Pakistan Economy - News & Updates - Archive

[Neo]

Pakistans GDP growth would be just 2.5 percent in fiscal year 2009: Escap​

ISLAMABAD (March 27 2009): Economic and Social Commission for Asia and Pacific (Escap) has projected that Pakistans growth rate would be just 2.5 percent in fiscal year 2008-09 while economists feared that it could be even lower than this. The Escap endorsed 2.5 percent growth rate revised by the IMF for Pakistan for 2008-09 from 3.5 percent estimated earlier for the year.

Dr Ashfaque Hasan, former advisor to the Ministry of Finance said that recently the growth rate was lowered to 2 percent for the ongoing fiscal year. In a presentation on factors responsible for macroeconomic difficulties, Ashfaque said that sudden rise in oil and food prices have been largely responsible for widening the current and trade accounts deficits.

Pakistan, he said paid $4 billion extra in terms of oil mainly on account of surge in prices. Ashfaque who has been one of those tasked to reshape Pakistans economy during last eight years admitted that incompetence at the level of decision making was also responsible for the economic mess. Hallmark was absence of adequate policy response to such threats, he added.

He said that commodity prices have come down to one-fourth in the global market but their impact in the local market was very little. The pace of reduction in inflation was very low in Pakistan as compared to the region in the wake of dwindling commodity prices, he said.

Ashfaque said the government should pursue tight monetary policy, increase tax to GDP ratio and ensure massive running of through forward of PSDP to reduce fiscal deficit. The focus, he said should be on enhancement of agriculture yield, which was never given importance during last many decades.

Dr Aynul Hassan who heads the macroeconomic policy and development division of Unescap said that Asia-pacific region faces a triple-threat to the development - financial crisis, volatile food and fuel prices and climate changes. He said that the Asian countries should increase inter-regional trade and investment as this would help move the region from crisis resilience to crisis resistant.

He said that volatile oil prices posed threat to the regions food security. These could result in trade imbalance, inflation and poverty and hunger, so the neighbouring countries need to strengthen trade ties to counter such threats. Dr Sarfraz Qureshi said that roughly 16 million people have slipped into poverty during last two years of global economic crisis and its impact on Pakistan.

The survey launched here at the United National Information Center noted that Pakistans economy suffered from political instability, law and order problems, supply shocks, a softening of external demand, turmoil in international financial markets and high prices of oil, food and other commodities.

Due to global economic slowdown and internal difficulties, GDP growth in Pakistan is expected to further reduce to 2.5 percent in 2009 while inflation in Pakistan rose steeply with food inflation going even higher. The situation was exacerbated by the weakness of the domestic currency, the gradual removal of fuel, food and power subsidies and the monetary overhang of excessive borrowing from the central bank to finance the large fiscal deficit.

The longer the inflationary pressure persists, the greater the chance for a wage-price spiral to gain hold. Tight monetary and fiscal policies are necessary to prevent such a spiral. If the budget deficit is not contained, tight monetary policy alone may not achieve the desired results.

With fall in oil and other commodity prices in international markets, inflation has started falling. Though overall revenue in Pakistan increased, but the increase in expenditure was much larger, mainly because of subsidies on oil, power, fertiliser, wheat and other food items.

Among long-term challenges, poverty remains a major problem for most countries in South Asia. Also, economic and social inequalities remain widespread. The main challenge for countries in the sub-region, therefore, is not only to improve growth rates on a sustained basis but also to make them more inclusive for a rapid reduction in poverty and inequality.

It underlined the need to strengthen the social safety nets for the poor and vulnerable who are unable to benefit from economic growth directly or indirectly. This support should be strengthened to provide a coping mechanism for the poor, especially in the event of macroeconomic shocks such as current global economic crisis.

 

[Neo]

Pakistan to receive WB $500m before March 31 ​

WASHINGTON (March 27, 2009): Pakistan will receive $ 500 million interest-free credit approved on Thursday by World Bank before the end of March in an encouraging sign for the country’s economic stabilization effort.

The transfer will take place before March 31, bolstering Pakistan’s foreign exchange reserves as well as enhancing international investor confidence in the drive to put the economy back on high growth track, officials told APP here Friday.

The targeted project - Poverty Reduction and Economic Support Operation - is designed to support the Pakistani government’s policy measures that promote macroeconomic stability. It seeks to benefit the poor people and is also expected to strengthen Pakistan’s competitiveness by spurring the financial sector.

