Pakistan Economy - News & Updates - Archive

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‘Drip irrigation, solar energy is future of Pakistan’ ​

Saturday, February 28, 2009

Mithi, (Trarparkar): In village Wandhanjo Wandu, Nagarparkar, one is amazed to find that a local farmer Mohabat is cultivating his 6-acre land with solar energy and is earning Rs300 daily through the sale of vegetables alone.

“I had this piece of land since long but it was lying barren for non-availability of water,” he told The News. “I used to work as a hari (peasant) in Thatta district and was barely able to meet my ends meet. Now I am self-employed person and earn pretty well,” he said.

Mohabat has gown tomatoes, eggplants, onions, chillies and sunflower on his field. He fetched Rs20,000 from the sale of tomatoes alone this year and yield in sunflower was 40 maunds per acre that he sold for Rs1,800 per maund. Similarly, the yield in onion was 60 maund per acre. He fetched Rs250 for every maund of that commodity.

“I use drip irrigation to conserve water and am a happy man now,” he said with a smile.

Known as Lift Irrigation, the project on which Mohabat works was initiated by Thardeep Rural Development Programme (TRDP) and is supported by Pakistan Poverty Alleviation Fund. The total cost of the project is Rs8,81,526 with a TRDP share of Rs1,78,926 and PPAF share of Rs7,02,600.

“Had I used a motor to lift water I would have needed at least 10 litres of diesel that would have been very expensive,” he said.

Similarly, in a village called Singharo, some 55km from district headquarter Mithi; poor villagers are fulfilling their requirements of drinking water through seven solar panels powering pumps that lift underground water. At least 60 houses of the small village of 2000 people are not only getting their thirst quenched courtesy to solar energy but are also making money through sale of tomato, brinjal, cumin and other vegetables.

Again the project has been a collaboration of TRDP and PPAF. The solar pumps work for 10 hours between 10am and 4pm every day and women are seen collecting water from the water tank.

The well is 170 feet deep. Previously village women would fetch water from the deep well through camels and donkeys and it was a tedious job. Now solar energy is being used to do the job.

Apparently, installing solar panels for the impoverished people of Tharparkar appears to be a costly affair but if one keeps in view that the great desert of Pakistan bordering the Great Indian Desert always has a blazing sun, one is bound to agree with enthusiasts relying on non-exhaustible sources of energy.

“Drip irrigation is the future of Pakistan. It means we have to learn water conservation and this can improve the lot of poor farmers,” said Dr. Sono Khangharani, Chief Executive Officer TRDP.

“In 90 per cent areas in Tharparkar we can avail solar energy and the later can play a vital role not only in provision of electricity, cultivation but can also help in job creation, poverty alleviation and in giving a boost to local economy,” said Dr. Khangharani.

“The use of solar energy in Tharparkar will also result in reverse migration,” he said.

In the wake of high cost of oil, developed as well as the developing countries are vying to meet their needs through solar and other sources of alternative energy. An article in SciDev.Net a prestigious scientific Web paper, quoted two German research reports saying that deserts in the Middle East and North Africa could generate vast quantities of electricity to sell to Europe.

“The studies found that concentrated solar power plants, occupying less than 0.3 per cent of the desert area in the region, could provide 15 per cent of Europe’s electricity needs by 2050,” the article said.

Tharparkar desert sprawls over an area of 20,000 square km. Its residents, Tharis, are the inheritors of a rich culture. This can be gauged from the fact that out of 56 most popular folk songs of Sindh, 45 are in Thari dialect. Forty per cent of the Tharis are from the Hindu and schedule castes. There are a number of ancient temples and remains of Buddhist and Jain religion present in the area as well.

Surprisingly, despite the fact that about 40 per cent population hails from the minority communities, there has never been any sectarian strife in Thar, perhaps, due to the strong influence of Sufism in the area. Who knows Tharparkar is poised to emerge as a role model in Pakistan?

