin in two years’
ISLAMABAD, April 10: Water and Power Minister Liaquat Ali Jatoi said on Monday the government planned to start work on six major dams over the next two years. In a written reply to a question by Maulana Abdul Malik, the minister identified the dams as Bhasha-Diamer, Munda, Kurram Tangi, Kalabagh, Akhori and Nai Gaj and informed the National Assembly about the status of these projects.

He said that the Bhasha-Diamer dam, to be built in Chilas, would have a storage capacity of 7.3MAF (million acre feet). Bhasha would be the biggest dam among the six as far as the capacity is concerned. Its feasibility study has been completed and its design and tender documents are under preparation.

Munda dam will have a capacity of 0.67MAF and is planned to be constructed in Swat, he said, adding that a private company was preparing its feasibility report.

Kurram Tangi dam’s design, envisaging a capacity of 0.614MAF, and tender documents are complete. The dam is planned for North Waziristan.

Mr Jatoi said that Kalabagh dam would have a capacity of 6.1MAF and its feasibility and tender documents were updated in 2005.

He said the Akhori dam, the second largest reservoir, would have a capacity of 7MAF and would be built near Attock. Its feasibility has been completed and is being reviewed by Wapda.

He said the PC-II of Nai Gaj dam, to be constructed in Dadu with a capacity of 0.13MAF, had been approved by the Central Development Working Party and added that the project would cost Rs62.36 million. Survey and other investigations for it are in progress.

KALABAGH STUDIES: Answering a question regarding the Kalabagh dam, the minister, in a written reply, stated that Rs1 billion had already been spent on various studies on this project. These reports have been reviewed by the World Bank, UNDP and Wapda.

He said that first these studies were undertaken in 1956 by M/s Tipton and Hill. In 1966 another study was done by M/s Chas T. Main, the World Bank consultants. M/s Associated Consulting Engineers Karachi carried out another study in 1975 and project engineering studies were done by the Kalabagh Consultants in 1988 with the help of the World Bank.

Five firms — Binnie and Partners (England), Hazara Engineering (USA), Preece and Cardew and Rider Ltd, Associated Consulting Engineers and Nespak — carried out project planning studies.

Mr Jatoi denied reports that the Bhasha-Diamer dam project had been shelved and said a consensus had been achieved among all the provinces on a water distribution formula.

He said the feasibility report of the renamed Bhasha-Diamer dam was ready and its groundbreaking would be performed by President General Pervez Musharraf as soon as weather permitted it.

He said work on the Gomal Zam dam project had stopped because of the killing of an engineer and abduction of another, which cost the government dearly in payment of compensation. He said the project would be re-tendered in accordance with its new cost which had been increased by about $50 million.

He denied there was any difference among provinces on the distribution of water as the Indus River System Authority had got a consensus agreement among the provinces on the quantum of water distribution.

He admitted that the newly installed telemetry system had run into trouble and said the ministry had taken up the matter with the contractor for its rectification. Ali Akbar Vaince of treasury claimed that Sindh was getting more than three times its share of water.

POWER AFFAIRS: In reply to a query, he said Pakistan had signed an MoU with Tajikistan for purchase of electricity for which talks would be held on April 30.

Responding to complaints by lawmakers from Karachi about over-billing by the KESC, he said: “We will convey the concern of the members to the new KESC management since it has been privatised.”

The minister assured the house that Wapda defaulters would be dealt with according to law. He said the Peshawar Electric Supply Company had defaulted on payment of Rs11 billion and unless this amount was recovered no substantial development work could be undertaken.

When Speaker Chaudhry Amir Hussain asked the minister to take defaulters to the task, he said: “If this is the consensus of the house then he will proceed accordingly”.

The speaker said that instead of getting approval of the house Wapda should try to enforce rules to recover its dues.

Mr Jatoi admitted that power theft continued to haunt Wapda and said that action would be taken against those involved.

In response to a Fata member’s concern about insufficient number of grid stations, the minister said work on several new projects was in progress but stressed the need for restoration of the law and order in the tribal region for timely completion of the projects.

 

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Tuesday, April 11, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\04\11\story_11-4-2006_pg5_16
Imported cars may capture 24% of market
By Farhan Sharif

KARACHI: Considering the demand and supply situation and the import duty structure, the share of completely built units (CBUs) or imported vehicles are expected to be 24 percent in the local market over the next five years.

Both new and used CBUs would depict a healthy growth in years to come. Duty liberalization on import of new and used cars would be responsible for this. In CBU segment, used cars, in particular, would penetrate sharply and are expected to capture 24 percent market share in fiscal year 2010 from only three percent in fiscal year 2005, said Faraz Farooq, an analyst at Jahangir Siddiqui Capital Markets.