Pakistan’s ambassador to the United States Husain Haqqani had an extensive meeting with World Bank President Robert Zoellick in Washington last week. During the meeting, Haqqani drew the WB leader’s attention to the importance of backing the government’s endeavours for economic uplift of the people, a Pakistan embassy spokesman said.

The World Bank chief assured the top Pakistani diplomat of his support and the financial institution’s stepped up participation in the economic development of the country, whose stability is considered key to South Asian peace and security.

The agreement, inked Thursday on $ 500 million credit by Economic Minister at the Pakistani embassy in Washington Abdul Wajid Rana, comes about three weeks ahead of an important Friends of Pakistan meeting in Japan.

Tokyo and the World Bank will co-host the April 17 meeting, which will be chaired by President Asif Ali Zardari and draw senior leaders from several Western industrialized countries, major Eastern economic powers and oil-rich Gulf nations.

The Pakistani ambassador and the World Bank chief also discussed efforts toward success of the Friends of Pakistan moot, where backing for Islamabad’s development initiatives would provide a major push to the country’s economic recovery efforts.

Pakistan, a key partner in the fight against terrorism, lost economic activity to the tune of billions of dollars due to unrest along the Afghan border and experienced severe external and internal shocks in the past year.

The rise in international oil and food prices in the last two years also sharply inflated the country’s import bill and the subsequent slowdown in the global economy dampened external demand for Pakistan’s exports.

Meanwhile, the United States that relies heavily on Pakistan’s cooperation in the fight against al Qaeda and Taliban on the Afghan border, is leading international efforts to help the country come out of its economic difficulties.

On Friday, President Barack Obama is expected to reaffirm his administration’s commitment to support Pakistan’s economic recovery efforts in a major speech on the way forward in Afghanistan, where American and international forces are struggling against insurgents.

Among the initiatives being launched in Washington are a proposal to set up reconstruction opportunity zones, products from where would exported to the United States duty-free and a Congressional measure to extend $ 1.5 billion socio-economic assistance annually to the country for up to ten years.

 

[Neo]

Turkish firm to invest $500 million in windmill project ​

KARACHI (March 27 2009): Turkish investors are keen to invest in alternative energy projects and a Turkish company, Zorlu Energi, will invest some $500 million in windmill project, said Fethi Etem, Consul General of Turkey.

Addressing the launching ceremony of advisory service of Escorts Investment Bank Limited of Turkey in Karachi, he said that Zorlu Energi Pakistan Ltd, a Turkish company, had already made $110 million investment in the windmill project and in the first phase five windmills were being installed in Jhimpir (Sindh) with a electricity generation capacity of 6 megawatt each.

He said that at present the Turkish company had obtained license from Alternative Energy Development Board for generating 50 MW electricity and was planing to extend its operation. "Zorlu Energi would expand windmill project up to 300 MW with further investment of some $500 million in the near future", Fethi added.

Consul General of Turkey said that Turkish companies are interested to invest in livestock, engineering, textile, leather, construction and other sectors with an aim to boost the bilateral trade, he said. Although Pakistan and Turkey are the two Muslim countries, but the trade volume is less than the one billion dollar and stood at 740 million dollar, he said, adding with some initiative we can boost it to one billion dollar annually.

Foreign Direct Investment in Turkey was $17.7 billion during the last year, he informed and offered Pakistani businessmen to invest in the Turkey, where a lot of opportunities are available for new business. Rashid Mansur, President and CEO of Escorts Bank, said that bank will provide advisory services to the businessmen of both countries for the mergers and acquisitions, joint ventures, imports, exports, brand promotions, distribution of products and services.

He said that Escorts Banks average return on equity stood at 20 per cent during the last five years and bank has also distributed some 20 per cent dividend. "We have introduced "Merhaba Turkey" country specific corporate advisory services, which help boost the bilateral trade between the two countries, besides opening new avenues of investment", Mansur said.

 

[Neo]

Pakistan 98th in global ICT ranking ​

ISLAMABAD (March 27 2009): The World Economic Forum on Thursday released its 8th annual Global Information Technology Report 2009. The report compares participating countries on a range of information and communication technology proxies and variables, which are considered to be the key enablers of economic and social progress, growth and productivity.

This year, Pakistan ranked 98th out of 134 countries, which is indicative of a weak information and communication technology base. This years report has in particular focused on how information and communication technology and networked readiness have fostered innovation. The Global Information Technology Report has followed the ICT revolution and evolution over the years.

