Pakistan Economy - News & Updates - Archive

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KARACHI (July 03 2006): Foreign private investment, which started increasing gradually since FY02, almost doubled to $820 million in FY03 and then reached $922 million after posting a modest increase in FY04. It posted another quantum jump in FY05 when it surged to $1,677 million recording an increase of about 82 percent over the previous year.

According to revised data format, adopted by the State Bank as from April last, and released for the month of May on June 23, the surge in current year (FY06) has been especially pronounced as it has already reached a record figure of $3,525 million during the period from July 2005 to May 2006, compared with $1,171 million in July-May FY05, depicting an increase of 201 percent over last year's figure.

Of the total investment, $3,212 million was in the form of foreign direct investment (FDI) and $313 million as portfolio investment.

The overall figure included $1,538 million as privatisation proceeds compared with $104 million of such proceeds in the corresponding 11 months of FY05.

The increase in privatisation proceeds during the year indicated the speed with which the government wanted to privatise various public sector enterprises. Privatization proceeds as sale proceeds of an existing enterprise, it may be noted, are as good a foreign private investment as fresh funds for a new establishment.

The only difference is that instead of establishing a new company with the dollars or Euros involved, investors buy an existing government, or even privately owned, domestic organisation catering the local or the export market and improve its efficiency and service standards using latest technology and innovation. In the process, additional funds become available for the owners of these establishments to invest in new enterprises.

The new format shows data on a regional and sub-regional basis such as Developed Countries (including Western Europe with a further sub-grouping of European Union and Other Western Europe, North America and Other Developed Countries), Developing Countries (including Caribbean Countries, Africa, Asia with a further sub-grouping of West Asia and South,East and South East Asia) and Unspecified (mainly the International Financial Institutions or IFIs).

Actual regional break-up of the 11-month total indicates that Developed Countries pumped in some $1,518 million, Developing Countries over $1,883 million and Unspecified/IFIs some $124 million compared with $754 million, $344 million and $72 million, respectively, in the corresponding period of FY05.

Within Developed Countries, Western Europe contributed $695 million including $286 million by European Union and $409 million by Other Western Europe; North America invested some $749 million while Other Developed Countries brought in $72 million.

Within Developing Economies, Africa invested $71 million, Asia $1806 million including $1,726 million by West Asia (mainly Middle East), and $80 million by South, East and south East Asia. Caribbean Islands, as part of developing countries, about $1 million.

It may be of interest to mention that foreign private investment, including direct and portfolio, in Pakistan is governed by Foreign Private Investment (Promotion and Protection) Act, 1976 as amended by Foreign Private Investment (Promotion and Protection) (Amendment) Act, 1990 which allows Pakistanis enjoying double citizenship the same facilities as are available to foreign investors but restricted them to deposit the entire amount of repatriable foreign investment in foreign exchange account in Pakistan for its subsequent use for the purchase of machinery and other fixed assets of the undertaking.

The Industrial Property Order, 1979 provides adequate safeguards to protect industrial property against compulsory acquisition in accordance with the provisions of the law. The other major law covering any left over aspects is Economic Reforms Act of 1992.

The Government of Pakistan's most recent Investment Policy (announced November 1997) allows foreign investment on repatriable basis in agriculture, services, infrastructure and social sectors in addition to the manufacturing sector.

 

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KARACHI (July 03 2006): The fiscal year 2005-06 proved to be the honeymoon year for the Pakistan rice export, as the country became the member of $1 billion club, while the total exports touched $1.12 billion mark. Pakistani rice exporters with their tremendous efforts achieved the target of $1 billion one year earlier and set a new record of the country's rice export in one year.

Out of the total rice exports around 880,000 tonnes of Basmati variety of rice worth around $500 million was exported during the said period while the total export of Irri-6 variety was reached up to $620 million.

Around 733,502 tonnes of Basmati rice worth $418.746 million were exported only from Karachi while the total rice export from Lahore reached 13,432 tonnes worth $7.005 million.

The rice export from Quetta increased tremendously during the fiscal year 2005-06 as over 125,735 tonnes of Basmati rice worth $40.995 were exported only from Balochistan to neighbouring countries through land routes.