He said in overall projected market of 375,000 vehicles around 90,000 vehicles would belong to used CBUs as per calculation. This would happen due to the relaxation given by the government to import a three-year-old car subject to a maximum 50 percent depreciation under the gift scheme. In addition, car dealers have also started leasing schemes for financing used cars. The share of new CBUs will also improve as all local car assemblers have aggressively engaged in trading activities to capture the growing demand.

The auto sector is one of the fastest growing sectors in the economy with local auto sales depicting an impressive four-year CAGR of 35 percent during fiscal year 2002 to 2005 to 152,000. The total demand of passenger cars (PC) and commercial vehicles (CVs), including CKDs, CBUs and used CBUs, has posted a CAGR of 38 percent to 169,000 vehicles in this period.

Assuming that the existing duty structure on CKD and CBU import will remain unchanged, Pakistan’s total automobile market is expected to grow at five-year CAGR of 17 percent from 169,000 units in fiscal year 2005 to 375,000 units in fiscal year 2010.

Pakistan has one of the lowest car penetration ratio in the world, that is, eigh cars per 1,000 persons. In India, China and Indonesia, this ratio stands at 12, 10 and 21 cars per 1,000 persons, respectively. It is believed that Pakistan’s overall automobile market will remain buoyant on the back of rising disposable income, consumers’ preference for new and innovative models, availability of extensive car financing schemes and growing quantum of home remittances. Rising middle-class and growing consumerism across Pakistan further promises growth in this sector.

Locally assembled vehicles or CKDs have posted a flamboyant growth pattern in past years with last five years’ sales CAGR arrives at 31 percent from 40,000 vehicles in fiscal year 2000 to 152,000 vehicles in fiscal year 2005. For the next five year, the growth in CKD is expected to slow down as the high base effect will be there and expect a CAGR of 11 percent to reach around 250,000 by fiscal year 2010. Moreover, the CKDs will lose its share to CBUs, new and used in total market share and it is likely to come down to below 70 percent in fiscal year 2010 from over 90 percent in fiscal year 2005.

In CKD market, private car growth is expected to be lower than CKD market growth. Car demand is expected to grow at 10 percent in the next five years and reach above 210,000 in fiscal year 2010 from 127,000 in fiscal year 2005. Commercial vehicles will grow at a higher pace of 13 percent, expected rise from 25,000 in fiscal year 2005 to 46,000 in fiscal year 2010. This will be because of increased economic activity in the country.

 

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Islamabad, April 10, 2006

A civil nuclear technology deal between Pakistan and China may be signed during President Pervez Musharraf's visit to Beijing in June to counter the Indo-US nuclear agreement, the Daily Times reported on Monday.

Pakistan has protested against the Indo-US deal and has also sought a similar deal. But the US has rejected the demand, saying that India and Pakistan were "two different cases".

There have been speculative reports since then that Pakistan might seek China's help.

Beijing has itself signed close to 30 international deals to import nuclear power technology.

The Indo-US civil nuclear pact agreed upon last year and formalised during President George W Bush's visit to the subcontinent last month.

The deal - if the US Congress clears it - will allow India access to previously denied nuclear fuel and technology in exchange for New Delhi separating its civilian and military reactors and opening the former to international inspections.

In a related report, the Daily Times quoted official sources as saying that separation of the civil and military nuclear facilities was in the offing and that a new regulatory authority for nuclear power generation would be in place shortly.

Musharraf would be discussing a 2,000 MGW nuclear power plant with the Chinese.

At a recent meeting chaired by Prime Minister Shaukat Aziz, the Pakistan Atomic Energy Commission (PAEC) said it was working on the authority's structure, powers, jurisdiction and operations.

The government is holding talks with China to set up nuclear power plants to generate 2,000 MW of electricity.

Sources said the site of the new plants had not yet been selected. They said the government was trying to get nuclear power technology from Europe, especially France and Italy.

The newspaper linked the nuclear power plant deal reports to the interior ministry's decision to heighten security of diplomats and officials posted to Pakistan and businessmen from China.

Quoting unnamed sources, the paper said intelligence reports say that terrorist organisations might target Chinese nationals to sabotage relations between the two countries.

In the light of these reports, the ministry has directed the authorities to gather information about Chinese nationals residing in Pakistan and make adequate security arrangements for them, the sources said.

Officials have also been asked to provide foolproof security to Chinese engineers and those working with multinational companies in Pakistan.