ICT has encouraged transparency in government processes and improved countries efficiency and services to citizens. It was a drop of nine spots from last years ranking of 89 out of 127 countries. In order to improve its network connectedness, Pakistan should invest more in ICT infrastructure, related services and more broadly, innovation.

Some of Pakistans other competitive disadvantages identified by the report are the absence of adequate competition in the market place (112), unnecessarily long procedures to enforce a contract (119), extremely low expenditure on education (119) and equally low enrolment in tertiary education (114). Significant drops were seen in spending on R&D from 72nd spot to 86th this year, Government prioritisation of ICT from 38th to 57th, and a staggering drop in the quality of education system from 85th to 104th.

The reports rankings are based on the Networked Readiness Index which measures the likelihood that countries will exploit the opportunities offered by Information and Communication Technology services. It tries to comprehend the impact of ICT on the competitiveness of nations.

The NRI is a composite of three components; the environment of ICT offered by a countrys government; the readiness of governments, businesses and individuals to use ICT; finally, usage of ICT among these three stakeholders. Pakistan ranked 112 in the environment component, 101 in the readiness component and 92 in usage component indicating that although the environment and infrastructure are not properly delivered, but the usage is still pretty good.

According to this years report, Denmark, Sweden, and United States secured the top three ranks respectively, further consolidating the fact that they have the most solid information and communication technology base.

Switzerland dropped two spots to 5th, and was replaced by USA in the 3rd rank. Singapore climbed up to the 4th rank from 5th and Iceland climbed up one spot to 7th from 8th. This year, Canada entered the top ten slot ranking 10th, whereas last year it was at 13th. Norway dropped two spots to number 10th from 8th.-PR

 

[Neo]

Pakistan seeking more UAE investments: Dubai daily ​

ISLAMABAD (March 27 2009): Pakistan wants the United Arab Emirates (UAE) to invest in its renewable energy, textiles, agriculture, infrastructure and construction sectors, a Dubai-based English daily, "the Pakistan," reported. A delegation, representing the Pakistan Federation of Chamber of Commerce and Industry (FPCCI), held first round of meetings this week with firms such as Aldar and Masdar, the daily said.

"It is seeking investment in more than a dozen projects, ranging from hydro, wind and solar-thermal power generation, to corporate farming, textile and property ventures," the paper added. The daily further said the group met Minister of Foreign Trade Sheikh Lubna Al Qasimi in Abu Dhabi, and discussed options to enhance trade between the two countries.

"Issues relating to a free-trade agreement between Pakistan and the Gulf countries were also discussed," it added. Later, the delegation met representatives of property developers, Limitless and Nakheel, Emirates Investment Group, Dubai Islamic Bank and NBD Capital.

The delegation also met Sharjah and Ajman chambers of commerce and industry representatives, as well as officials from the Dubai Export Development Corporation and the Planning and Development Department in Dubai. "We have several attractive options for the UAE investors to invest in renewable energy," said Chairman of the FPCCIs Standing Committee on Alternative Energy Development Khurram Sayeed. "We will pitch several alternative energy projects to firms like Masdar here," he added.

The daily said that Pakistan would seek 10 billion dollars (Dh 36.73bn) over the next three years from the Friends of Democratic Pakistan group, set up in September to help the nation stabilise its economy. "We have identified priority projects for which we want funds from member countries," said spokesman for Pakistan Foreign Ministry Abdul Basit said.

Basit said the projects would help reduce poverty, meet security challenges and boost human resources development, health and education. The Pakistani officials and representatives of member countries and institutions would meet in Abu Dhabi next Wednesday and Thursday to "fine tune" the details of projects, Basit said. Between 2004 and last year, the UAE firms have invested about 3.74 billion dollars in Pakistan, most of it from the Abu Dhabi Group, an investment consortium.

The Abu Dhabi Group has stakes in the telecoms operators, Warid and Wateen, Bank Alfalah Limited and United Bank Limited. The government-owned Etisalat has a 26 per cent stake in the Pakistan Telecommunication Company Limited (PTCL) while private equity managers such as Abraaj Capital and Emirates Investment Group has their own initiatives in the country, the English daily reported.

