Pakistan Economy - News & Updates - Archive

[ajpirzada]

Export of non-textile goods up by 24.5pc

By Mubarak Zeb Khan







ISLAMABAD, Feb 19: Export of non-textile products soared by 24.5 per cent in the first seven months (July-Jan) of the current fiscal year to $5.062 billion as against $4.066 billion over corresponding period of last year, according to the Federal Bureau of Statistics data issued here on Thursday.
The upward trend indicates a natural diversification of export base, which concentrated in a few textile products, owing to highestever depreciation of the rupee.

The data revealed that textile and clothing exports dipped by 3.79 pc to $5.827 billion in JulyJanuary this year as against $6.056 billion over last year despite depreciation of rupee, which should have made Pakistan’s textile and clothing products more competitive.

It is also clear from the fact that import of textile machinery also dropped by over 41 per cent during the period under review over last year showing that textile tycoons were not making any investment to improve competitiveness of their products.

The government had doled out more than Rs42 billion in the past few years as subsidy to the sector for kicking off exports but it seems that money was mostly misused owing to safeguard measures.

A similar kind of package is being under considered for the sector. Details of the traditional products showed that export of food group inched up by 58.38 per cent. Of these, export of rice went up by 90.80 per cent during JulyJan 2008-09 to $1.256bn as against $0.658bn over last year.

In the rice group, export of basmati rice was up by 72 per cent, and others 117 per cent, respectively, during the period under review.

Export of fish products was up by 21.84 per cent, wheat 100 per cent, sugar 73.71 per cent, meat 48.19 per cent, spices 19.54 per cent and other food items seven per cent during the period under review over last year.

Export of sports goods was up by 6.24 per cent, footwear 15.85 per cent, surgical instruments 2.21 per cent, engineering goods 72.80 per cent, cement 84 per cent, molasses 285 per cent during the period under review.

Among the textile group, export of raw cotton was up by 215.22 per cent, cotton cloth 8.90 per cent, towels 14.31 per cent and made-up articles 1.26 per cent during the first seven months of the current fiscal year over last year.

However, export of cotton-carded declined by 1.65 per cent, knitwear 0.37 per cent, cotton yarn 15.73 per cent followed by yarn 56.5 per cent, bed ware 9.64 per cent, tents 24.56 per cent, readymade garments 11.93 per cent, art-silk synthetic textile 15 per cent and other textile products 16.7 per cent during the period under review.

islamabad, feb 19: export of non-textile products soared by 24.5 per cent in the first seven months (july-jan) of the current fiscal year to $5.062 billion as against $4.066 billion over corre- sponding period of last year, ac- cording to the federal bureau of statistics data issued here on thursday. the upward trend indicates a natural diversification of export base, which concentrated in a few textile products, owing to highest- ever depreciation of the rupee. the data revealed that textile and clothing exports dipped by 3.79 pc to $5.827 billion in july- january this year as against $6.056 billion over last year de- spite depreciation of rupee, which should have made pakistan’s textile and clothing products more competitive. it is also clear from the fact that import of textile machinery also dropped by over 41 per cent during the period under review over last year showing that textile tycoons were not making any in- vestment to improve competitive- ness of their products. the government had doled out more than rs42 billion in the past few years as subsidy to the sector for kicking off exports but it seems that money was mostly misused owing to safeguard measures. a similar kind of package is be- ing under considered for the sec- tor. details of the traditional products showed that export of food group inched up by 58.38 per cent. of these, export of rice went up by 90.80 per cent during july- jan 2008-09 to $1.256bn as against $0.658bn over last year. in the rice group, export of bas- mati rice was up by 72 per cent, and others 117 per cent, respec- tively, during the period under re- view. export of fish products was up by 21.84 per cent, wheat 100 per cent, sugar 73.71 per cent, meat 48.19 per cent, spices 19.54 per cent and other food items seven per cent during the period under review over last year. export of sports goods was up by 6.24 per cent, footwear 15.85 per cent, surgical instruments 2.21 per cent, engineering goods 72.80 per cent, cement 84 per cent, molasses 285 per cent dur- ing the period under review. among the textile group, ex- port of raw cotton was up by 215.22 per cent, cotton cloth 8.90 per cent, towels 14.31 per cent and made-up articles 1.26 per cent during the first seven months of the current fiscal year over last year. however, export of cotton-car- ded declined by 1.65 per cent, knitwear 0.37 per cent, cotton yarn 15.73 per cent followed by yarn 56.5 per cent, bed ware 9.64 per cent, tents 24.56 per cent, readymade garments 11.93 per cent, art-silk synthetic textile 15 per cent and other textile prod- ucts 16.7 per cent during the peri- od under review.


Export of non-textile goods up by 24.5pc

 

[ajpirzada]

Circular debt to be settled by month-end

By Our Staff Report







LAHORE, Feb 19: The government plans to clear the circular debt of Rs400 billion by the end of the current month and the Independent Power Producers (IPPs) and other power generating units have been directed to pull their socks up for the coming summer.
This was stated by Federal Water and Power Minister Raja Pervez Ashraf while addressing a press conference at the Lahore Electric Supply Company (Lesco) headquarters on Thursday.