Chinese have been targeted particularly in Balochistan that is witnessing armed resistance by the tribals who are demanding greater economic and political rights.

http://www.hindustantimes.com/news/...00500020000.htm

 

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KHALID KHOKHAR

During the last five years, the government initiated a number of mega development projects in Balochistan. The Gwadar deep seaport project is the foremost mega project, which would help the country to take a quantum leap in terms of economic progress. The port of Gwadar is being constructed at a cost of $ 1.5 billion with financial and technical assistance of China. The infrastructure facilities consisting of road-link, connecting Gwadar to the national highway, will serve as a gateway for trade from land-locked countries of Central Asia. It will facilitate the development of shipyards and export of mineral resources of Balochistan.
The development of industrial zones in the port area will create opportunities for employment and private investment in the Province of Balochistan. Pakistan intends to build an export processing zone and a free trade area to maximise the potential of Gwadar port. A new railway track from Gwadar connecting with existing rail network at Quetta-Kohi Taftan section will be built to enhance trade activities at Gwadar Port. Besides the road network, there are plans to set up an international airport equipped with all modern aviation facilities. It will serve as the mother-port at the junction of traditional trade routes opposite Strait of Hormuz which lies so close to this base and at the mouth of the Persian Gulf.
Gwadar port is very important for China from both economic and security point of view. Since Gwadar will be linked with China’s western province of Xingjian with Pakistan, therefore it is expected to become a gateway port for Central Asia and Xingjian. China wants to convert its western region into a hub of economic and commercial activities.
Beijing and Islamabad have identified $12 billion projects, including Islamabad International Airport, oil refinery at Gwadar, Bunji hydropower project and Neelam-Jhelum hydropower project for Chinese investment. Gwadar’s geo-strategic location also interests the United States, who considers Chinese presence in Gwadar a threat to its oil trade from Gulf to the Far East and Europe. Iran is also one of the main players in the region and considers Gwadar as a threat to its main route to the sea from Central Asia. Iran is currently building a port at Chabahar as a response to Gwadar port. Iran, with assistance from India, plans to channel and monopolise trade from Tajikistan, Kyrgyzstan and Kazakhstan destined for the East and the Gulf via Chabahar. India’s geo-strategic interest in the region may be to prevent the Chinese from building influence in the Persian Gulf region and to assume the role of regional power. India has the means, resources and potential to give the Baloch rebels a hand. Therefore, the unrest in Balochistan becomes the Achilles heel in the war against terror and a constant worry over Pakistan’s stability. India is surely helping insurgents in Balochistan and the instable Balochistan would be in India’s interests, as it would improve India’s security perception. What is fun of having so big consulates in Kandahar in Afghanistan and Zahidan in Iran equal to embassy in Tehran?
Pakistan enjoys a historical, cultural, political and religious links with UAE, which have been further fomented through bilateral and regional cooperation between the two countries. President HH Sheikh Zayed bin Sultan al Nahyan had a deep interest in developing relations with Pakistan and had a special feeling of warmth towards the people and leaders of Pakistan. Pakistan views relations with UAE as top priority among ties with all Asian countries. The BBC report about a statement attributed to the Balochistan Minister for Tourism, Culture and Fish harbour Syed Sher Jan Baloch as saying that “UAE is scared because the development of Gwadar will take away major share of international investment besides giving Pakistan the status of a major regional economic power”, is not taken in the true perspective.
UAE has never spelled out even an iota of apprehensions of an economic threat from Gwadar port. In fact some of the anti-Pakistan element working in the UAE have dissipated this disinformation to create a wedge between two brotherly countries. Pakistan is very optimistic about the prospects and impacts of Gwadar.
These two ports operating at Gwadar and UAE will complement each other and the positive outcome would be to find mutual advantages accrued from them. Pakistan intends to take on other Gulf ports, especially Oman’s Salalah and UAE’s Jebel Ali and offer Central Asian states their most efficient warm-water access to both the west and the east.
Government of Pakistan has reportedly agreed to lease out land to UAE at Gwadar for the establishment of shipping companies and other related trade activities. UAE companies have shown a strong interest in the development of Gwadar port, with the promise of attracting more investment for the development of the whole area. The Saudi Investment Fund has promised to invest $100 million in the Pasni-Ormara section of the Mekran coastal highway, which is needed to connect Gwadar with other key regions of the country.
Talks are also at an advanced stage with Oman and the UAE for co-financing $100m each in this project. UAE and Saudi funds are also expected to finance some water storage schemes, as well as some social uplift projects in Balochistan. Oman has already signed a deal for small development schemes in Gwadar. UAE investments in the automotive and other manufacturing fields have fuelled economic activity in Pakistan, while the presence of Pakistani workers in the UAE have given impetus to economic activity in the UAE.