Already, the property developers, Emaar and MAF Investments, are building several key projects in Pakistan. The UAEs Bin Din Group has already signed an agreement with Pakistan to develop the Thar Coal Project in Sindh province. The project, to be completed in three years, would include a mine-mouth thermal power plant with 1,000 megawatts of capacity, said Adviser on Textile and Chairman of the Pak-UAE Business Council Dr Mirza Ikhtiar Baig.

Dr Baig said the project was being developed as a joint venture between the UAE and South Korean firms, but he declined to reveal the size of the investment. "There is a lot of potential of investment in Pakistans energy sector, which is expected to grow 7.2 per cent until 2010 and 8.8 per cent thereafter," he said.

Most investments in Pakistan in the current fiscal year have come from the sale of large tracts of agricultural land to the UAE investors, the paper reported. "We have so far sold over 50,000 acres (20,234 hectares) of land in parcels to the UAE investors," Dr Baig said.

The investors had 100 per cent ownership rights, with subsidies in machinery imports and fertilisers, and permission to export 100 per cent of the proceeds to the UAE, he said. "Al Dafra, one of Abu Dhabi Group company, is very actively buying the agri land for corporate farming and cultivation of cattle feed, alfalfa," Dr Baig said, adding that different provincial governments had set aside land parcels between 404.6 hectares and 4,046 hectares for investors.

"At the end of this trip, I expect to bag more deals in agriculture sector than any other," he said. A group, including several UAE private and public firms, in October last year acquired about 16,187 hectares of land in Balochistan for an estimated cost of 40 million dollars to begin mechanised farming in the area as part of the strategy to lower food import costs, said the daily.

 

[Neo]

100 more licenses to be issued for minerals exploration in Northern Areas ​

ISLAMABAD (March 27 2009): More than one hundred licenses will be issued to national and international firms shortly by allocating of a vast area in different districts of Northern Areas for exploration of multi-billion dollars minerals including gold, copper, lead and coal besides precious stones.

Talking to APP about potential of mineral wealth of Northern Areas, Shahjehan, Deputy Director of Mines and Minerals Department said that Northern Areas are considered richest areas of the world regarding minerals and precious stones. Responding to a question, he said that more than seventy firms including foreign and local had already been issued licenses for the exploration of mines and further would be issued shortly after the finalisation of minor amendments in the existing rules.

To a question about identification of gold mines in Northern Areas, he said that more than 11 sites of gold mines had already been identified in various parts of the Northern Areas. About fifteen firms including local and foreign are already busy in mining gold and copper in various areas which have been allocated to them for this purpose, the Deputy Director told APP.

 

[Neo]

Corporate sector Oct-Dec earnings down by 62pc ​

Saturday, March 28, 2009

KARACHI: Corporate profits in Pakistan have declined sharply in the last quarter (October-December) for the 2008 on the back of high interest rates and economic slowdown in businesses.

Economist S Akbar Zaidi says that the overall slowdown in the economy is affecting corporate profits, which have declined over the last couple of months.

He said that banking sector has faced the brunt as its profits have declined owing to high benchmark interest rates by State Bank of Pakistan (SBP), non-performing loans and decline in consumer financing. “There is a credit squeeze in the market,” he added.

Corporate result season for the 4Q2008 (Oct-Dec) has almost come to an end. The JS Research for the analysis of corporate earnings used companies that account for 75 per cent of the total market capitalisation of Karachi Stock Exchange’s KSE 100-share Index. The sample companies posted profits of Rs17.9 billion ($223 million) against Rs47.7 billion ($782 million) in the corresponding quarter last year, depicting a decline of 62 per cent, JS Research reported on Friday.

“Moreover, if we remove PSO, SHEL, ATRL, PRL and NRL as they suffered severely due to drastic fall in oil prices (more than $50 per barrel), the corporate earnings would have declined by only 34 per cent,” the research report stated.

Cement, exploration and production companies (E&P) and fertilizer sectors were the major drivers of corporate earnings during 4Q 2008. Cement sector booked hefty profit growth of 181 per cent on the back of high local & export retention prices.

Exploration and production sector profits grew by 15 per cent as a result of higher oil and gas well head prices along with 24 per cent devaluation of Pakistan rupee in the period. Fauji Fertilizer boosted fertilizer sector profitability, as the sector recorded a growth of nine per cent amid higher Di-Ammonium Phosphate (DAP) prices.

However, amid sharp decline in oil prices the refinery and the oil marketing companies (OMC) sectors incurred huge inventory losses. Moreover, they also faced exchange losses due to significant rupee depreciation plunging both sectors into losses, it said.