The Quetta-based rice exporters are exporting rice to Iran, Afghanistan, Central Asian republics and other neighbouring countries through land routes from Balochistan and the rice export from this province is increasing rapidly by the passage of time.

The Rice Exporters Association of Pakistan (Reap) while considering the efforts of Quetta-based rice exporters, has set up it regional office at Quetta to facilitate the rice traders for increasing country's rice export.

The rice exporters also played a very important role in value-addition of this commodity during the year and the Basmati rice was exported on the average price of $535 per tone. The highest rate was recorded $590 per tone from Karachi while the lowest price remained at $314 per tone from Quetta. The rice exporters also explored new markets and during the fiscal year 2005-06.

 

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KARACHI (July 03 2006): Money supply during the week ended on June 17 decelerated by Rs 6 billion to Rs 389.5 billion, though it was a very small deceleration when compared with the huge descent of Rs 36 billion in government sector borrowing to Rs 96 billion within a week.

The reason was a sudden jump in the foreign sector forcing net foreign assets (NFA) of the banking system, and hence money supply, to surge by Rs 27 billion, which almost neutralised the contraction impact originating from the government sector. In the previous week, the NFA had declined by over Rs 11 billion.

Another reverse movement occurred in the private sector in which credit off-take by the sector increased by about Rs 7 billion over the week compared with a decline of Rs 4.5 billion in the previous week.

The foregoing movements in government, private and foreign sectors in a week should have resulted in a net contraction in money supply of Rs 2 billion, whereas the actual contraction amounted to Rs 6 billion. This was explained by the negative balance of other items (net) or OINs of the banking system, a factor which had been depressing money supply for the last many weeks, that increased by another Rs 4.5 billion over the week.

It would be of interest to note that at this time last year (viz to June 18, 2005), government borrowing showed an expansion of Rs 110 billion, private sector an expansion of Rs 360 million and NFA an expansion of Rs 24 billion, to be offset partly by the contraction of Rs 86 billion in the OINs of the banking system with monetary expansion ending up at Rs 408.5 billion.

Break-up of deceleration of Rs 6 billion in money supply during the week showed that reduction in money supply was shared by both components with currency in circulation going down by Rs 4 billion and deposit money declining by Rs 2 billion.

Within deposit money, demand deposits declined by Rs 1.4 billion, time deposits fell by Rs 2.4 billion and Resident Foreign Currency Deposits (RFCDs) increased by Rs 1.8 billion.

A break-up of decline in government borrowing of some Rs 36 billion showed that the entire decline occurred in budgetary borrowing which squeezed by over Rs 39 billion to Rs 81 billion during the week while borrowings under commodity operations increased by another Rs 3 billion to Rs 15 billion during the year so far, raising total wheat procurement loans to about Rs 51 billion since March 22.

As regards the mix of budgetary borrowing squeeze during the week, decline in borrowing occurred 'on account of' (oao) both the Federal Government (down Rs 25 billion, entirely oao SBP as borrowing from scheduled banks increased by about Rs 3 billion) as well as the provincial governments (down Rs 15 billion: Rs 8 billion oao SBP and Rs 7 billion oao scheduled banks).

Change in net foreign assets (NFA) of the banking system had a dual effect during the week.

On the one hand, it helped the government generate revenue from the build-up of NFA on its own account and used the proceeds to retire its borrowing from the central bank. As an effect of this, government deposits with the banking system increased by Rs 25 billion while their investment in government securities declined by about Rs 24 billion.

On the other hand, actual build-up of NFA of the banking system both on account of public and private sectors knocked out partly the impact of contraction in money supply originating from the government sector.

Depletion of reserves on the back of rising imports and maturing foreign liabilities stood effectively stalled during the week ended on June 17 with reserves climbing again to $13,000.9 million.

According to advance data on reserves, liquid foreign exchange reserves further increased by another $20 million during the week surging to $13,021.4 million on June 24.

The increase of over $20 million during the week was entirely on account of SBP whose reserves increased by $74.5 million while reserves held by scheduled banks fell by $54 million.

 

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LAHORE (July 03 2006): Pakistan and Australia have a huge potential of bilateral trade and could initiate joint ventures in a number of sectors, including textiles, pharmaceuticals, wool, food items and coal.