He expected a difficult summer due to increase in demand but promised to set things right by the end of this year.

Around 1,000 megawatts would be added to the system by June and another 2,000 megawatts by December, which would help end the menace of loadshedding from the country, he hoped.

“Every year power demand grows by 8 to 10 per cent and to meet this demand installation of new power projects is very important.

Independent Power Producers (IPPs) and other power units have been directed to prepare for the summer season to meet the demand.” The minister said the government was also working on various hydel projects, including Neelum-Jhelum for which Chinese engineers had arrived at the site. Work on Kohala, Dasu and Bunji was also going on and these projects would soon be commissioned.

“The government has allocated funds for Bhasha Dam and work on it will also start shortly,” he said.

In addition to thermal and hydel power generation, he said, the government was also exploring the possibility of power generation from coal and the country would soon start getting 1,000 to 3,000 megawatts from coal, he added.

“Wind energy is another area being focused by the government and the first windmill will start working soon at Jhampir in Sindh and import of 1,100 megawatts electricity from Iran will also provide relief to the nation,” he concluded.

lahore, feb 19: the govern- ment plans to clear the circular debt of rs400 billion by the end of the current month and the independent power producers (ipps) and other power generat- ing units have been directed to pull their socks up for the coming summer. this was stated by federal water and power minister raja pervez ashraf while addressing a press conference at the lahore electric supply company (lesco) headquarters on thursday. he expected a difficult sum- mer due to increase in demand but promised to set things right by the end of this year. around 1,000 megawatts would be added to the system by june and another 2,000 mega- watts by december, which would help end the menace of load- shedding from the country, he ho- ped. “every year power demand grows by 8 to 10 per cent and to meet this demand installation of new power projects is very im- portant. independent power producers (ipps) and other power units have been directed to prepare for the summer season to meet the demand.” the minister said the govern- ment was also working on various hydel projects, including neelum-jhelum for which chinese engineers had arrived at the site. work on kohala, dasu and bunji was also going on and these projects would soon be commissioned. “the government has alloca- ted funds for bhasha dam and work on it will also start shortly,” he said. in addition to thermal and hy- del power generation, he said, the government was also explor- ing the possibility of power gen- eration from coal and the country would soon start getting 1,000 to 3,000 megawatts from coal, he added. “wind energy is another area being focused by the government and the first windmill will start working soon at jhampir in sindh and import of 1,100 mega- watts electricity from iran will al- so provide relief to the nation,” he concluded.

Circular debt to be settled by month-end

 

[Neo]

Efforts on to enhance remittances ​

Friday, February 20, 2009

KARACHI: Federal Minister for Overseas Pakistanis, Dr Farooq Sattar has said that the federal government wants to enhance home remittances from $7 billion per annum to $15 billion.

He said: “We are trying to utilise latest technology for fast and on-time delivery of remittances sent by Pakistanis living abroad and in this regard a high-level meeting would be held in the last week of February at Karachi in which representatives of local and foreign banks, mobile phone companies and information technology experts would participate.”

Addressing a ceremony held in honour of S M Muneer, President Indo-Pak Chamber of Commerce, by Munir Sultan, Chairman KK Builders, Sattar further said that with some measures it is possible to enhance remittances up to $15 billion in the next one to two years and then Pakistan will not be compelled to turn to the IMF in the future. Sattar said a fast and proper channel with some new facilities was needed to encourage overseas Pakistanis to use banking and legal means to remit their valued amount.

 

[Neo]

Pak manpower export continues despite global recession ​

Friday, February 20, 2009

ISLAMABAD: Contrary to international trends, the manpower export from Pakistan continues at an old pace despite closure of hundreds of mega projects in the labour-intensive Gulf market because of severe recession, officials have claimed.

However, Pakistan has no mechanism in place to gauge exodus of its workers from different countries, including the UAE and Saudi Arabia, one official told The News. He said the Bureau of Immigration recorded that a total of 37,515 Pakistanis departed for the Gulf Cooperation Council (GCC) countries in November, 28,814 in December and 33,817 in January this year for employment as per the contracts signed by them with different companies.

“There has been no significant reduction in manpower export from Pakistan despite a difficult situation that has hit the market where most of the Pakistanis go for jobs,” the official said. But there are reports indicating that several Pakistanis who recently went to the Gulf countries after signing agreements with various employers had to come back after finding the projects for which they were hired closed.

Such people suffered double losses — they paid huge amount to recruitment agents and got no jobs. “I went to Dubai two weeks back to work as an excavator operator but came back after a few days as the employer told me he had no job to offer,” said Nadeem Hamid.

The official said the impact of any large-scale arrivals of Pakistani expatriates back to the country had not been felt so far. He said this would happen only after the contract periods, ranging from two to three years, of the overseas workers would expire and the agreements would not be extended.

He said the government had received reports of closure of a large number of projects in Dubai where hundreds of thousands of Pakistanis were working. An official of the Overseas Employment Corporation said a small number of workers sent to South Korea and Malaysia continued to remain in these countries.