Banks’ profits declined by a hefty amount of Rs11.82 billion ($147 million) as they recorded higher provisions amid increase in non performing loans due to a combination of higher interest rates and economic slowdown. Moreover, they recognized impairment losses on account of diminishing stock prices.

Auto sector was the most disturbed sector as sector’s gross margins squeezed further as Yen continued to strengthen against the Pak Rupee, resulting in 86 per cent decline in profitability.

 

[Neo]

No push at home for free trade with EU ​

Saturday, March 28, 2009

KARACHI: Pakistani textile makers on Friday welcomed Italian Foreign Minister’s desire to seek duty-free access for exports from the terrorism-hit South Asian country to European Union but they are yet to start lobbying for its attainment.

A day after Franco Frattini said EU should launch free-trade talks with Pakistan in recognition of its efforts to fight terrorism, the industrialists here were either unaware of the development or verifying the reports.

None of the business lobbies including the apex trade body Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and the Karachi Chamber of Commerce and Industry issued any press release in this regard.

Muhammad Azam Chairman All Pakistan Textile Mills Association (APTMA) refused to comment insisting it was too early to say anything about it. “We have to review this statement carefully and I don’t want to say something that could jeopardize the effort.”

Pakistan has been trying to seek GSP plus status for its exporters who have suffered at hands of their counterparts in Bangladesh and other least developed countries, which get preferential treatment in trade with EU states.

Shabir Ahmed, Chairman, Pakistan Bed Wear Exporters Association, said it was about time that West helps to stabilize Pakistan’s economy, which has suffered from fallout of increasing terrorism.

“It is a significant development and government must leave no stone unturned to see it happens,” he said, adding that diplomatic missions in European countries should start consultations immediately.

Pakistani bed wear exports, which make up substantial part of overall textile exports, he said, have fallen from over $2 billion a few years back to just $1.8bn now. “This happened after EU increased duty on imports from Pakistan.”

He said US, which is leading the war against terrorism, must also give trade incentives to Pakistan rather than proposing reconstruction opportunity zones in tribal areas. “Helping existing industry to strengthen and expand will address unemployment and poverty, which are believed to be the causes of terrorism.”

Idea of establishing such industrial zones in war-torn border regions with Afghanistan has yet not materialized. And experts say it will take billions of dollars of investment and years of work to set up infrastructure for industries there.

Textile products like knitwear, cotton cloth and readymade garments account for over half of the Pakistani exports. A tuff competition in international markets and falling industrial output at home have hammered down the exports this year.

Exports of textile have dropped to $6.7bn between July-Feb 2008-09 from $6.89bn in same period of previous year despite a steep depreciation in value of rupee against dollar.

But even free-trade agreements will not revive the poor industrial base of the country that is now crumbling after years of neglect, said M A Jabbar, Chairman Site Association of Industrial (SAI), largest industrial estate of Pakistan.

“Preferential trade might give us marginal benefit over competitors but we will need investment in human resource development and capital accumulation to increase exports in the long run.”

 

[Neo]

World Bank’s $500m soft loan to be released on 30th: Tarin ​

Saturday, March 28, 2009

ISLAMABAD: Adviser to the Prime Minister on Finance Shaukat Tarin has confirmed the approval of $500m soft loan for Pakistan and said the amount would be released on March 30.

On Thursday, the World Bank approved a soft credit of $500 million under the Poverty Reduction and Economic Support Operation (PRESO) after one and a half years which will help Pakistan regain economic stability, affected by the judicial crisis.

The World Bank (WB) had linked its funding to the International Monetary Fund (IMF) by asking Pakistan to approach the IMF first for balance of payments (BoP) support and then come to get a credit line for the budgetary support. Although project-related funding continued for Pakistan, the WB did not provide any soft loan to Pakistan after March 2007 because subsidies on power, fuel and commodities swelled the fiscal deficit to 7.4 per cent of the GDP.

“The WB approved a $500 million interest-free IDA credit to support the government’s programme to regain and maintain economic stability and to bring the economy back to higher growth,” the WB stated in its announcement here on Friday. According to the ministry of finance, Pakistan and the WB signed an agreement at Washington DC on March 26 for the International Development Association (IDA) credit of SDR 321.3 million ($500 million approximately) for the PRESO.

The agreement was signed by Abdul Wajid Rana, Minister Economic, Embassy of Pakistan, Washington DC on behalf of the government and Yusupha B Crookes, Country Director, World Bank, Islamabad on behalf of the WB.