 

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ISLAMABAD, April 11 : Prime Minister Saukat Aziz has said that Pakistan is rich in mineral resources waiting to be tapped by both domestic and foreign investors by bringing in latest techniques and state-of-the-art technology in this attractive sector.
The Prime Minister said this while talking to the Chairman of two of the world’s largest copper and gold mining companies Jean Paul Luksic of Antofagasta and Gregory Charles Wilkings of Barrick Gold Corporation who called in him at PM House Tuesday.
Prime Minister Shaukat Aziz told the delegation that currently several mining projects are underway in the province of Balochistan for exploring copper, lead and zinc as well as oil and gas. He said increase in mining activity in the country would contribute towards increase in economic growth and exports in addition to creating more jobs for the people.
Gregory Charles Wilkings, CEO Barrik Gold Corporation told the Prime Minister that substantial amount of work needs to be done before the challenging project can be built. He appreciated the support given by the government and said both the companies would make sure that the project is viable.
Jean Paul Luksic, Chairman Antofagasta appreciated the economic policies of the government ad said that because of the investor-friendly atmosphere foreign investors are happy to come here. We are looking forward to a long partnership with Pakistan, he said.
The Prime Minister assured the visitors that the government would help the investors in every way in providing infrastructure, facilities and a level playing field. He emphasized the need t hire and train local personnel to work in the project.
Prime Minister Shaukat Aziz said that logistics chain would be improved throughout the country to facilitate the movement of cargo. He expressed the hope that Gwadar Deep Sea Port would be a hub for the export of mining products from Balochistan and said that building roads ad infrastructure linking it with important business places in the country is a major priority for the government.
Antofagasta and Barrick Gold Corporation are working all over the world and are looking at the possibilities of exploring copper ad gold reserves in Balochistan. When the reserves are verified, the companies will bring in billions of dollars worth of investment, in which the government of Balochistan would also have 25% share.
Minister of State for Petroleum and Natural Resources Naseer Khan Mengal also attended the meeting in addition to senior government officials.

 

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ISLAMABAD, April 10: The World Bank has urged the government to seriously concentrate on improving the “low productivity and efficiency” of the textile, garments and apparel industries, failing which it will not reap the benefits in the post textile quota regime, effective from January 2005.

Informed sources told Dawn here on Monday that the World Bank maintained that the impact of quota elimination for Pakistan would be serious as a result of growing competition from other countries.

The implication for the apparel sector, the WB believed, could be more serious, if no action was taken to improve the much needed productivity and efficiency.

Pakistan’s per capita productivity has been estimated by the WB at only 37 per cent of the benchmark established by China.

Compared to this the Indian per capita productivity is also better at 46 per cent.

“For Pakistan, raising productivity by improving the efficiency of the production process is a key to reaping benefits from the abolition of Multi-fibre Agreement (MFA),” a source quoting WB officials said. If, for example, Pakistan is able to increase its productivity in textile and clothing sector by around 60 per cent to reach China’s productivity level, the gain would likely to be over $1 billion per year, he added.

The concerned government official conceded that the country’s garments industry is suffering from acute problems of low productivity, poor quality, weak management and marketing skills’ and hence facing serious threat of losing its share in the international markets.

Keeping this in mind, the government is said to have decided to make exporters competitive in garment business so that they can be the catalysts to enhance the productivity of the garment industry by making it cost effective and thereby sustaining and improving its market share in the global market.

The main objective is to provide comprehensive consultancy services and technical guidance on all aspects of garment manufacturing and productivity enhancement methods in order to meet the challenges of global market.

Sources said the government was considering a proposal to hire foreign consultants from Hong Kong, China, Taiwan, Korea, Japan, Germany, Italy, UK, Turkey and Sri Lanka to help improve existing technology used in the garment industry.

Also, their relevant experience of working in their own countries in the garment industry with proven strength and highest level of production efficiencies will be the real advantage for learning by garment manufacturers.

The government, sources said, will ensure transfer of knowledge and expertise from foreign experts to local staff of the industry and to improve their capacity building by the professionals engaged for which a Project Implementation Cell will be established.

It has been proposed that in each factory, maximum three to four foreign experts of relevant areas such as dyeing, finishing, knitting, sewing, laundering, industrial engineering, printing, mechanical maintenance, designing and branding will be placed.

It has been proposed that the cumulative basic salaries bill for any recipient for its entire approved expatriate staff will not exceed $25,000 per month.

Garment manufacturing factories (preferably vertically integrated) from all over Pakistan will be part of the new programme. However, initially 10-12 factories will be selected from different garment clusters of the country. The basic selection criteria for any garment factory will be its export sales volume (in dollars). The export sales details of the last two consecutive financial years will be evaluated. All major garment export factories will be ranked according to their year-wise sales volumes.

Before the start of the programme implementation and engaging of foreign experts, National Productivity Organisation (NPO) will establish certain benchmarks for all relevant technical fields to be covered. The government will initially provide Rs300 million to carry out the job by the ministry of industries, production and special initiatives for technical upgrading of garment industry of Pakistan.