This was the consensus developed during the LCCI Senior Vice President Abdul Basit's meetings with top Australian government functionaries and businessmen during his month-long visit to that country, said a press release issued on Sunday.

Talking to Philip Stone Howe of Australian Ministry of Trade and Consul General of Pakistan in Sidney Mohammad Azam, the LCCI senior vice president said that Pakistan was a land of opportunities with a high rate of return to all sorts of investments and the atmosphere is quite conducive for the foreign investors.

The LCCI leader particularly briefed them on the policy of industrialisation being pursued by the present government.

He informed them about the network of industrial estates being spread by Punjab Chief Minister Chaudhry Pervaiz Elahi.

The LCCI SVP urged them to arrange a sector specific delegation of Australian businessmen to Pakistan so that they could be able to take stock of the situation for themselves.

He informed them that at a time when the world has shrunk into a global village, the exchange of business delegations and single country exhibitions are the most effective tools to promote bilateral trade between the two countries.

He also promised them to bring an LCCI delegation to Australia so that the Pakistani business community could avail the business opportunities available in that country.

Meanwhile, addressing a gathering of businessmen, the LCCI senior vice president said that due to economic reforms initiated by the present government, Pakistan was fast attaining the status of economic leader in the region.

He said that Pakistan was a gateway to oil-rich Central Asian States that have a huge potential of investment.

 

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KARACHI (July 03 2006): The overall sales volume of the oil marketing industry during the 11-month period of FY06 ending May 2006 witnessed a 1 percent increase to 14.1 million tonnes as against 13.9 million tonnes during the corresponding period last year.

The most remarkable feature of the sales volume has been the unprecedented growth in fuel oil sales which by the end of December 2005 (first six months of FY06) were down by 20 percent on a y-o-y basis are now higher by 5 percent to 4.5 million tonnes.

Fuel oil sales had begun picking up since March 2006 on the back of higher demand from thermal power units such as Wapda and Hubco due to lower water availability. Sales of jet fuel remained robust as it throughout the year, was rising by 21 percent during the period under review mainly on account of an increase in exports to Afghanistan and additional relief flights for the earthquake-hit areas in the northern parts of the country.

On the other hand, motor spirit and diesel sales thinned by 10 percent and 4 percent respectively. This has been the trend of domestic POL prices since April 2004 (over two years now). In order to give respite to the general public, the government took the burden on itself by way of completely eliminating the PDL to keep prices constant on many occasions.

Since April 2004, there have been a total of 53 fortnightly reviews out of which prices were kept unchanged 42 times, raised just 11 times and were never reduced. Prices on the whole during FY05 rose in the range of 17-25 percent and in FY06 they have risen by 23-33 percent.

The change in domestic POL pricing formula, which the government would significantly dent OMC profitability. A marginal improvement in sales volumes is not anticipated to do much good for the sector either.

 

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ISLAMABAD (July 04 2006): Minister for Health, Muhammad Nasir Khan on Monday said country's exports of pharmaceuticals products have reached $1.35 billion from $800 million this year, showing a considerable growth.

National pharmaceutical industry is progressing well and ready to launch itself in the international market, he said while addressing a foundation stone laying ceremony of Filter Clinic being built by Indus Pharma at Pakistan Institute of Medical Sciences (Pims).

Nasir Khan said today national pharma industry, in terms of units, takes care of around 80 percent of the share of domestic pharma market. This itself is an indicator of confidence of medical profession on our pharma industry, he added.

Assuring full support to pharma industry, he said the government foresees a great potential for this industry in future.

The minister appreciated great contribution from Pims as well as pharma industry during the last year's earthquake and said this is in continuation of the situation that ministry of health felt the need for establishment of filter clinics in Pims to control and manage the ever increasing number of patients. He said the present government is giving priority to the health of people and has enhanced the budget for health to Rs 12 billion.

The minister said in all federal government hospitals of the country, kidney patients would be provided free of cost dialysis facility. The minister said government would launch a programme - Early Detection and Treatment of Breast Cancer in Pakistan. Speaking on the occasion, Managing Director, Indus Pharma, Zahid Saeed said the facility will serve around 1,200-1,500 patients daily.