 

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France offers food processing technology ​

Saturday, February 28, 2009

KARACHI: French Ambassador to Pakistan Daniel Jouanneau has said that Pakistan as the world’s fifth largest milk-producing country can benefit from French technology in milk processing. “France can provide technology for food processing in which it has expertise.”

He said this while speaking at Shaheed Zulfikar Ali Bhutto Institute of Science and Technology (SZABIST) on Friday.

“France is closely working with Pakistan and partnering for democracy, peace, stability, security, education, environment and bilateral trade,” he said. France and Pakistan shared common challenges of population, food, education, health, poverty and environment, he added.

After 1945, he said European countries decided to make efforts to avoid war as damages were greater than benefits. The European Union was an economic alliance initially but changed into a political alliance later. “Now all decisions including security and sovereignty are made by ministers of the bloc’s 27 member countries.

“France believes in collective decision-making as a member of the European Union. We believe in social stability, free market and human rights,” he elaborated.

Daniel Jouanneau said, “Islam is part of our history and geography. There are over five million Muslims in France, which is the largest among European countries. There are two grand mosques and a large number of small prayer places and over more 200 more mosques are being built,” he informed.

Commenting on Pakistan, he said Pakistan is a great country and is strategically located in an important part of the region. “No one can engage in dialogue with Muslims without Pakistan,” he added. In response to a question, he said, shortage of food and water may cause wars and challenges like these are challenging for France and Pakistan.

Riots in November 2005 in France were not religious but it was in frustration owing to unemployment, health and poverty, he said while responding to a query. The ban of wearing scarf in schools was imposed due to large number of requests by Muslim girls as their parents were forcing them to wear scarf.

However, girls can put on their scarves as soon as they leave school premises. Muslim students can wear scarves at college/university level and there is no ban, he said in response to a question.

 

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Connecting Karachi with Kalabagh: Zardari seeks ADB help for navigation project ​

ISLAMABAD (February 28 2009): President Zardari on Friday asked the Asian Development Bank to consider assistance in the development of a navigation project to connect Karachi with Kalabagh for cheap transportation of goods from the Port in Karachi to the north. He said this when a delegation of the ADB led by its Vice President Xiaoyu Zhao called on him here.

The President thanked ADB Vice President for continued support of the Bank by providing short term and medium term assistance to the country through its various programmes. The President remarked with one of the areas which needed special attention and in which the Bank could be a great assistance was setting up of a Research centres for the optimum utilisation of irrigation water and development of hybrid seed of cotton, rice and sugarcane, which were not only highly yielding but also disease resistant.

The President said that the government of Pakistan was already engaged with China in this matter and that he planned to visit China every three months to monitor progress on the collaborative projects between the two countries in these areas.

President also drew the attention of the ADB delegation towards the need for building agricultural storage capacity and oil storage capacity in Pakistan through public private partnership model in which the private entrepreneur is encouraged to invest in building the storage capacity while the government rent the storage capacity on terms for mutual benefit.

The Vice President of the ADB showed keen interest in the idea and said that the Banks team in Pakistan will give it a serious thought. He said that there was distinct possibility of the increasing economic assistance to Pakistan due to the success it had achieved in the macro economic stability programme.

Xiaoyu Zhao said that the Bank was encouraged by the progress made by the government of Pakistan in its macro economic stability programme, which he said would further help in boosting economic assistance to the country. He said that the ADB was part of Pakistan's development programme and was committed to work with it to bring about positive changes for the benefit of the people of Pakistan.

Zhao said that he looked forward to continued and enhanced co-operation with the government of Pakistan and expressed the confidence that Pakistan's economy will grow faster in the days to come.