The benefits that the textile garment industry will get by the new initiative include improvement in the existing production practices according to the international standards resulting in the betterment of product quality, enhancement in productivity by learning best practices of foreign industry, update knowledge on latest technology, improvement in capacity and skills level, learning industrial engineering techniques for performing manufacturing operation efficiency in garment value chain, adoption of cost effective techniques to minimize wastage, development of on-job-training culture, optimal capacity utilisation of the garments units and introduce the concept of continuous improvement.

“Textile is the most important sector of the economy and, that is why, $4 billion investment has been made in modernisation and infrastructure development of the industry during the last 4 years,” a source said.

It imparts 46 per cent share in total manufacturing. It contributes about 66 per cent of total exports and 38 per cent of total employment. The textile industry’s share in GDP is about 30 per cent in value added production by the manufacturing sector.

 

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KARACHI: The most charming barrier of 12,000 points was briefly breached on Monday at the Karachi Stock Exchange, but finally KSE 100-share index closed below 7.77 points from this mark. At the end of the day, the index stood at 11,992.23.
Banking stocks helped maintain the upward drive for the sixth consecutive day as the index hit an intra-day high of 12,078 points, but profit-taking in energy scrips reduced the gains of the day by 55.64 points.
Analysts were of the view that the news published in some leading newspapers about Etisalat’s initial payment to take over the management control of PTCL put more fuel in the investors, who lifted index to new heights.
Most of the notable banking scrips performed superbly and provided support to the index. MCB, Union Bank, NBP and UBL posted increments of 2.5 per cent, 4.9 per cent, 1.6 per cent and 2.8 per cent respectively.
Profit-taking was evident in the energy scrips as PPL, POL and PSO closed in the red territory after marking intra-day highs at Rs278, Rs667.90 and Rs399.20 respectively. On the other hand, Oil and Gas Development Company soared by Rs1.25 to Rs161.
In cement sector, DG Khan Cement, Fauji Cement and Pakistan Cement depicted increment of 0.6 per cent, 1.7 per cent and 1.6 per cent while Lucky Cement and Maple Leaf Cement closed red.
The hectic competition drew the day trading session in favour of none, as gainers and losers were having difference of only two scrips, accordingly 185 scrips advanced, 187 declined while the value of 31 scrips remained intact.
The overall trading volumes evaporated to 380.186 million shares turnover as against 419.042 million shares recorded on the last Friday. Consequently, the market capitalisation improved by Rs14 billion to Rs3.399 trillion.
After a long time, Pakistan Telecommunication Company came first in terms of the day volume leaders with 35.494 million shares turnover. The scrip never crossed its opening rate in reverse during the day that is point to be noted. Therefore, it registered a marginal increase of 15 paisa and closed at Rs67.85.
Fauji Cement firmed by 45 paisa and closed at Rs26.85 with 31.226 million shares turnover. MCB Bank Limited soared by Rs6.45 and closed at Rs259.95 with 27.609 million shares turnover. Lucky Cement lost Rs2.10 and closed at Rs128.80 with 26.429 million shares turnover.
Pakistan Cement up by 30 paisa and closed at Rs19.20 with 23.948 million shares turnover. Pak Oilfields plunged Rs5.30 and closed at Rs655 with 17.540 million shares turnover.
Pak Petroleum shed Rs3.70 and closed at Rs272.05 with 16.492 million shares turnover. Union Bank improved by Rs3.40 and closed at Rs72.30 with 12.543 million shares turnover.
Pakistan State Oil eased by Re1 and closed at Rs388 with 11.627 million shares turnover. Pak PTA Ltd remained under selling pressuring for the second consecutive day and occupied tenth position among the top-ten volume leaders of the day, which was the day volume leader a couple of sessions before. The scrip downed by 35 paisa and closed at Rs9 with 11.298 million shares turnover.
Forward Counter: DG Khan Cement led the list of actives, enhanced by Re1 at Rs134 on 31 million shares, followed by Oil and Gas Development Company, which surged by Rs1.05 at Rs161.05 on 26 million shares, National Bank, deprived of Rs3.20 at Rs260.90 on 14 million shares, Lucky Cement declined by Rs1.15 at Rs130.35 on nine million shares, Pak Oilfields plunged Rs4.40 at Rs660.25 on eight million shares.