The pre-fabricated building of filter clinic is expected to be completed within two months and would have 28 rooms in addition to laboratory, waiting room and canteen facility. Secretary Health, Syed Anwar Mahmood and Executive Director Pims, Dr Fazl-e-Hadi were also present on the occasion

 

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SUST (updated on: July 04, 2006, 19:05 PST): President General Pervez Musharraf on Tuesday inaugurated the Sust dry port, saying the high-altitude facility near Pakistan-China border would bolster bilateral commerce to new levels and also facilitate in realising Pakistan's potential as hub of intra-regional trade.

"This landmark project is poised to impart further depth and strength to Pakistan-China economic and political ties as well as help expand Pakistan's commerce linkages with the regional countries including Central Asia states", he stated at the inaugural ceremony of the port, jointly built by Pakistan and China.

President Musharraf spoke of Pakistan's central geo-strategic location at the heart of regions including Western parts of China, Central Asian states, Afghanistan, Iran, India and the oil-rich Gulf countries and envisioned a pivotal role for Pakistan in augmenting trade between them.

"Such is Pakistan's geo-strategic strength-it would play a vital role in promoting trade between members of major regional groupings including SAARC, Economic Cooperation Organisation and Shanghai Cooperation Organisation --- trade interaction between the regional countries has to take place through Pakistan," he underlined.

Dwelling on the importance of the 10,000 ft-high Pakistan-China Sust Dry Port, the President said the state-of-the-art facility, an elaborate network of infrastructure being put in place across Pakistan and improvement in Korakoram Highway would provide China shortest access to the Middle East and other world markets through Pakistani deep sea ports including Gwadar.

Pakistan, he said, would become a trade and energy corridor for China and landlocked Central Asian countries.

"We are talking of Pakistan-China inter-connectivity in terms of energy and trade, improvement in the Korakoram Highway, development of railway link and gas and oil pipeline linkages and even fibre optics connectivity along the KKH under one project simultaneously will open up immense prospects of trade and economic growth," he said.

The President said the completion of KKH was hailed as the eighth wonder of the world and added that "we are capable of creating 9th and 10th wonders in the form of railway and pipeline linkages between Pakistan and China." He also referred to strengthening of quadrilateral arrangement between Pakistan, China, Kazakhstan and Kyrgyzstan while stressing the country's importance in making use of regional opportunities for mutually beneficial economic growth.

In local perspective, President Musharraf said the Sust Dry Port would open new vistas of employment opportunities for the people and lead to their socio-economic development.

"The government is committed to the uplift of the people of these beautiful areas and I am sure that the construction of Bhasha-Diamer dam, the widening of KKH and the commencement of services at Sust Dry Port would fetch tremendous gains to the local people and bring them at part with the developed parts of the country," he said.

According to the officials, the dry port has the capacity to handle 40 Chinese containers a day and this would be increased to 400 containers per day in the future.

President Musharraf observed that the Sust port would not only enhance trade and economic linkages between Pakistan and China but through increased co-operation also help forge deeper links between their people.

Earlier, Dr Salman Shah told the gathering the construction of Sust Dry port makes it the first formal dry port linking the two countries and stated that it would prove to be an important step towards intensifying bilateral economic co-operation.

He said China's vast market offers great opportunities and Pakistan is centrally located to provide it trade route to the Middle East and other world markets.

The silk route dry port, he said, currently generates Rs 714 million per year with Pakistan importing Chinese goods worth Rs 2.4 billion and Pakistani exports amounting to Rs 180 million.

 

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GENEVA (updated on: July 05, 2006, 20:02 PST): Pakistan plans major upgrades to its ports, roads and pipelines as it seeks to become a regional hub for energy shipments, Prime Minister Shaukat Aziz said on Wednesday.

Aziz said that the energy-importing South Asian country, which shares borders with major producer Iran as well as booming energy consumers India and China, hoped to take advantage of its geography and feed the region's fast-growing needs.

"We are fortunate that Pakistan is located near the energy reserves of the world in the Middle East, so we can tap those and share it with our neighbours," he told a news conference in Geneva, where he had attended meetings on United Nations reform.

"We are working on these corridors to improve the linkages between Central Asia, China, Pakistan and beyond," he said.

Negotiations are still ongoing on the tariffs for a $7 billion natural gas pipeline project running from Iran through Pakistan to India, Aziz said.