Salman Faruqi, Secretary General to the President, Sardar Asef Ahmed Ali, Deputy Chairman Planning Commission, Hina Rabbani Khar, Minister of State for EAD, Shakil Durrani, Chairman Wapda, Farrakh Qayyum, Secretary Economic Affairs Division, Shahid Rafi, Secretary Water & Power, Sibtain Fazl Haleem, Secretary Health, Farhatullah Babar, Spokesman of the President, Muhammad Shahzad Arbab, Additional Secretary and Zafar Hasan Raza, Joint Secretary Economic Affairs also attended the meeting.-PR

 

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Marble exports surge by 75.01 percent ​

KARACHI (February 28 2009): Marble export have surged by 75.01 percent during July to January of current fiscal year 2008-09 due to mega construction projects in Middle East countries. According to statistics made available to Daily Business Recorder on Friday, marble sector has exported US $21.433million worth marbles, majority to Middle East during July to January as compare to US $12.247million marbles export made in previous corresponding period.

Commenting on it, Sanaullah Khan, former chairman, All Pakistan Marble Mining Processing Industry and Exporters Association (PMMPIEA) told Business Recorder that marble sector has surpassed last corresponding period export by US $9.186million, which is a positive stroke for economical growth of the country and would help sector achieve annual target fixed for current fiscal year.

To a question, he said that the sector had increased marbles export without any governmental favour and added the government had not even planned to give any incentive to marble exporters in this connection. "The government has completely ignored the sector in its policies, however the sector has privately taken some positive measures for its survival", he said.

Lack of technical expertise in mining processing, outdated equipment and poor law and order condition are creating negative impact on the marble export to European countries and America, which has considerably declined during recent years, Khan said. He added that marble exports to these countries have declined by 30 percent.

He further said the marbles export to European countries and America had become more costly as compared to Middle East countries because of under invoicing export, which was very high in these countries. However, the freight charges of marble export to Middle East countries are more reasonable. He said that Middle East countries are importing marbles in bulk without maintaining quality, which helps all marble processors to expand its exports at large.

He urged the government to take positive measures to facilitate marble sector, saying the government should take serious efforts for marble city and demanded the government to provide gas for the sector. He expected that marble export to Middle East countries would further increase because of multibillion dollars construction projects, being started in Saudi Arabia.

 

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Wind energy to provide lighting for some main streets in Karachi ​

KARACHI (February 28 2009): Federal Minister for Water and Power, Raja Pervez Ashraf has said that some main streets in Karachi would be electrified by the wind energy soon, as some projects of renewable energy have been completed in the city. According to sources the Minister made these observations while presiding over the 17th meeting of the Alternative Energy Development Board (AEDB) held in Islamabad on February 25.

The Minister, they said, appreciated UNDP for their support in the installation of 11 wind masts across Pakistan worth over one million dollar, which would help identify wind corridors in the four provinces, opening new avenues of investment and power production.

The Federal Minister said that the government is focusing on alternative and indigenous resources to produce electricity at affordable prices, they added. They said that Pervez Ashraf had also asked the AEDB to expedite their work and complete the wind and solar energy projects as early as possible. He further asked the Board to prepare comprehensive short and long term plans to utilise all the renewable energy resources available in the country and to attract the private sector for investing in this sector on fast track basis.

The Minister, in his concluding remarks said to cater to the severe energy crisis the government has to move forward fast to generate electricity from renewable resources, as God has blessed us with plenty of indigenous resources, which need proper utilisation.

AEDB later approved the formation of a Policy Review Committee to review the recommendations proposed by the AEDB for "Mid Term Renewable Energy Policy" and the committee would submit its report by September 2009.

According to the sources the Board has also approved land for a 50 MW Wind Power Project at Gharo, Sindh. The project, being set up by M/s SUNEC, would start commercial operation in 18 months' time. One-megawatt hydro project in NWFP and a 34 MW waste to energy project have also been completed recently. They said AEDB had earlier started spade work on 50 MW Hawksbay Wind Farm, 50 MW Gharo Wind Farm and 50 MW Solar Thermal Power projects, to be executed by the public sector.

They said over 3000 homes have been electrified by solar energy system under the rural Electrification Programme in various villages of Sindh while three projects of the same nature are being started in Balochistan. The sources also said that at least 40 wind turbines of 10 to 250 kW in different areas of Karachi would start electricity generation in the summer this year.