 

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By Farhan Bokhari, Special to Gulf News
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Pakistan's opposition parties are clamouring for a fuller investigation into the recent privatisation of the country's biggest steel factory a move that's apparently meant to scuttle the government's overall privatisation plans.
The response from the opposition, however, was nothing different from what could be easily predicted ahead of time. The opposition parties are protesting what they consider a modest price of $362 million for Pakistan Steel Mill (PSM) by a Russian-Saudi-Pakistani consortium for 75 per cent stock of the company, and thereby its management as well.
The opposition's protests, notwithstanding, the case against privatisation of PSM may well be a weak one. It's not surprising that Pakistan's latest privatisation drive has evoked a mixed reaction with many supporting the case. The reaction, opposing the deal, goes broadly in line with similarly adverse reaction experienced in other countries where privatisation of public sector units has progressed. For Pakistan though, the milestone along the road to privatisation is indeed welcome.
In the past, whenever the case of privatizing PSM was raised, there was much political opposition, especially from Karachi's Muttahida Qaumi Movement (MQM) political party-the city's largest political force whose many supporters were employed by the steel factory. The MQM had a vested interest in opposing the process fearing that many of PSM's workers would be made redundant.
Today, the MQM is an ally of the government and its political position has inspired it to go along with the PSM deal. But there are other important considerations which support the case. Pakistan's overall economic trends of today are such that the country has begun attracting the interest of foreign investors.
In sharp contrast to the 1990s when Pakistan's position often came close to the brink of collapse, the country's economic profile of today is such that its considered a relatively stable country. Though there's much to be said about the failure of the government in seeing the fruits of economic success trickle down to poorest of the poor, Pakistan is distant from the prospect of returning to the brink of its first ever foreign debt default which is a comforting development for many investors.
As for the price paid for the steel mill, this will always remain a contentious matter and subject of debate and disagreement. For any similar deal, controversy could be kicked up by comparing what was earned to what could have been earned.
The simple reality, however, is that it is fundamentally wrong for any country including Pakistan to run largely loss-making public sector enterprises, keep on subsidising them through periodic financial aid to help them cut their losses and still expect to meet expenditures for other vital commitments such as social services.
The PSM has indeed become profitable in the past few years, thanks to a successful program for pushing ahead with a reform plan. However, years of previous losses are a powerful reminder of not just the company's past, but also a possible mirror image of the future. Once successfully privatised, the PSM's future losses are now the liability of a private business rather than the Pakistani government which should finally turn its attention towards the welfare of its people.

 

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KARACHI, April 10: The environment is very conducive to investment in Pakistan. This was stated by Italian Consul General in Karachi Bruno A. Pasquino here. He was speaking at the financial close ceremony of Dost Steel Limited, the first steel re-rolling mills in Pakistan.

Mr Pasquino is of the view that the steel sector in Pakistan now looks quite promising. “This is a good moment for Pakistan and international investors should make investments in Pakistan. Foreign companies and especially those from Italy should find opportunities in different sectors of the economy.”

He also referred to the provision of reinvestment as well as repatriation of capital for the foreign investors. “It is even easier for the Italians and the Pakistanis to do business because our values and mentalities are close.”

The project manager of Siemens Vai, Stefano Salentino, who is also from Italy, spoke about the project being undertaken with the Italian expertise.

He said Pakistan needed a lot of infrastructure and that steel was one of the tools that it required.—APP

 

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KARACHI: Possible business links and energy cooperation came up for discussion at a presentation made by a Pakistani business forum at one of Qatar’s major financial institutions recently.
The business potential of Pakistan in general and Balochistan in particular for investors from the Muslim world was the highlight of the presentation made to the Board of the Qatar International Islamic Bank in Doha. Sardar Shoukat Popalzai, President of the Balochistan Economic Forum, made the presentation on investment and trade prospects of Balochistan.
Popalzai, who is known to champion the economic potential of Balochistan, said the state of Qatar today attracts world attention because of its forward-looking leadership, favourable economic and political climate and strategic importance.
He added that as Qatar has one of the fastest growing economies in the World and by 2012 will be the largest liquefied natural gas supplier (LNG) globally, Pakistan is keen on expanding its ties with this country.
The BEF president said that Pakistan is looking for gas supply sources in the region. Pakistan expects Qatar’s help to finance its $3 billion plan for developing a LNG supply chain infrastructure on the coastal area of Balochistan to help meet its fast approaching shortfall, Popalzai said.
Chairman of the Bank Ali Bin Abdullah Bin Thani Al Thani, giving his views said that Pakistan offers enormous opportunities in different economic sectors for profitable investments, which is why, he was launching an Islamic Insurance Company in the near future. He expressed hopes that the Qatar International Islamic Bank would also stretch its operations to Pakistan.
He said the Qatar government has started investing abroad as alternate investments to energy sector. Al Thani assured that he would introduce Balochistan to businessmen of Qatar and international investors.
He said Qatar and Pakistan enjoy very cordial economic and diplomatic relations. Presently, the bilateral trade between the two countries is in favour of Qatar that is fast emerging as one of the growing world markets for consumer and capital goods, services and skills, given the space at which its economy has been galloping.
The development covers all sectors, including, infrastructure, basic industry, real estate, tourism and energy, with these developments Pakistan’s business community could take advantage of such situation for successful business ventures.
The sharp growth has pushed Qatar’s GDP per capita to record level of $38,241 the highest in the Middle east, with this, Qatar now ranks as one of the world’s wealthiest countries. Ali promised to support countryside parks for nature lovers in the province of Balochistan.
Popalzai said the trade between Qatar and Pakistan is increasing gradually while a gas import project worth $8 billion is in the pipeline. He said that 16 per cent population of Qatar comes from Pakistan, and plays very important part in the development of Qatar.
The Balochistan Economic Forum since its inception has played important role in attracting foreign investments in Balochistan. The Forum has organised several Seminars - Conferences on different economic related topics with an aim to familiarise the National & International economic community with opportunities for trade and investments in Balochistan.