Notwithstanding the Pakistani government’s optimistic view, low-paid Asian workers who toil long days to build the skyscrapers of Dubai have become the latest victims of the global financial crisis, as companies are running short of business and money, said a report.

For many years, the Gulf emirate was a magnet for South Asian workers who fed the booming economy with cheap manpower — from cleaners and gardeners to skilled and unskilled builders.

Another report spoke about severe financial crisis being faced by several projects in Saudi Arabia where workers were in deep trouble. Yet another recent report said a large number of foreign nationals from among those who had got resident visas in Dubai were cancelling them everyday.

“People are abandoning hundreds of cars in the Dubai airport parking lot every day before flying back to their native countries as they can’t afford to live there and can’t pay their instalments,” A Jamal, who recently returned from Dubai, told this correspondent. He said leasing companies and banks were getting possession of the abandoned vehicles, which they would sell in the near future after completing necessary procedural formalities.

 

[Neo]

Foreign exchange reserves increase by $83 million​

KARACHI: The country’s liquid foreign exchange reserves surged by $83 million during the last week. The State Bank of Pakistan’s statistics showed on Thursday that overall foreign reserves increased to $10.371 billion on February 14, 2009, as compared with $10.288 billion last week. According to the released figures the reserves held by banks other than SBP witnessed an increase of $92 million to reach $3.463 billion as compared to $3.371 billion during the last week. However, the reserves held by the central bank showed a decline, as they dipped to $3.908 billion as compared with $3.916 billion last week.

 

[Neo]

Government-UN ink agreement to implement $384.7m health plan​

ISLAMABAD: The government and 14 United Nations agencies working in Pakistan on Thursday signed a $384.7-million agreement for improvements in the health and population sectors in the country.

The government and the UN agencies have planned and developed a two-year joint programme in this regard, which is expected to be completed in 2010. The agreement was signed here by the federal secretaries of health and population welfare -- Suleman Ghani and Nayyar Agha – World Health organisation (WHO) representative Dr Khalife Bile and officer in-charge UNICEF Luc Chauvin.

Federal Secretary Farukkh Qayyum and the heads of various UN agencies were present.

Fourteen UN agencies involved in this programme include FAO, ILO, IOM, The World Bank, UNAID, UNDP, UNESCO, UNFPA, UNHCR, UNICEF, UNIFEM, UNODC, WFP and WHO, while the programme is being co-chaired by WHO and UNICEF. The main areas of intervention are mother and child care health (MNCH) and primary health care (PHC), communicable disease control, nutrition, health promotion, health systems development, HIV and AIDS. The vision of the programme was based on the ‘Health for All’ approach, through five well-targeted components, which would be treated in a holistic manner to ensure linkages and common concerns were well articulated.

Issues of maternal health were linked to family planning and reproductive health, which were further reinforced by interventions of health promotion and nutrition; communicable disease management and control including HIV and AIDS; attitudinal changes in a health life style to bring about better health behaviours. Finally, support to the health sector was encapsulated in credible health systems, including capacities for human resource development, financing, quality control and effective governance. The programme would be implemented over a period of two years, with emphasis on initiatives that would address the priority areas of the government.

 

[Neo]

China visit: Zardari to explore avenues of cooperation in agriculture, energy sectors ​

WUHAN (February 20 2009): President Asif Ali Zardari, who arrives here on Friday on his second visit to China in four months, will explore avenues for co-operation with China in the fields of energy and agriculture resources. The President will visit the world's largest dam in Wuhan called Three Gorges Dam having a capacity to produce 22500 MW of electricity.

Construction on the dam started in 1994 and at present there are 26 generators operating at the site. By 2011, six more generators will be added. Wuhan is the capital of Hubei province and is one of China's biggest cities. Chinese and Pakistani officials are attaching great importance to the President's visit as FTA in services sector between the two sides is also expected to be concluded. Pakistan's ambassador to China Masood Khan has said that negotiations for FTA in services sector had already been concluded.

"The time is ripe to ink the agreement during President Zardari's visit," he added.

The year 2008 saw frequent high level visits and robust growth of bilateral relations as President Zardari chose to pay his first state visit to China in October 2008 and held very successful talks with President Hu Jintao, Premier Wen Jiabao and other top Chinese leaders.

Prime Minister Yousuf Raza Gilani came here twice, once to attend the opening Ceremony of 2008 Beijing Olympics and then to represent his country in 7th ASEM summit. Pakistan's Army Chief, and Chairman Joint Chiefs of staff, besides Chief Minister of Punjab, Speaker Sindh Assembly, and young parliamentarians also visited China.

Many high and ministerial level delegations from China visited Pakistan. During visit of President Zardari last year, Pakistan and China signed 12 agreements for co-operation in agriculture, trade, science and technology, radio and television, telecommunications satellite, sports (cricket) etc and now both sides were engaged to translate these into reality.

State and provincial leaders will greet the President in Hubei and Shanghai. Besides, Wuhan, President Zardari will also visit Yichang and Shanghai, the regions that are industrial hubs of China to observe country's development in agriculture, use of hybrid seeds, science and technology. Pakistan and China are closely and successfully co-operating with each other in counter terrorism and have achieved very positive results to fight this menace.