 

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AJK plans to produce and sell excess electricity ​

MIRPUR (February 28 2009): Azad Jammu Kashmir government has evolved an integrated phased plan to utilise vast natural resources for generation of hydel power to meet power needs, official sources said. The sources told APP here Friday that only 300 megawatt of power was the requirement of entire Azad Jammu Kashmir and the state government had executed construction work on various projects under the plan to meet the shortage.

The sources said that AJK government not only intended to utilise maximum hydel power generation resources to meet its own requirement but also to sell additional power.

 

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Pathetic throttling of export effort ​

EDITORIAL (February 28 2009): Shocking, indeed, will be the disgusting disclosure of massive misuse of Export Development Fund (EDF) by successive governments for nearly two decades, as revealed in an exclusive Recorder Report appearing on Tuesday.

It will be recalled that although created in 1991, ostensibly, to provide export-oriented industrial units with additional support, the Fund seems to have somehow deviated from the chosen path, hence proving of little avail in mitigating the plight of variously disgruntled exporters.

This should be all the more so in view of the novel scheme, having incorporated in its measures to guard against unforeseen eventualities. First thing first, the cost of the novel scheme was sought to be met from an ingeniously devised levy of Export Development Surcharge (EDS), equivalent to 0.254 percent of the value of goods exported. Moreover, proceeds of the surcharge were to be transferred by the government to EDF for onward distribution among the export associations for purposes of export development.

As for its allegedly massive abuse, reference has been made to a number of instances of maladministration, in its wide and variegated meaning. Mention, in this context, has been made of nepotism by way of discriminatory distribution of EDS among favourite organisations and individuals under 'miscellaneous expenditures' head.

It will also be noted, with dismay though, that while thus far the EDF Board has sanctioned a total of Rs 11,549.025 million, of which Rs 10,367.161 million has been released, thus still leaving a balance of Rs 1,181.864 million, with little indication of its purposeful spending.

For, as now revealed, the government has irrelatively disbursed millions of dollars on matters, such as hiring foreign law firm by All Pakistan Textile Manufacturers Association (Aptma) to defend imposition of safeguard duty measures by Turkey on import of cotton yarn; study for preparation of perspective plan for Pakistan's textile and clothing industry by a Swiss organisation; benchmarking certain sectors of the textile and apparel industry, so on and so forth.

Worse, while certain companies are on record to have received payment, with little evidence of rendering the assigned services. Among other such instances, mention has been made of hiring of international consultants for preparation of trade policies, the end document, like other studies, was simply left to gather dust in a storeroom. As for now, though heartening it may be to learn, the cause of the predicament had been identified in 1999, nothing tangible could be done to bring the malaise to its logical conclusion.

It was then discovered that Finance Ministry was not providing EDS collected by the federal government to EDF, except for a small portion of it, through annual budgetary grant. Even then, much later, in Trade Policy 2002-03, the Cabinet had accorded approval to the proposal to amend the EDF Act, 1999, thus making it mandatory for all EDS receipts to be automatically transferred to the EDF, but as ill-luck would have it, the matter was left to be finalised in consultation with the Auditor General and Finance Division.

Small wonder, the matter seems to be resting there. Nevertheless, the process was followed and the EDF Act, 1999 was amended by the Parliament through EDF (Amendment) Act, 2005, enabling transfer of whole EDS receipts collected in the preceding year to EDF in the following year. However, the position still remains unchanged. For the Finance Division has not provided the entire receipts of EDS collected in 2005-06, 2006-07 and 2007-08 in the following years 2006-07, 2007-08 and 2008-09 respectively even after amendment in the Act.