He said Pakistan was also talking with Turkmenistan about channelling gas through Afghanistan and into Pakistan and India, and cited early-stage talks with China on energy shipped through the Karachi sea port.

"With China, we are hoping to attract them to take some of their energy via a pipeline from Karachi to Western China, via the land border we have with them," Aziz said, adding: "It is still preliminary, but we are talking."

The Karachi port will "in the next few weeks" announce the construction of a deep water container terminal to serve major vessels and large container carriers used in international shipping, Aziz said.

"Karachi's new deep water container terminal will be a major mother port and hub for container traffic in the region, and can be accessed by countries in Central Asia, by Afghanistan and by Western China," Aziz said.

He said the deep water Gwadar port, close to the Iranian border, should be ready within a few months and would also boost Pakistan's emerging energy transit role.

"We are positioning it as an energy port, as an energy hub for storage and refining," he said. "We are building roads links to Afghanistan and Central Asia which will allow this port to be a major shipment and transit port for energy and other goods."

While offering few details, Aziz said he expected no barriers to foreign investment in the initiatives. "We think these are projects with great opportunity, and we will offer them to investors from anywhere in the world," he said.

 

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SUST (July 05 2006): President General Pervez Musharraf on Tuesday, while inaugurating the Sust dry port, said that the high altitude facility near Pakistan-China border would bolster bilateral commerce to new levels and would facilitate the realisation of Pakistan's potential as the hub of intra-regional trade.

The President said: "This landmark project is poised to impart further depth and strength to Pakistan-China economic and political ties as well as help expand Pakistan's commerce linkages with the regional countries including Central Asian states." The port has been jointly built by Pakistan and China.

Musharraf spoke of Pakistan's central geo-strategic location at the heart of regions including western parts of China, Central Asian states, Afghanistan, Iran, India, and the oil-rich Gulf countries, and envisioned a pivotal role for Pakistan in augmenting trade among them.

"Such is Pakistan's geo-strategic strength. It would play a vital role in promoting trade between members of major regional groupings including Saarc, Economic Co-operation Organisation (ECO) and Shanghai Co-operation Organisation (SCO) as trade interaction between the regional countries has to take place through Pakistan," he said.

About the importance of the 10,000 ft high Pakistan-China Sust Dry Port, the President said that the state-of-the-art facility, an elaborate network of infrastructure being put in place across Pakistan and improvement in Karakoram Highway would provide to China shortest access to the Middle East and other world markets through Pakistan's deep-sea ports, including Gwadar.

Pakistan, he said, would become a trade and energy corridor for China and the landlocked Central Asian countries.

The President said: "We are talking of Pakistan-China inter-connectivity in terms of energy and trade, improvement in the Karakoram Highway (KKH), development of railway link and gas and oil pipeline linkages and even fibre-optics connectivity along the KKH under one project simultaneously will open up immense prospects of trade and economic growth."

He said that completion of KKH was hailed as the Eighth Wonder of the world, and added that "we are capable of creating the 9th and 10th wonders in the form of railway and pipeline linkages between Pakistan and China."

He also referred to strengthening of quadrilateral arrangement between Pakistan, China, Kazakhstan and Kyrgyzstan while stressing the country's importance in making use of regional opportunities for mutually beneficial economic growth.

The President was flanked by PML President Shujaat Hussain, Secretary General Mushahid Hussain, Minister for Kashmir and Northern Areas Tahir Iqbal, and Advisor to PM, Dr Salman Shah.

In local perspective, President Musharraf said that the Sust Dry Port would open new vistas of employment opportunities for the people, and would lead to their socio-economic development.

"The government is committed to the uplift of the people of these beautiful areas, and I am sure that the construction of Bhasha-Diamer dam, the widening of KKH, and commencement of services at Sust Dry Port would fetch tremendous gains to the local people and bring them at par with the developed parts of the country," he said.

According to the officials, the dry port has the capacity to handle 40 Chinese containers a day, and this would be increased to 400 containers per day in the future.

President Musharraf observed that the Sust port would not only enhance trade and economic linkages between Pakistan and China but, through increased co-operation, would also help forge deeper links between their peoples.

Earlier, Dr Salman Shah told the gathering that the construction of Sust Dry Port had made it the first formal dry port linking the two countries--Pakistan and China--and added that it would prove to be an important step towards intensifying bilateral economic co-operation.