The bilateral co-operation in this field will continue. In view of the importance of President Zardari's visit, the Chinese media has made a number of requests for his interviews during which he will dilate upon the relations between the two countries. He will also tell the Chinese media about the importance, which Pakistan attaches to its friendship with China whose foundation was laid by late Zulfikar Ali Bhutto.

 

[Neo]

First half of current fiscal year: Rs 369.814 billion budgetary allocation spent on poverty reduction ​

ISLAMABAD (February 20 2009): Federal and provincial governments have spent Rs 369.814 billion budgetary allocations during the first half of current fiscal to reduce poverty, according to Finance Ministry. According details of expenditure released by the Finance Ministry during the first half of 2008-09 for pro-poor sectors under Poverty Reduction Special Programme, the federal government has spent Rs 179.087 billion on social sector projects.

The expenditures involved both the current and development for projects on infrastructure, health, education population planning, natural calamities, agriculture, and rural development besides law and order, low cost housing, subsidies, food support programme and people works programme. Analysis of the figures showed that Punjab government has spent Rs 97.776 billion, Sindh Rs 43.824 billion, NWFP Rs 35.654 billion and Balochistan Rs 13.473 billion during the first half of current fiscal.

Of the total Rs 179 billion expenditures by the federal government, Rs 15 billion were spent on different projects under People's Works Programme, Rs 13.241 billion on agriculture, Rs 12 billion on law and order, Rs 10 billion on education, Rs 5 billion on health, Rs 2.055 billion on food support programme, Rs 1.366 billion on roads, highways and bridges, Rs 1.426 billion on population planning, Rs 2.716 billion on health facilities and preventive measures.

Punjab government has spent Rs 40.119 billion on education, Rs 18.640 billion on primary education, Rs 9.862 billion on secondary education, Rs 3.121 billion on general universities, colleges and institutions, Rs 11.997 billion on infrastructures related projects, Rs 5.002 billion on health, Rs 9.468 billion on agriculture, Rs 1.557 on others, Rs 15,962 billion on law and order and Rs 2.028 billion on justice.

Sindh government has spent Rs 16.281 billion on education, Rs 5.717 billion on primary education, Rs 1.811 billion on general universities, colleges and institutions, Rs 4.699 billion on health, Rs 2.612 billion on social security and social welfare and Rs 8.101 billion on law and order.

NWFP government expenditures included Rs 1.672 billion on roads, highways and bridges, Rs 13.561 billion on education, Rs 5.717 billion on primary education, Rs 1.020 billion on general universities, colleges and institutes, 903 million on professional and technical projects in colleges, Rs 4.900 billion on health, Rs 3.040 billion on general hospitals and clinics, Rs 1.879 billion on agricultures and Rs 3.225 billion and 7.328 billion for food support programme.

The expenditures of Balochistan government during the first half of current fiscal included Rs 1.771 billion for roads, highways and bridges related projects, Rs 729 million for water supply and sanitation, Rs 3.245 billion on education, Rs 1.140 billion on primary education, Rs 984 million on secondary education, Rs 1.011 billion on health, Rs 1.186 natural calamities and other disasters, Rs 2.425 billion on agriculture and Rs 2.142 billion on law and order.

Rs 116.958 billion were spent on subsidies by the federal, Punjab Sindh and NWFP governments. No amount was spent by the Balochistan government on providing subsidies, showed Ministry of Finance figures on six month expenditures.

 

[Neo]

Pak-China economic relations
​

Sardar Aminullah Khan

ARTICLE (February 20 2009): The world of rapid economic globalisation and regionalization continues to intensify since the last decade involving phenomenal change in the international economic spectrum, particularly after establishment of WTO. Countries are looking for the business opportunities abroad. Free trade and investment agreements have become almost the need of the hour.

While international trade has been there throughout much of the history, its economic, social, and political importance has also increased. Industrialisation, ICT revolution, advanced transportation, globalisation, growth of MNCs' and outsourcing etc had major impact on it. Trade is regarded as a major source of economic revenue, investment and modern technology. Pakistan and China are two friendly countries and partners in international trade and investment. Consistent growth in economic relations amplifies the strength off their relationship.

THE STRUCTURE OF TRADE: There is high demand for Chinese goods in Pakistani market. Their experience of growth in trade is positive due to convenient trade flows and openness measures. Trade and investment policies are liberal since 80s' and generally WTO compliant. The pattern has merchandise bias but with high volume of manufactured items.

China has become one of the top five import sources of Pakistan. Major imports from China are machinery, chemicals, garments and other textile products, stationery, construction materials like tiles, sanitary wares and crockery, etc. Machinery and electrical appliances are the major parts of overall exports. Bilateral trade had reached around dollar 7 billion in 2008. The balance is, however, in favour of China due to lesser exports by Pakistan. Efforts are under way for correction of this situation.

Trends of trade are very positive as volume of bilateral trade has increased exponentially during the last seven years. Pakistan enjoys huge export potential to China due to advantages in agriculture, mineral, chemical, textile and leather products. Besides, Pakistan has comparative advantage in oil seeds, fruits, base metals, plastic goods and perfumery etc. China has static advantage over Pakistan in machinery, transport equipments, chemical products, precious instruments, stone and plastic articles, home appliances, pearls, precious/semi-precious stones etc. Man-made filaments, space crafts and aircrafts provide dynamic comparative advantage to China.