The PRESO is a single-tranche development policy credit. The funds will be utilized by the government.

The PRESO is one of the three budgetary support credits that the WB will provide to the government during the current financial year, said Farrakh Qayyum, Secretary EAD.

“The other two, Higher Education DPL for an amount of $100 million and Social Protection/Safety Nets Programme for $200 million, will be finalized during the last Quarter of the FY 2008-09,” he added.

However, the WB states that Pakistan has experienced severe external and internal shocks in the past year and is confronting a very difficult macroeconomic situation.

The rise in international oil and food prices sharply inflated the country’s import bill and the subsequent slowdown in the global economy dampened external demand for Pakistan’s exports.

On the internal side, political turmoil and uncertainties affected investor confidence which, together with macroeconomic imbalances, led to capital outflows.

The PRESO supports the government’s policy measures that promote macroeconomic stability. “The government has taken important policy steps to stabilize the economy,” said Crookes. “These polices have succeeded in reducing external imbalances, rebuilding foreign exchange reserves, narrowing fiscal overruns, and lowering inflation. However, the sharp deterioration of the global economy poses significant risks to exports, remittances, and external financing. This underlines the importance of Pakistan regaining economic stability and protecting its poorest citizens during the process.”

The operation also supports measures to ensure that poor and vulnerable people are shielded from major adverse impacts of the stabilization process.

This entails improving the targeting of the government’s cash transfer programmes, focusing especially on the Benazir Income Support Programme.

“Protecting the country’s poor and vulnerable people is essential during the stabilization process,” said Satu Kahkonen, World Bank Lead Country Economist for Pakistan.

 

[david23]

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[Neo]

KSE jumps 195 points on better economic outlook ​

Saturday, March 28, 2009

KARACHI: Ignoring the terrible law & order situation in the country, the Karachi bourse jumped up by fresh three per cent and easily breached through 6,800 points level on Friday.

The KSE 100-share Index posted a fresh increase of 2.95 per cent or 194.97 points and ended at 6,803.46 points.

After opening on a positive note, market continued to hover upside throughout the day and closed very much close to its intra-day high of 6,827.18 points.

The market could have slipped into the negative territory owing to a powerful suicide blast in Khyber Agency, taking more than 50 lives and injuring another about 150 people, who were offering Friday prayers in an area mosque. The investors, however, ignored this law & order development in the country and gave more importance to the economic events this time, analysts said.

They added that investors injected fresh funds in market, keeping in view the approval of $500 million interest free loan to Pakistan by the World Bank. Moreover, the joining of market by the sideline investors on strength encouraged the other dormant investors too to take their active part in the rising market.

Therefore, the day turnover surged to 229.616 millions shares as compared to 205.219 million shares changed hands a day earlier - showing an increase of approximately 12 per cent on day-to-day basis.

On the contrary, the turnover on future market declined by 99 per cent to mere 500 shares from 50,000 shares yesterday.

In line with the overall market performance, the overall market capitalisation enhanced by Rs57 billion and stands at Rs2,043 billion.

Hasnain Asghar Ali at Aziz Fidahusein said that news of confirmation of World Bank’s grant of $500 million interest free loan and the WB offer to convert $67.5 million loan into grant, allowed the local bourse to ignore the last day phobia.

Low turnover initially did not allow an excited run-up, accumulation at discounted levels, however, allowed index to stage a decent recovery. A mix of apprehension and rumours from Saturday’s parliamentary address infused renewed buying interest in almost all the main board stocks, as materialization of the rumours, such as elimination of 58(2B) and restoration of Punjab government, will not only increase international support for the local democracy but will offer a healthy investment environment, he added.

Buying spree allowed the index to breach and sustain above major resistance of 6770-6773 as the whisper of increased foreign inflow, which proved wrong, invited the active corporate and retail participants with comparatively high energies, Asghar Ali said.

The foreigners, as usual, disinvested another total $56,560 in this session from three local bourses, according to NCCPL website.

Development that can move the local bourses either ways include the unveiling of US strategies regarding war against terror, financial and economic assistance to the supporting nations. These future developments might influence the local bourses, as the bourses are likely to stay sensitive to the situation linked with national and international developments.

Out of total 354 active stocks, 232 stocks closed in positive column, 107 stocks closed in negative column, while the value of remaining 15 stocks closed unchanged.