He said that China's vast market offers great opportunities and Pakistan is centrally located to provide it a trade route to the Middle East and other world markets.

The silk route dry port, he said, currently generates Rs 714 million per year, with Pakistan importing Chinese goods worth Rs 2.4 billion and Pakistani exports amounting to Rs 180 million.

Welcoming the President, the Deputy Chief Executive of Northern Areas, Ghazanfar Ali Khan, said that the trading activity would multiply with the commencement of the new dry port facilities and added that the revenue generation would be Rs 20 billion per annum.

He drew President's attention to some of the problems faced by the local people in terms of their rapid economic growth, and demanded relief in SMEs and agro loans to be extended to them. The Chairman of Pakistan-China Sust Dry Port Company presented traditional a long coat (Chugha) and cap to the President on the occasion.

 

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KARACHI (July 05 2006): The Credit Plan for FY07 proposed at the annual meeting of the National Credit Consultative Council (NCCC) envisages the broad money to grow by 13.5 percent (Rs 459.9 billion) based on GDP growth target of seven percent and the inflation target of 6.5 percent set for the current fiscal year.

The council meeting chaired by Dr Shamshad Akhtar, Governor, State Bank of Pakistan (SBP) also reviewed the monetary and credit developments during the last fiscal year and proposed the Credit Plan for FY07 here on Tuesday.

The State Bank presented the Credit Plan for FY07, which will be approved by the SBP Central Board of Directors at its meeting being held in Karachi on July 6, 2006.

Shamshad Akhtar pointed out that the targets under the Credit Plan for FY07 should be treated as minimum requirements to support economic growth.

The NDA of the banking system is expected to expand by Rs 450.1 billion this year. NFA of the banking system is projected to rise moderately by Rs 9.8 billion. In line with the budget, the government sector is estimated to absorb bank credit to the extent of Rs 130.1 billion (Rs 120.1 billion for budgetary support and Rs 10 billion for commodity operations). Credit to private sector is estimated at Rs 390 billion.

The Council expressed its concern that the liquidity position will remain tight due to large recourse of the government from the banking system, given the fiscal expansion anticipated for 2006-07.

Dr Akhtar informed the Council that the State Bank would strive to meet the challenge of maintaining price stability during the fiscal year 2007 and asked the Pakistan Banks Association for its assistance in bringing down the spread between the lending and deposit rates for the benefit of small depositors and also stretching the maturity of deposits to create room for long term project financing. She assured the participants that data on new bank borrowers would be provided to the NCCC participants.

The SBP governor has, in principle, agreed to (i) set up an Infrastructure Task Force to help improve the financing to meet the growing requirements of the economy; (ii) examine the feasibility of allowing the refinance facility on Islamic Banking principles.

The Council was of the view that provincial governments should lower the stamp duty, which is levied on corporate debt papers and securitisation. The council also proposed the provision of data on provincial distribution of industrial credit and recommended for enhancement of credit to SME sector in order to alleviate poverty.

Dr Shamshad Akhtar informed the council that NCCC had been constituted in September 1972 by the federal government to ensure optimal utilisation of bank credit through the process of directed credit to various sectors. Now that the on-going financial sector reforms have virtually led to the stoppage of all directed and subsidised credit and that the credit planning process is completely market-based, it is highly desirable to change the status of the NCCC consistent with forces of free market economy.

The governor, SBP, therefore, proposed that the NCCC be renamed as "Private Sector Credit Advisory Council" whose role should be to explore the credit needs of the private sector and ensure that those credit needs are appropriately met. The council endorsed the proposal of the governor SBP. This proposal will be presented to the SBP Board of Directors.

The meeting was attended among other by the, Riaz Riazuddin, Economic Adviser, Jameel Ahmed, Executive Director, Dr Aftab Nadeem, Director, Economic Policy Department, SBP, presidents of commercial banks, representative of the federal and provincial governments, chambers of commerce and industry and agriculture.

 

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KARACHI (July 05 2006): MCB Bank Ltd, the second largest listed bank at the Karachi Stock Exchange (KSE) has planned to sell global depository receipts in the range of $100 million to $150 million, utilising funds for acquisition and gaining international recognition. The bank has appointed Merrill Lynch and KASB to help sell global depository receipts at the overseas market.