Under the 5 years programme launched in 2006 for strengthening of economic relations, the existing trade is to be enhanced to 15(b) US$ by 2012. Besides, different projects have been identified in the programme for co-operation and investment in various economic fields. Permanent and enduring factors that may prove effective and successful in the demand and supply dynamics need to be enforced through mutual co-operation. Some restrictions on free movement of goods and services are occasionally reported and are often discussed for removal to further enhance the volume of trade and significant increase in investment. Both countries can benefit greatly from further expansion in economic and trade relations under this 5year programme.

INVESTMENT: China and Pakistan have witnessed steady growth in mutual investments in recent years. In the last few years, investment of more than 1.3 billion USD was made by China in Pakistan. A large number of Chinese companies are working in Pakistan in oil and gas, IT and telecom, power generation, engineering, automobiles, infrastructure and mining sectors. These include names like, ZTE, Huawei Technologies Co Ltd, China National Machinery Imp/Exp Corporation, Metallurgical Construction Corporation of China, China International Water and Electric Corporation, China Petroleum, and Haier.

OTHER INVESTMENT OPPORTUNITIES: There are possibilities of active co-operation in the sectors like oil and gas, mining, financial sector, infrastructure, power (coal, hydel, gas based) IT and telecom, chemicals, fertiliser, glass, polymers, textile manufacture (value added), engineering goods, textile machinery, assembling of automobiles, electronics, automotives, agricultural implements, agricultural and agro-based industry, food and fruit processing and packaging, livestock and dairy farming and pesticides.

Relocation/mergers in a large number of complementary units are also possible. A few most ambitious projects for the future are the high altitude railway link, energy corridor, trade corridor by using KKH as alternate trade route and collaboration in major infra structure projects like development/processing of coal on a large-scale and construction of big dams etc.

MEMBERSHIP OF ECONOMIC FOR A: On account of the familiarity and common understandings, developed over a long period of economic co-operation, China and Pakistan have signed many bilateral agreements, like Free Trade Agreement, Bilateral Investment Treaty, Double Taxation Agreements, Customs related agreements/procedures, Pak-China Joint Investment Company, bilateral contracts, 5-Year Framework, MOUs in various fields/ministries/divisions and other agreements.

China and Pakistan have recently concluded an agreement on trade in Services. This involves a wider impact than the other trade and investment agreements. The volume is going to increase after the implementation of this agreement, particularly in financial and technical services.

Simultaneously, they have been participating actively in regional as well as multilateral organizations and supported the reforms for regional and multilateral liberalisation and expansion of trade. Both maintain good co-operative relations and play active role in multilateral contexts in capacity of members of important international and regional economic clubs like WTO, SCO, ECO, SAFTA, ASEAN, WIPO and APTA etc.

SHARING OF EXPERIENCES: China's impressive economic achievements over the past two decades have made its development experiences quite distinct from those of many other economies and even the conventional development models.

Important areas are creation of social safety nets, subsidy distribution mechanism, disaster management, regional development, management of Forex reserves, integrated agricultural development promotion of Foreign Direct Investment and Economic Zones.

Since there are considerable similarities in the composition of the poor-rich /rural-urban populations in Pakistan and China and on account of other economic similarities, Pakistan can utilise the Chinese experience to its economic benefit.

Challenges in the process include infrastructure, communication and co-ordination, trade related visible/invisible barriers, understanding the new trends/global realities, exchange of information on exports, documentation of informal trade, implementation and monitoring of progress, visa related problems, timely implementation of decisions/ agreements, professional approach and enlargement of the trade basket.

CONCLUSION AND RECOMMENDATIONS: The aforementioned challenges are certainly impeding the speedy growth of investment and trade as per the potential. They can effectively be turned into opportunities through comprehensive medium and long-term collaborative joint efforts.

The measures that may facilitate the achievement of desirable goals include timely implementation of the agreements, creation of enabling environment, person-to-person contacts to provide confidence and encourage the potential investors, operationalization of Transit Trade Agreement, regular exchange of information to enable the stakeholders to realise the ground realities, co-operation in business laws and procedures between the businessmen of the two countries and a dispute resolution mechanism to avoid any trade disputes and misgivings, improvement of security environment, engaging the Chinese private sector on long-term basis for sustainable economic relations, revamping the processing technologies with mutual co-operation in potential sectors like seafood and leather products, value addition in cotton yarn and fabric, chrome and copper ores and other industrial minerals and precious stones, relocation of industries through restructuring, improvement of institutional frameworks for better communication and co-ordination between the government agencies and representative trade and industry bodies, which is essential for better understanding of business houses.

EPILOGUE: China and Pakistan are close and friendly neighbours. Pakistan has treated China as its most important economic partners. Rapid economic development in China and consequent inter-regional activity has caused increased demand for raw materials, exchange of parts, components, intermediate products and development of cross-country production networks/processes.