Highest volumes were witnessed in Bank Al-Falah at 17.115 million closing at Rs14.64 with a loss of 46 paisa, followed by Maple Leaf Cement at 15.802 million closing at Rs5 with a gain of 75 paisa, DG Khan Cement at 11.830 million closing at Rs22.64 with a gain of 64 paisa, National Bank at 11.202 million closing at Rs90.31 with a gain of 32 paisa, and Oil & Gas Development Company at 11.131 million closing at Rs68.94 with a gain of Rs3.08.

 

[Neo]

Pakistan to lose $500m in sugar import this year ​

Saturday, March 28, 2009

ISLAMABAD: The country is set to lose $500 million on sugar imports this year, the largest amount spent on the commodity, despite a bumper local sugarcane crop in the current season, officials said on Friday.

Prices are likely to soar due to smuggling of sugar out of the country and the refusal of the government to allow raw sugar imports for building up reserves to stabilise the market.

Fearing a shortfall in sugar supply, the Pakistan Sugar Mills Association (PSMA) had requested the government to allow import of 400,000 tons of raw sugar through the Trading Corporation of Pakistan (TCP) for refining and supplying to the market. This was meant to build a buffer stock and stabilise the prices.

They also demanded that a ban be imposed on export of raw sugar (gur) to ensure production of 50,000 tons in Peshawar, which could save consumers from short supply and price hike. The PSMA made the request in view of the looming crisis in the sugar market.

But the Economic Coordination Committee of the cabinet did not allow the import of raw sugar. Last year (2007-08), mills produced 4.7 million tons of sugar. In September 2008, the TCP and mills had a joint stock of 1.2 million tons. This year (2008-09), sugar production is estimated to be three million tons. Competition among mills resulted in an increase in sugarcane price to Rs130 per 40kg compared to Rs80 set by the government for the season. Non-imposition of a ban on raw sugar exports resulted in production shortfall of 50,000 tons in NWFP.

Furthermore, extremely high sugar prices in Afghanistan encouraged smuggling of the commodity under the guise of gur. According to rough estimates, over 200,000 tons of sugar were smuggled out of the country and till March, the trend continues.

So far, the ministry of food and agriculture has failed to stop the smuggling. The government’s refusal to allow import of raw sugar and ban on the export of gur plus rampant smuggling led to shortages. Stock on September 2008 stood at 1,200,000 tons; less consumption during the Oct-Nov period in 2008 amounted to 700,000 tons; production for 2008-2009 amounted to 3,200,000 tons; the available sugar weighed 3,700,000 tons; subtracted sugar smuggling at 200,000 tons; sugar availability stands at 3,500,000 tons; domestic consumption is estimated at 4,200,000 tons; net shortage of sugar in October-November 2009 would not be less than 700,000 tons.

The export of raw sugar and smuggling of refined variety would cost the Federal Board of Revenue (FBR) Rs500 million in tax losses and the country would have to suffer foreign exchange loss of $115 million that could have been avoided. Sugar shortage would cost the country $322 million, provided the international prices remain stable at $400 per ton and freight is $60 per ton.

Timely import of raw sugar and a ban on its export would have saved $262 million of the government, sources in relevant government departments said.

 

[Neo]

‘Trade diversion towards region to save $1.5bn’ ​

Saturday, March 28, 2009

LAHORE: SAARC Chamber of Commerce and Industry (SAARC CCI) has appreciated the Pakistani government’s decision to promote trade with neighbouring countries.

In a press statement on Friday, Tariq Sayeed, SAARC CCI president, said the decision is a positive step, and said that it would help increase the share of Pak trade within South Asia and affect the overall increase in intra-regional trade, which was less than 5 per cent before the formation of SAARC in 1985.

Referring to some studies, including that by Dr Hafiz Pasha, he said that trade diversion towards the region could save enormous amounts of $1.5 billion per annum, if essential products not made locally, were imported from the region, particularly from India.

He said Pakistan has to import raw material of steel and iron, machinery and engineering-based equipments, chemicals, and consumer goods from Australia, Brazil, Mexico, Europe and South East Asian countries, which are also available in India at a compatible quality and competitive rates. “There is no harm if we buy these products from India,” he maintained.

Iftikhar Ali Malik, VP SAARC CCI said that allowing trade through the Wagah-border and increase in importable items from India would help promote Pakistani trade with the largest market of the region and eventually have multiple impacts in terms of saving of huge foreign exchange of the country.