 

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Obama administration seeks more aid for Pakistan​

Anwar Iqbal
Saturday, 28 Feb, 2009

Two top US defence officials – Secretary of Defence Robert Gates and Chairman Joint Chiefs of Staff Admiral Mike Mullen – held extensive talks with Army Chief Gen. Ashfaq Kayani in Washington.—AP​

WASHINGTON: The Obama administration’s budget for 2010 includes an unspecified amount of military and civilian aid for Pakistan.

Although Pakistan has asked for drone aircraft, helicopters and other equipment, the US administration has not yet said what equipment it was willing to provide.

Two top US defence officials – Secretary of Defence Robert Gates and Chairman Joint Chiefs of Staff Admiral Mike Mullen – held extensive talks with Army Chief Gen. Ashfaq Kayani in Washington earlier this week.

Mr Gates also met a Pakistani delegation, which included the ISI chief and was headed by the foreign minister.

‘Well, I think one of the themes that, certainly, in my meetings with Pakistanis have been, how can we work more closely together? How can we help them be effective? How can we help ourselves by helping them?’ said Secretary Gates explaining what Pakistan expected from the United States.

‘Clearly, more intelligence is an important aspect of that. In terms of the drones specifically, that hasn't come up in my talks, but figuring out ways to help them have better intelligence to guide their operations, I think, is a positive thing and we ought to do as much as we can,’ he added.

Admiral Mullen also stressed the need to help Pakistan, saying: ‘It's very important that we help resource them and develop this comprehensive strategy with Pakistan over a number of years. And I'm delighted to see that kind of support in the ‘10 budget.’

Explaining what he believes Pakistan needs to fight terrorists, Admiral Mullen said: ‘The kind of capabilities —not just drones but other military capabilities support more precision, faster reaction, better operations, which is one of the things we focus on to try to assist the Pakistani military for a long time —certainly, newer —new capabilities, as we learn lessons.’

Pakistan, he said, has asked for equipment that would allow enhancing its defence capabilities and ‘I think we need to be mindful of that in trying to help them get better.’

Asked what kind of capabilities he was looking at, Admiral Mullen said: ‘In this case, it's the full spectrum of intelligence, surveillance, reconnaissance, but it's what we've learned and used and how can we best, in the future, assist them in their operations with those kinds of capabilities.’

The fiscal year 2010 budget, sought by the Obama Administration, refocuses US resources to increase economic and military assistance for both Pakistan and Afghanistan.

According to the State Department, the budgetary request made to Congress in the new fiscal year, beginning October 1, 2009, ‘increases non-military aid to Afghanistan and Pakistan to revitalise economic development and confront the resurgence of the Taliban.’

The budget increases non-military assistance to both countries, providing additional funding for governance, reconstruction, counter-narcotics, and other development activities that will help counter extremists.

The budget expands the number of civilian personnel in Afghanistan and Pakistan in an effort to stabilise these countries, build government capacity, and successfully manage expanded assistance programs.

The administration’s request provides $533.7 billion for the Department of Defence base budget in 2010, a four-per cent increase over 2009, which includes appropriating resources on achieving the US objectives in Afghanistan.

Pakistan has been recognised as a keystone for regional stability. ‘In addition, we must leverage allied support to help struggling states such as Pakistan, which are the keystone for regional stability,’ a Defence Department budget request overview said.

 

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Agreement to enhance SME performance ​

Sunday, March 01, 2009

ISLAMABAD: Human Capital Management Institute (HCMI) on Saturday signed a partnership agreement with International Finance Corporation (IFC) to enhance the performance and competitiveness of small and medium enterprises (SME) through IFC-initiated corporate value chain (CVC) deals under the Business Edge Programme.

The IFC, a member of the World Bank Group, promotes sustainable private sector investment in developing countries, which helps reduce poverty and improve people’s lives. Business Edge is a suit of specialised training products and services developed by the IFC which will be combined flexibly to create a management training programme.

The Business Edge training programme will focus on those aspects of management which concerns the private sector. The IFC will use the expertise of HCMI in delivering innovative training programmes to enhance management skills of the SME sector in Pakistan.