Such outward linkages are beneficial for resource rich Pakistan in the Chinese context. It can be supplanted by policy of diversification of risk through investment in Pakistan. It will increase trade and spur investment through deepening of all-round co-operation for mutual prosperity.

The economy of Pakistan is deeply linked to the Chinese economy. Pakistan highly appreciates the assistance that China had provided for infrastructure development/other projects. The development must be carefully synchronised and we must share information to facilitate and assure the investors of the good returns and results.

They need to very actively and forcefully promote and facilitate economic co-operation with high zeal and spirit. The measures undertaken include the aggressive economic diplomacy. Many companies have signed agreements and MOUs worth millions of dollars to cooperate and undertake joint ventures in various sectors, such as infrastructure, mass transit, communication network, finances, chemical, fertiliser, automobile energy, and agro-based industries.

A few other agreements are likely to be signed during the upcoming visit of the President of Pakistan to China. Prospects of further consolidation of economic relations are bright as the two sides have a lot of potential for further developments in a number of fields. Moreover, as active supporters of regional economic integration, both countries can help establish an open and integrated regional market also through regional economic fora.

(The author is Economic Minister in the Embassy of Pakistan, Beijing and can be contacted on Sardar.ameen@gmail.com)

 

[Neo]

Jump in poverty level​

The news that Pakistan's poverty rate has jumped from 23.9 percent to 37.5 percent in the course of three years due to severe economic shocks can only be described as devastating. According to a presentation made by the Planning Commission to the Prime Minister, the latest estimates indicate that 64 million people were living below the poverty line in 2008 as against 35.5 million people in 2005.

The main factors for such a plunge were slow economic growth, sudden external shocks, high inflation and shortages in certain cases. Pakistan's position in human development index was 136 out of 177 countries and 40 percent of the urban population was living in kachi abadis/slum areas. The Planning Commission was also not optimistic about future trends in this regard.

The condition to reduce the fiscal deficit to 4.2 percent of GDP during the current year had forced the government to slash the development programme which could lead to further unemployment and accentuate the present poverty trends. The PSDP has already been slashed by Rs 100 billion and the government could spend only 19 percent during the first six months of the current fiscal year out of a total allocation of Rs 371 billion for Public Sector Development Programme.

It was feared that achieving IMF conditions would ultimately force the authorities to ignore social sector spending and make it impossible for Pakistan to meet the UN Millennium Development Goals (MDGs). Although a rise in poverty level was expected between 2005 and 2008, the scale of increase as reported by the Planning Commission is simply baffling.

Intriguing is the fact that the previous government had been boasting about economic success and imparting resilience to the economy during this period, claiming that poverty level had been contained due to improved economic management.

Such a sharp deviation between the claims of the then government and the ground realities underlines the importance of following a consistent methodology to measure poverty in the country and avoiding political considerations in the compilation of data. Giving complete autonomy to the Federal Bureau of Statistics and other relevant statistical agencies is very crucial in this respect otherwise the statistics released by the government would continue to be suspect.

Coming to the present poverty level in Pakistan, the figures presented by the Planning Commission are highly disturbing and call for complete overhaul of policies to arrest the deteriorating trend. More worrying is the fact that spreading global economic crisis is going to make this task of the government much more difficult than under the ordinary circumstances.

According to the latest estimates of the World Bank, almost 40 percent of 107 developing countries were highly exposed to the poverty effects of the crisis, less than 10 percent faced little risk and the remainder were moderately exposed. Unfortunately, Pakistan was ranked among the 43 countries most exposed to poverty risks.

This high level of exposure is compounded by the current Stand-By Arrangement with the IMF which, though essential under the prevailing conditions, stipulates a rapid reduction in budget deficit, necessitating a cut in development expenditures which could contribute to further increase in unemployment and poverty level in the country.

Although, under the present conditions, it looks difficult but a way must be found to reduce poverty level in the country and ensure that people on the fringes continue to get at least basic necessities of life like food and medical care at affordable rates during this difficult period.

Continuing with the present trend will not only be perilous but such approach will reflect lack of pity or compassion. It is, therefore, critical to finance job creation, delivery of essential services and infrastructure and safety net programmes for the most vulnerable groups of society. To achieve these objectives, it is essential to redesign fiscal strategy boldly and imaginatively.

The restoration of investor confidence is another area which needs to be given high priority in our context. A higher level of investment would automatically create more jobs, reduce poverty level and promote economic growth. There is no dearth of advice on the subject but a meticulous planning and a committed leadership is needed to get out of the present crisis without indulging in statistical trickery.

 

[Neo]

Textile exports drop creating fear of big layoffs​

By Mubarak Zeb Khan
Friday, 20 Feb, 2009

ISLAMABAD: The export of non-textile products soared by 24.5 per cent in the first seven months of the current fiscal year to $5.062 billion as against $4.066 billion over the last year mainly on the back of massive export of rice.

Though the export of these traditional products are on the higher side but exports on the whole decelerated sharply owing to decline in export of carpets and leather products during the period under review, suggested data of federal bureau of statistics.

The upward trend in the export of non-textile products has been witnessed since July 2008 indicating a natural diversification of the export base, owing to the highest ever depreciation of Pak rupee, which was highly concentrated in a few textile-based products.