Sayeed stressed upon the need for promoting intra-regional investment, stating that investment has taken over trade strategy due to its multiplier effects, like innovation in technology, value addition, and surplus production for quantum leap in exports, etc. Citing the exemplary increase in Chinese exports, he said that FDI had a major role in increasing the size of exports from China, attracting more than $50 billion per annum FDI for the last one decade.

 

[Neo]

Govt readies ‘Energy Plan 2022’​

* Plan suggests hydrocarbon, petroleum products supply from Gulf, diesel import from India​

ISLAMABAD: The government has prepared an ‘Integrated Energy Plan 2022’ with a vision to secure affordable energy supplies and focus on indigenous resources, sources told Daily Times on Friday.

The plan suggested that the subsidies on energy for the poorest and the vulnerable section of the society should continue, despite the fact that the government had already agreed with international funding institutions to abolish all such subsidies by June 30.

The energy plan was drafted by the recently-formulated Energy Experts Group (EEG). Oil and Gas Development Company Chairman Farooq Rahmatullah heads the body, which has 14 other members and reports to the prime minister.

The proposal report would be formally presented to the prime minister and the top leadership by mid-April.

The report, seen by Daily Times, focused on developing the country’s indigenous resources and introducing an energy efficiency plan to conserve energy.

Proposals: The report also proposed a review of the energy plan every three years and suggested that the government must secure future supplies of hydrocarbon products and devise a contingency plan for regular supplies of petroleum products from the Gulf region.

The EEG report also said Pakistan should import diesel from India as it would be relatively inexpensive.

The report raised concern over the circular debt issue, saying it had affected oil-refining capacity in the country. It also discouraged the government from allowing import of used oil refining machinery unless they were accompanied by secondary processing facilities.

The EEG report projected that Pakistan could produce 9,000 megawatts of electricity through liquefied natural gas and imported gas by 2022.

It said that the country had the potential to produce around 18,000MW of hydro electricity by 2022.

It said 12,450MW of coal-based electricity could be generated by 2022. The report targeted generating 17,400MW of electricity from renewable energy sources.

 

[Neo]

Pakistan’s exports to US dwindle owing to gas shortage​

KARACHI: Pakistan lost considerable share of its export to United States of America (USA) during the current financial year owing to host of reasons, sources in the export sector told Daily Times.

Textile and clothing was the main sector, which lost its share in the USA market as according to exporters and officials, the share of export to USA fell below 20 percent in total export volume compared to 22 to 24 percent in the previous years.

The sliding export to USA market has been causing concerns in the export sector of the country for quite some time as high cost of production coupled with high tariff structure on Pakistani export has been depriving the country from this high priced and lucrative American market.

However, the report of USA chamber of commerce a couple of days to ease the tariff slabs and provide greater market access to Pakistani exports has been seen as an encouraging move, which if implemented would definitely help Pakistan to regain its lost share in this market.

Although, global economic recession, which hurt USA severely contributed in dwindling Pakistani export to this market, other factors too made the situation tough for the local exports.

Zubair Motiwala, a well-known figure in textile sector pointed out that uneven domestic situation for the export sector was the leading factor contributing to the downfall in exports to USA market.

For instance, during November and December of current fiscal year when major export of textile products to USA and European market take place just before Christmas and new year, the industry was grappling with gas shortage which hampered the production and significant quantity of export orders could not be honoured due to this issue.

“It caused estimated one billion dollar shortfall in export to USA and European market due to this problem,” Motiwala, who also holds Advisor to Sindh Chief Minister on Investment portfolio, revealed.

He also pointed out increased duty drawback by Chinese government from 11 to 15 percent on its textile exports, which made Chinese products more competitive compared to its Pakistani counterparts.

According to an official in Textile Ministry, Pakistan’s value-added textile products were affected adversely due to these issues and created a major dent in export.

About the latest USA Chamber report proposing easing the duties on Pakistani textile goods, Motiwala said that this is what we have been arguing since long that USA and EU should give preferential treatment to goods originating from Pakistan.

“We don’t need aid. We just want trade to keep the wheel of the industry moving and create more and more jobs,” he said and added that realisation on part of USA business lobby is very heartening.

Referring to Italy’s call to extend trade benefits to Pakistan, advisor said that it is also a key development and urged that the EU summit should be held immediately on this issue instead in the second half of 2009 as proposed by Italy.