 

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Experts blame policy flaws for persistent high inflation ​

Sunday, March 01, 2009

LAHORE: The government seems helpless in controlling inflation which remains perched at a high level compared to other countries of the region where inflation has fallen sharply.

Though Adviser to Prime Minister on Finance Shaukat Tarin claimed two days ago that inflation was going down, official statistics showed that inflation this week in fact increased to 23.4 per cent compared to the corresponding period of last year.

Monthly inflation will be above 20 per cent, but it has eased from the peak of 25 per cent in October 2008. The decline may look good to economic managers, but is not in line with other countries of the region which faced similar high inflation in 2008.

Inflation in Sri Lanka has fallen from 27.5 per cent in August 2008 to 7.6 per cent in February 2009. India’s inflation rate has dropped from 12.91 per cent in August 2008 to 3.36 per cent in February 2009. Inflation in Bangladesh is down to manageable 5 per cent from the peak of over 12 per cent in November 2008. China’s inflation rate has declined from 9 per cent in February 2008 to only 1 per cent in February this year.

Economic experts point out that there are flaws in economic management in Pakistan, which deny consumers the benefit of enjoying low prices of goods and commodities. This tendency, pursued both by the state and the private sector, stems from weak governance, absence of government’s writ, inability of state to control corruption and generate adequate revenues.

Senior economist Naveed Anwer Khan, FCA, said the finance adviser had openly admitted that the federal government planned to earn Rs100 billion this fiscal year by capping prices of petroleum products at present levels. “This indirect tax on consumers is one reason for high inflation.”

Chartered Accountant Yunus Kamran said though petroleum prices were still very high, the government did reduce them by 25-30 per cent during the past six months. However, he added transport fares had remained almost the same as at peak rates of petrol and diesel, which he termed “an administrative failure”. Fares of public transport and goods carriers should have come down by 25-30 per cent, he suggested.

Faisal Qamar, ACA, said edible oil prices should have gone down by at least 30 per cent even after accounting for rupee depreciation. But the federal government after prolonged negotiations could achieve a reduction of only four per cent in edible oil rates.

He said cement prices had increased despite a decline in demand while car rates were extraordinarily high due to government protection. These factors were keeping inflation high and the government lacked the writ and mechanism to force producers to market their products at reasonable prices, he added.

Citing an example of China, Certified Public Accountant Asif Ali Shahid said despite expanding at an annual rate of nearly 9 per cent, China’s economy had exhibited a marked cyclical pattern. Periods of rapid growth accompanied by accelerating inflation were followed by contractions during which both growth and inflation fell.

In Chinese policies, he said, things worth watching were economic decentralisation, government’s commitment to the state sector, its credit plan and credit control.

 

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Gwadar Port faces sea of problems ​

Sunday, March 01, 2009
By Hina Mahgul Rind

KARACHI: Since coming into operation in December 2008, it has been learnt that the Gwadar Port has been plagued with a host of problems such as transportation of goods into the area.

Transportation became a problem in particular after the arrival of ships carrying urea. “There is no shortage of transport, but a few contractors have monopoly in the area, which in turn is causing a price hike, among other things,” said an official.

In addition to the price hike, the official explained that in Gwadar trucks carrying cargo have no stand to park in, which has resulted in heavy traffic congestion in the city.

“Because there is no truck stand anywhere, heavy vehicles are parked on the roads, leading to congested traffic,” he said. “The safety and security of pedestrians as well as of local traffic is compromised.”

It has been learnt that a truck stand is being planned by the Gwadar Development Authority, but so far progress has been very slow.

As well as being without a truck stand, the port lacks direct access to the Coastal Highway. The East Bay Expressway, a project of the Gwadar Port Authority, aims to remedy the situation, but even here there has been little progress. If successful, the East Bay Expressway will aid a smooth flow of vehicles not only in the port area, but also further inside the city.