 

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POWERS that be often claim to have broken the begging bowl. It means that there is no fresh external borrowing. Given regular debt servicing, this should be reflected in reduction in the stock of outstanding external debt. What is the factual position? Before going into numbers, it is necessary to clear a semantic confusion created by official pronouncements in this regard.

New external loans actually contracted or expected are termed as “assistance” or “aid’ which is grossly misleading. Foreign assistance or aid ended with the termination of cold war. Now there are only loans and grants.

The grants are being gradually reduced so much so that even the compassionate support for the October earthquake has very little grant and mostly it will be loans, though on soft terms. Terms of a loan, even if it is at zero rate of interest and stretched over a long period, do not bring any relief in the debt liability on account of principal. It will be only proper, if the term loan and grant is used instead of assistance and aid.

Another confusion arises when officials use a short-hand term for the external debt burden. This has two elements, namely “external debt” and “foreign exchange liabilities” adding up to “total external liabilities” for which the heading used is “External Debt and Liabilities.” The second element is much softer than external debt is the core problem. However, sometimes officials use the term external debt for total external liabilities, which can be misleading.

The factual position is that, between June 00 and December 05, external debt and liabilities, or total external liabilities have been reduced by $2.7 billion but this has been largely due to foreign exchange liabilities, which fell by $4.0 billion, mainly due to foreign currency accounts of Pakistanis, totally wiped out, giving relief of $1.7 billion and Special Dollar Bonds falling by $0.9 billion . In contrast, total external debt has increased by $1.3 billion.

Within this category, private non-guaranteed debt has been reduced to less than half, from $2.8 to $1.3 billion, or by $1.5 billion whereas public and publically guaranteed debt went up by $2.9 billion. The increase in the public debt would have been greater, for that matter total external debt, but for large loan write-off with which Pakistan has been rewarded after 9\11 for its key role in the American sponsored campaign against terrorism

In short, the regime continues to burden future generations, or mortgage them, without in any way increasing their ability to cope with it. They could hope to be able to bear this burden, if their capacity to do so was, in any way, enhanced by the present generation by long-term real investment in the economy. Unfortunately, gross national investment has been lack lustre and stagnating.

Gross fixed investment hovered around 15.5 per cent during the last three years. National investment is quite short of the minimum rate considered essential for sustainable growth. If a realistic allowance is made for depreciation of the existing stock of capital, the net rate of national investment may very well turn out to be negative. Against this setting, breaking the begging bowl, or attaining the cherished goal of self-reliance, demands strenuous effort in three crucial areas, namely domestic saving, balance of payments and fiscal policy. External resources have a large role even in the present dismal national investment rate. This is a reflection on effort for domestic saving.

In a growing economy, domestic saving is expected to improve with the capacity to save. However, in Pakistan the situation has been just the reverse in recent years. While the growth rate increased from 1.8 FY 01 and 3.1 per cent in FY 02 to 8.4 per cent in FY 05, the rate of domestic saving over this period declined from 18.1 FY 02 to 13.2 per cent. The rate for household saving, which was 14.8 in FY 02 and 16.5 per cent in FY 03, dropped to 10.8 per cent in FY 05. The government seems least concerned about the low rate of domestic saving and has been, in fact, actively pursuing anti-saving policies.

Of these, the most prominent are negative rate of return to financial savers and positive encouragement to consumption through introduction of consumer credit, at the instance of the central bank, in an already highly consumption-oriented society.

The rate of increase in private consumption expenditure was only 0.5 per cent in FY 03 but jumped to 8.2 percent in FY 04 and more than doubled to 16.8 per cent in the following year. During FY 05, the expansion in formal consumer credit accounted for 7.7 per cent of the increase in private consumption. It would be stating the obvious that the benign neglect of this important problem needs to be given up and anti-saving policies reversed.