According to the experts depending upon the demand and pricing, the lender would sell GDRs soon aimed to utilise these funds for acquisition. Moreover, this would help gain recognition among the international investors, building a strong base for the group. It would help the group to sell more GDRs in future in other associated companies.

MCB Bank, first bank in the country is contemplating raising fresh equity capital in the form of GDRs, to be listed at the London Stock Exchange. A consortium of Merrill Lynch and KASB has been mandated to place the issue with institutional and retail investors outside Pakistan.

MCB Bank with an asset base of $5 billion and deposit base of over $3.8 billion. With a market capitalisation of over $1.7 billion. MCB Bank is one of the mostly actively traded stocks.

According to an analyst several investors heard rumours about floatation of GDRs by the MCB Bank since the last couple of weeks and despite the downturn at the stock market on several occasions, the lender received support from financial institutions and high net worth investors.

The MCB Bank for the last four consecutive sessions has either closed at the upper circuit or near to the upper level, with heavy volumes. The share price during Tuesday's trading climbed by Rs 9.45 to Rs 213.45 on a brisk business of 17.989 million shares.

"Based on its market position, potential for growth, profitability and management quality, MCB has been receiving the Euro money Award for Excellence for the "Best Bank in Pakistan" for five out of the past six years.

Since its privatisation in 1991, MCB's major shareholder has been the Nishat Group, the largest and one of the oldest business conglomerates in Pakistan, having substantial interests in cement, textiles, finance and insurance. MCB has been an active contributor and beneficiary of the economic and social development of the Pakistani nation. Its 9,000 employees operate through a network of 946 branches, servicing of institutional banking clients and 4.1 million account holders.

The capital of MCB Bank is around Rs 5.2 billion and funds raised through this GDRs would used as tier 1 capital and would be convertible into shares, after passing through primary resolution at general body meeting. Last year, Dr Mohmmad Taccob, former governor of State Bank of Pakistan has been elected as one of the board directors of the lender and would head the audit committee.

 

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KARACHI (July 05 2006): The Pakistani ship owners are eyeing up to 500 million tonnes of annual freight market of India which would be open after the formal implementation of the amended bilateral shipping protocol between the two countries.

According to shipping circle, the main impediment in the private ship owning sector under Pakistani flag vessels. The early implementation of the shipping protocol between Pakistan and India was agreed at the federal secretaries level early this year, at the Directorate General of Ports and Shipping Office, Karachi.

Last January, The Director General Ports and Shipping, Captain Anwar Shah. While the Joint Secretary, Ministry of Shipping, Road Transport & Highways, Government of India, Susheel Kumar had announced their agreement in amending the 'restrictive clauses, three and five', allowing lifting for third country cargo from their ports by either flag vessels.

Pakistan and India agreed to amend the old 'Shipping Protocol 1975' for the enhancement of freight traffic and freedom of navigation and commercia1 activities between the two countries.

The ministry of ports and shipping of Pakistan pursued the matter at their end and Cabinet approval was sought for the amendment agreed that was graciously approved.

However, it is intriguing to note that the Indian side is dragging its feet for the past seven months and have not been able to get the same approved by their cabinet.

Although, it was the Indian government and their ship owners who had been trying to amend the shipping protocol for the past many years to enable the Indian flag vessels to lift containerised cargo from Pakistani ports. The owners and management of Sheryas Shipping had approached the director general ports and shipping many times for the amended shipping protocol.

It may recalled that Indian ministry of shipping allowed Pakistan National Shipping Corporation (PNSC) vessel to load a cargo of rice from Indian, Kandla port to Nigeria as a goodwill gesture on the request of Pakistan's DG ports and shipping during the year 2005, as a incentive of confidence building measures to amend the shipping protocol immediately.

The Pakistani foreign office must take up this issue with the Indian government for the early clearance of the protocol.

This we have learnt from shipping circles in Pakistan who eagerly are awaiting signing of the protocol similarly the Indian shipping companies are also keen for the expeditious signing of the protocol to enable regular service by the Indian flag vessels.

It is also learnt that the owners of Mega-I, a private Pakistani Shipping company, are keen to launch the Karachi-Mumbai ferry service but the only hitch is for the Indian government to sign the protocol.