Currently, the Coastal Highway itself is burdened with additional problems. While many of the heavy vehicles approaching Gwadar are without cargo, a large number of vehicles are overloaded. Officials say that overloading is not a problem with urea, but it is with wheat, which has 50 per cent more weight in the same volume as urea.

Allegedly, the Coastal Highway was built in a hurry with builders compromising on quality. Those involved in the business warn that if the trend of overloading continues, the highway may not be able to sustain the traffic for much longer.

 

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Salman says growth will be less than 2pc ​

Sunday, March 01, 2009

LAHORE: The gross domestic product would be less than 2 per cent this year, which will be the lowest in the past one decade, as growth has been strangulated by high interest rates and a tight monetary policy, said former finance minister Salman Shah.

He was speaking during discussions on the economic decline and remedial measures, organised by the Lahore Economic Journalists Association.

Elaborating his point, he said the Sensitive Price Index (SPI) had been on constant decline since October 2008 and there was no justification to keep the central bank policy rate at 15 per cent, which had stifled growth. Shah claimed that based on the current inflationary scenario, the State Bank’s policy rate should be 9-9.5 per cent.

After accounting for 3 to 5 per cent banking margin, he said, the industry would get loans at 13-14 per cent. “Even this interest rate is high but the productive sector will be able to grow.” He said current high interest rates had marginalised the manufacturing sector. “No industry could grow if it gets credit at 20 per cent.”

He said more than 54 per cent of the country’s population was under the age of 25. “Every year about 4 million of them join the adult workforce. Pakistan needs to grow at 9-10 per cent to absorb about 4 million youth which join the workforce every year.”

The former finance minister said economy was moving comfortably till the middle of 2007-08 fiscal year as economic managers of the previous regime knew that high oil prices would put pressure on foreign exchange reserves.

“This government handed over a roadmap to the government elected last year.” He said the plan was to offload small percentage of public sector companies like National Bank, Kot Addu Power Company, etc on the London Stock Exchange in April 2009.

At that time, he said, the stock market was at its peak at 15,800 points and share prices of these companies were very high. “The government would have got $4-5 billion from these transactions.”

However, he regretted the new government scrapped the programme of offloading these shares in the global market without considering pros and cons of its decision. He said high oil prices consumed most of the foreign exchange reserves and the government had to go with a begging bowl to the International Monetary Fund.

He said the rot had not stopped even after the IMF deal because growth had stagnated and revenue sources were drying up due to regular closure of industries. He said the option to offload stocks was not feasible as the stock market had lost $45 billion in the last around one year. He said the rupee which had remained stable from 2002 to June 2008 had lost 29 per cent of value, scaring away investors. “The revival journey would now be hard, long and painful.”

 

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Interest rate may be cut to 12pc ​

BoI chairman says govt preparing industrial package​

Sunday, March 01, 2009

KARACHI: Board of Investment Chairman Saleem H Mandviwalla has said interest rate may be cut to 12 per cent from 15 per cent after the government reviews the benchmark interest rate in March this year.

Besides that, “the government is bringing an industrial package, including new laws for the gems and stone sector,” he said.

He was speaking to industrialists at a seminar on ‘Public-Private Partnership’, organised by the Karachi Chamber of Commerce and Industry (KCCI) and its Infrastructure Management Unit (IMU) on Saturday.

He said the BoI was doing its best to include more and more private sector people in the public sector in order to make progress through public-private partnership.

He said the government had also made agreements for purchasing hybrid seed from China to improve per acre yield of crops and produce more food. “Hybrid seed will increase our per acre yield up to three times,” he added.

BoI Sindh Chairman and businessman Zubair Motiwala said the public-private partnership mechanism had always been productive all over the world whether they were developed or underdeveloped countries. He said the BoI would take all measures to exploit all possible areas of development including fish farming, corporate farming and agriculture in general.

A businessman invited the attention of BoI officials to smuggling of stationary and lubricant items from the Chinese border, to which Zubair Motiwala replied that the government should do something to control smuggling. “There are a variety of goods being imported into Pakistan under the Afghan Transit Trade Agreement (ATTA), which never went to Afghanistan and damaged local industries.