But the export proceeds of carpets and leather products have witnessed a declining trend since December 2008 owing to higher cost of doing business and high competition from Chinese and Indian exporters.

The data released here revealed that the textile and clothing exports dipped by 3.79 per cent to $5.827 billion in July-January this year as against $6.056 billion over last year despite depreciation of rupee, which should have made Pakistan’s textile and clothing products more competitive.

It is also clear (from the fact that the import of textile machinery also dropped by over 41 per cent during the period under review over last year) that textile tycoons were not making any investment to improve the competitiveness of their products.

The government had dolled out more than Rs42 billion in the past few years as subsidy to the sector for kicking off exports from the sector but it seemed that the money was mostly misused owing to safeguard measures.

A similar kind of package is under consideration for the sector but it is not clear whether the cash starved country can afford to set aside money for the sector from tax revenue.

Details of the traditional products showed that export of food group shot up by 58.38 per cent. Of these export of rice went up by 90.80 per cent during July-Jan 2008-09 to $1.256 billion as against $0.658 billion over last year.

The export of fish products was up by 21.84 per cent, wheat 100 per cent, sugar 73.71 per cent, meat 48.19 per cent, spices 19.54 per cent, and other food items 7 per cent during the period under review over the last year.

Export of sports goods was up by 6.24 per cent, footwear 15.85 per cent, surgical instruments 2.21 per cent, engineering goods 72.80 per cent, cement 84 per cent, and molasses 285 per cent during the period under review.

Among the textile group, the export of raw cotton went up by 215.22 percent, cotton cloth 8.90 percent, towels 14.31 percent and made up articles 1.26 percent during the first seven months of the current fiscal year over last year.

However, the export of cotton carded declined by 1.65 per cent, knitwear 0.37 percent, cotton yarn 15.73 percent followed by yarn 56.5 percent, bed wear 9.64 percent, tents 24.56 percent, readymade garments 11.93 percent, art, silk synthetic textile 15 percent and other textile products 16.7 percent during the period under review.

 

[Neo]

Oil import bill soars by 26 per cent​

Friday, 20 Feb, 2009

The food import bill is up by 20.52 per cent to $2.468 billion, whereas the oil import bill increased by 28.9 per cent to $6.436 billion. - File photo.​

ISLAMABAD: Pakistan’s oil and food import bill ballooned to an all time high of $8.904 billion in the first seven months of the current fiscal up by 26 per cent from $7.043 billion over the corresponding period last year owing to massive depreciation of rupee that is increasing cost of imports.

Oil and food prices witnessed drastic cuts in the past few months in the international market but Pakistan could not get the benefits owing to currency depreciation. The oil prices dropped by more than 70 per cent to around $30 per barrel since hitting an all time high above $147 per barrel.

Official figures compiled by the federal bureau of statistics (FBS) showed the oil import bill increased by 28.9 per cent to $6.436 billion in July-January period of the current fiscal against $4.995 billion over the corresponding period of last year.

This shows that Pakistan is not in a position to curtail the rising import bill of oil, which last year had crossed the $11 billion mark exposing the country to severe balance of payment problems.

An official said that with the rising oil import bill, Pakistan may again approach the IMF next month for another over $4 billion loan to pile up forex reserves of the country, which should rather have been built up through export proceeds.

Analysts said more than 30 per cent depreciation of rupee since July last will increase the import bill of the oil group (crude oil and petroleum products) because there will be no let up in the demand so the quantity of the group will see no drop in the months ahead.

A similar impact has been witnessed in the import bill of food items and agricultural products during the months under review. The food import bill is up by 20.52 per cent to $2.468 billion in July-Jan period this year against $2.048 billion over the last year.

Of these, import of wheat increased by 266 per cent, tea 19.5 per cent, pulses 4.38 per cent and spices 2.84 per cent during the period under review over last year.

Analysts said that Pakistan could have accrued benefits of the steep fall in prices of edible oil, raw materials, and food items in international market during the current fiscal year if the rupee had not shed its value to such a great extent.

Machinery imports rose to $3.993 billion during the period under review as against $3.921 billion over last year, showing an increase of 1.82 percent.
But the impact of depreciation of rupee and imposition of additional duty has been reflected in the import bill of vehicles and mobile phones. A drastic cut of over 41.72 per cent was recorded in import of transportation group (build units and CKD/SKD) during the first seven months of the current fiscal year over the last year.

A reduction of 47.7 percent has been witnessed in the telecom sector during the July-January of the current fiscal year over last year. Of these, imports of both mobile phones and machinery declined.

 

[Neo]

4.28mmcfd gas discovered at Qadirpur deep well ​

Saturday, February 21, 2009

ISLAMABAD: Oil and Gas Development Company Limited (OGDCL) has discovered 4.28 million cubic feet of gas per day from its exploratory well at Qadirpur in district Ghotki of Sindh.

According to a company spokesman here on Friday, the deep well was drilled to a total depth of 4,703 meters. Based on electric, geological and drilling data, production testing was carried out to test the potential of the well, he added.