As to the balance of payments, current account surplus of $4.2 billion in FY 03 was gradually turned into a deficit of $1.3 billion in FY 05. In the first half of the current fiscal year, this stood at $2.8 billion as against $0.7 billion in the corresponding period last year. This is fourfold increase. The deterioration has been mainly due to the trade deficit, which increased from $0.4 billion to $4.4 billion over the fiscal years, or by 11-fold and was $3.9 billion in the fist half of FY 06 as compared with $2.2 billion in the corresponding period last year, an increase of 77.2 per cent.

This has been the result of a much faster increase in imports than exports. Exports in the current year do not cover more than 66 percent of imports as against 76 per cent in the same period last year. The ratios in FY 03, 04, 05 were 96 percent, 91 and 77 percent respectively.

The real solution, of course, lies in pushing up exports and this is not going to be easy in an intensely competitive environment created by WTO. Pakistan should not hope for continuance of market access specially granted to it in the wake of 9\11 and must brace up to compete with the rest of the world.

The country is fast heading towards a “do or die” situation. It must “shape up or ship out.” The traditional ways would not do and a drastic psychological shake up of producers and exporters is called for. Foreign investment is looked up to but it must not be forgotten that it does not come without cost. Already payments abroad on account of profit income touched $1.8 billion in FY 05 showing an increase of 33.5 per cent over the year.

Dividend return on direct investment remitted abroad has gone up from $990 million in FY 03 to $1,228 million in FY 04 to 1,639 million in FY 05. This means an increase of 33.5 per cent in one year and 65.6 percent in two years. In the current year, in seven moths, profit and dividend payments abroad have been $299 million as against $269 million last year. These payments are, in no small measure, related to inflation and interest rates.

Fiscal policy comes into the picture because of heavy reliance of federal budget on external resources. During FY 05, external resources provided Rs198 billion as compared with revenue receipts of Rs875 billion (gross) and Rs630 billion (net).They financed as much as 22.8 per cent of revenue-current and development expenditure. For FY 06, they are expected at Rs212 billion as compared with the revenue receipts of Rs927 billion (gross) and Rs643 billion (net) and will finance 22.1 per cent of total revenue expenditure.

Currently, the low tax-GDP ratio is often bemoaned. What sort of effort to replace external resources by internal resources is required and how long will this take place in a corruption-ridden society is not hard to imagine. That will keep the achievement of self-reliance at a distance, even if, by any miracle, the trade and current count deficits are wiped out.

It is time economic managers looked beyond crisis management and seriously address the basic structural problems of investment\saving, balance of payments and heavy reliance of the federal budget on external resources. Without significant improvement in these crucial areas, breaking the begging bowl will be a pipe dream.

 

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ISLAMABAD, April 10: Prime Minister Shaukat Aziz on Monday said the government is working on a comprehensive plan to tap the tourism potential of the country that includes simplifying visa and other procedures for tourists desiring to visit Northern Areas.

He was talking to Prince Karim Aga Khan, the spiritual leader of Ismaili community, who called on him at the Prime Minister’s House.

The prime minister said Pakistan had vast potential in tourism. Necessary facilities are being created to facilitate the tourists and plans are underway for packaging Gandhara and Northern Areas linkages to attract more tourists.

Investment and business opportunities in the country also came under discussion during the meeting.

The prime minister said the numerous investment opportunities had been created as a result of the government’s investor- friendly policies.

In this respect, he referred to the construction of a new airport, which would shortly begin, resumption/initiation of flights to Islamabad by a number of airlines and a host of other factors.

He said there was a vast scope for investment in hotel industry in Islamabad and a number of new hotels were being set up by renowned companies.

Mr Aziz said Islamabad by virtue of its location and scenic beauty had the potential to become a regional tourism hub.

He emphasized the need for promoting inter-civilizational dialogue, saying people belonging to various faiths needed to work harder to promote interfaith harmony to promote peace and prosperity in the world.

He briefed Prince Karim Aga Khan about the government’s plans for rebuilding and rehabilitation of earthquake-affected areas and restoration of roads and other infrastructure.

Prince Karim Aga Khan thanked the prime minister for the government’s assistance and the interest shown by it in setting up of an educational city in Karachi.

The prince said the Aga Khan University expansion was being done and presently academic planning was moving ahead.

He said at least six new graduate schools would be set up in the education city and the university would offer facilities in a wide range of disciplines in science, arts and humanities.

Prince Karim Aga Khan appreciated the investment-friendly policies of the government. He said the Aga Khan Foundation was working on plans to start more ventures in Pakistan.—APP