“Pakistan has the potential to go forward despite these critical problems. Invest in Pakistan and believe in Pakistan.

We have to change our mindset because there is always a window of opportunity in times of crisis and we should try to observe these windows in the present crisis,” he advised.

Heartfile President Dr Sania Nishtar, speaking on ‘motivating private investment in social sector, issues and apprehensions’, said Pakistan had not been affected so much by the present global crisis, yet the country was hurt by local problems.

However, in coming months and years Pakistan would face some tough challenges posed by the present global financial crisis, she warned.

 

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Downward revision in macro-economic targets: Forex reserves need to be beefed up​

ISLAMABAD: Downward revisions in macro-economic targets would require the government to further increase the foreign exchange reserves agreed with International Monetary Fund.

Reduction in discount rate by 200 basis points would be essential to provide relief to the ailing industry and trade and State Bank of Pakistan would be reviewing the situation next month.

A senior official at Ministry of Finance who attended recent Pakistan-IMF talks at Dubai informed Daily Times that both sides have agreed to revise discount rate in line with the decline in inflation. Status quo or reduction by less than 200 basis points would be counter productive as the economy needs reduction at least by 200 basis points, he added.

"Reduction in discount rate by 100 basis point or 150 basis points would not have positive impact on economy," the official explained.

According to the finance ministry analysis, the interest rate could be brought down to a desired level if the core inflation comes down to 15 percent.

Private sector strongly feels that core inflation is not coming down as the government is not reducing POL prices on the one hand and is increasing gas and power tariff on the other giving no benefit of decrease in oil prices to the consumers. Aggregate demand in the economy has came down to a level where monetary stance should be changed and discount rate be brought down to help revive the manufacturing sector.

According to the official, despite downward revisions in Gross Domestic Product (GDP) growth target from 3.5 percent to 2.5 percent, the fiscal deficit target has remained remain unchanged at 4.3%of the GDP for 2008-09.

Current account deficit (CAD) target has been lowered from 6.5 percent of GDP to 5.6 percent of GDP for the ongoing fiscal year 2008-09. But this would require the government to enhance its foreign exchange reserves further as compared with earlier target agreed with the IMF authorities for the end June 2009, the official said.

Ahmed Waqar, Chairman Federal Board of Revenue (FBR), during a brief chat with Daily Times at Planning Commission told that tax collection target has been revised from Rs 1.360 trillion to Rs 1.3 trillion for the ongoing fiscal year 2008-09.

He was of the view that without initiating any study it would be difficult for the FBR to access the revenue loss due to the current political situation. However, he said that FBR would be striving hard to achieve the target assigned by the government.

 

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$1.833 million withdrawn from share market by foreign investors ​

KARACHI (March 01 2009): The offshore investors withdrew $1.833 million from the country's equity market during the week ended on February 27, 2009. "The quantum of outflow of foreign portfolio investment from the country's equity market has been reduced as compared with previous days, mainly due to available attractive levels", analysts said.

Interestingly, two trading sessions of the week witnessed a net inflow of foreign investment, despite heavy selling pressure by local investors. Although an outflow of this mode of investment was witnessed in the remaining days, the quantum of outflow was low as compared to the previous levels.

According to National Clearing Company of Pakistan (NCCPL) data the cumulative outflow of this mode of investment was recorded at $48.630 million in February 2009, while this figure increased to $563.744 million in the period from January 1, 2008 to date.

The week opened on a positive note as a fresh inflow of $966,984 was recorded on Monday. However, the offshore investors withdrew $506,518 on Tuesday. On Wednesday, once again, a fresh inflow of $86,584 was witnessed despite heavy selling pressure at the share market due to political uncertainty in the country. However, a negative trend prevailed during the remaining two days as the foreign investors withdrew $1,704,251 on Thursday and $675,800 on Friday.