He said a total of five Drill Stem Tests (DSTs) were conducted, out of which three were conducted in Sembar formation and two in Lower Goru formation.

Out of these five DSTs, only one in Sembar formation was productive which produced 4.28 million cubic feet per day of gas at well head flowing pressure of 770 Psi on 32/64” choke, he said.

It may be mentioned here that after assuming charge, Advisor to Prime Minister on Petroleum and Natural Resources, Dr Asim Hussain had directed OGDCL to expedite exploration activities to double oil and gas production in the next 16 months.

He had directed to start work on Kunar, Pasakhi, Tando Allah Yar and Sinjhoro development projects on fast track basis and complete them within the stipulated time.

Officials of the company were asked to double gas production with a competitive mechanism and also bring a significant increase in oil production aimed at generating investment for the company and the national exchequer.

Dr Asim had also directed to complete Qadirpur Expansion Project to enhance the capacity of 100 mmcfd gas by March-April, for which eight new wells were in the process of drilling at Qadirpur.

“The present success is a result of the efforts being made to increase production as desired by the advisor,” he added. He said that present gas production is 4 billion cubic feet per day (bcfd) against the demand of 9-10 bcfd.

 

[Neo]

Excavation work for hydropower project starts ​

Saturday, February 21, 2009

LAHORE: Excavation of a 47km-long network of tunnels, one of the main works for the 969-megawatt Neelum Jhelum Hydroelectric Project (NJHEP), has started at the project site near Muzaffarabad in Azad Jammu and Kashmir.

The tunnel network is meant for diversion of Neelem river water to outfall into the Jhelum river near Chattar Kalas. A statement issued here said NJHEP General Manager Hasnain Afzal and a representative of Islamic Development Bank witnessed the blasting of rocks for excavation.

The Neelum Jhelum Hydroelectric Project is of immense importance as it would inject low-cost hydel electricity into the national grid. The IDB and other Middle Eastern donors have already agreed to finance the project.

The contract for the hydropower project was awarded to a Chinese consortium comprising China Gezhouba Group Company and China Machinery Import & Export Corporation. Preparatory works like access roads, offices and colonies for contractors and consultants started last year while main works have begun with the tunnel activity. Total cost of the project has been estimated at Rs130 billion. On its completion, the project will contribute 5.15 billion electricity units annually to the national grid.

 

[Neo]

SBP measures generate Rs 360bn liquidity in banking system​

KARACHI: The central bank has taken several measures to ease liquidity crunch in the banking system, which have resulted in the creation of an additional Rs 360 billion indirect and direct liquidity, Syed Salim Raza, Governor State Bank of Pakistan said.

Presiding over a meeting of the Private Sector Credit Advisory Council (PSCAC) held at State Bank, Raza said that to ease tight liquidity conditions arising from extraordinary outflows from the banking system during October 2008, the State Bank took a series of measures including liquidity injection through OMOs, reduction in cash reserve requirement, exemption of time deposits (i.e. deposits of above one-year tenor) from statutory liquidity requirement, enhancement of list of eligible securities for SLR and provision of 100 percent refinance to banks against Export Finance Scheme, he added.

“These measures helped pump in direct and indirect liquidity of around Rs 360 billion in the banking system at present compared with just Rs 79 billion in September 2008,” he said. Raza said that sufficient liquidity is available in the banking system and urged upon the commercial banks to increase lending to productive sectors of the economy which will help the country to stage a quick economic recovery.

He noted with concern that private sector credit, after recording an average growth of 19 percent during FY06 to FY08, witnessed deceleration in the first seven months of FY09 (July 08 to January 09) mainly due to slowdown in the economic activity coupled with global recession. He said overall credit disbursement to the private sector expanded by Rs 158.4 billion during July 2008 to January 2009 and recorded a growth of 5.5 percent compared to Rs 260.3 billion or 10.5 percent last year. On annualised basis, however, growth is 11.2 percent, which is lower than 17 percent last year, he added. During FY09, private sector credit expanded substantially till October 2008 as private sector availed credit of Rs 125.6 billion during the period 1st July-1st November 2008 compared to Rs 60.5 billion in the same period last year. Thereafter, the credit- take-off started to decelerate and it increased by only Rs 32.8 billion during 1st November 2008 – 31st January 2009 as compared with Rs 199.8 billion in corresponding period last year.

SBP Governor told the participants that weak demand, high mark-up rates, rising non-performing loans and past liquidity constraints are some of the important factors behind decelearation in private sector credit disbursement.

He informed the meeting that credit disbursement to the agriculture sector through banking system in first half of FY09 remained at Rs 99.4 billion, up 10 percent over the disbursement of Rs 90.3 billion in the same period last year, against an annual target of Rs 250 billion.

However, he pointed out that credit disbursement to SMEs has declined to Rs 372.1 billion from Rs 433.2 billion as of December, 2007. Out of which, around 75 percent was for working capital, 17 percent for fixed investments, while 8 percent extended for other finances. The highest share of SME credit was obtained by Manufacturing sector at 40 percent followed by commerce and trade at 33 percent, real estate and renting at 8 percent and other private business at 5 percent as of December 2008.