Interestingly, the Indian merchant shipping fleet is lifting about 30 percent of the 450 to 500 million tonnes of their national carriage, which is considered to be an attractive market for Pakistani ship owners and operators. While the national flag carrier PNSC lifts only about 20 percent, from a total cargo of 55 million tonnes.

The sources said that the protocol would also encourage some Indian container line operators to look at the Pakistani market for container operations and reduce Pakistan's dependence on Far Eastern and Western container shipping lines as well as help reduce freight charges.

 

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KARACHI (July 05 2006): The country's garments export target of $3.252 billion may fall short by $228 million as the exports reached only $2.753 billion during the first 11 months of the last fiscal due to higher cost of production and aggressive strategy of international competitors, sources said.

They said that the country's garments export target of $3.252 billion seems next-to-impossible to achieve as it has reached $2753 million in the first 11 months of the last fiscal (July05-May06) and the final figures would portray a decline of almost $228 million.

"Rough estimates show that the average exports of the country were around $250 million per month during the last fiscal, however, it should have been around $271 million every month," said a leading garment exporter. He added that the first 11 months figures of the last fiscal should have been nearly $2981 million instead of $2753 million.

Since the garment sector could be divided into two segments - readymade garments and knitwear garments, its targets were also set separately last year.

"The aggregate $3.252 billion target, the major chunk of the exports were of knitwear garments worth $1938 million, while the readymade garment exports target was set at $1314 million," the exporter said.

Elucidating the details, he said that during the past 11 months of FY06, readymade garments exports were recorded at $1189 million, showing that the country's exports would have to fill the remaining gap of $125 million in just one month (June06), which seems quite unlikely.

On the contrary, the knitwear exports had reached $1565 million during the under-discussed period and it has to achieved $373 million more in just one month to actualise the set target of $1938 million.

"The set targets were quite ambitious as the authorities should have realised that the exporters could face afflictions in attaining it amid higher input costs and rising competition on the international front," said a Karachi-based garments exporter who wished not to be identified.

Some of the exporters were of the view that the export figures could have declined even more, if the country did not explore more avenues and markets in the EU countries.

"We (Pakistani exporters) have recently explored new markets in Poland and Romania," said a Karachi-based exporter, terming it a 'good omen' for the country's readymade garment exports.

He said that since the EU countries are considered among the biggest markets of the world, Pakistan's exporters have been concentrating meticulously on that region and have been striving to get further trade access in that region.

Beside that, some 800 members of Pakistan Readymade Garments Manufacturers and Exporters Association (Prgmea) across the country are engaged in exporting locally manufactured garments mainly to European Union (EU) countries followed by United States, Canada, United Arab Emirates (UAE) and Japan.

 

[Neo]

ISLAMABAD (July 05 2006): The government believes that tourism industry is gaining momentum and more and more tourists are visiting Pakistan. Not only foreign tourists are coming to the country but also domestic tourism is showing upward trend, as luckily, the people are more aware and looking after natural beauty and rich cultural heritage.

The government has undertaken a number of steps to give boost to the tourism industry like facilitating tourists, easy procedures for obtaining visa and proper preservation of sites, but promotion of tourism to a large extent depends upon the private sector and friendly attitude of the people.

Pakistan is endowed with a rich and varied flora and fauna. High Himalayas, Karakoram and the Hindukush ranges with their alpine meadows and permanent snow line, coniferous forests down the sub-mountain scrub, the vast Indus plain merging into the great desert, the coastline and wetlands all offer a remarkably rich variety of vegetation and associated wildlife, including avifauna.

Country's Northern Areas are spread over 72,496 sq. kms. Amidst towering snow-clad peaks with heights varying from 1,000 meters to over 8,000 meters, the valleys of Gilgit, Ghizer, Hunza and Skardu recall Shangri-La.

The people with typical costumes, folk dances, music and sports like polo provide the tourists an unforgettable experience.

Nowhere in the world there is such a great concentration of high mountains, peaks, glaciers and passes except in Pakistan. Of the 14, over 8,000 peaks on earth, four occupy an amphitheatre at the head of Baltoro Glacier in the Karakoram Range.

The government, this year, has decided to celebrate Shandur Polo Festival with more enthusiasm and passion from July 7 to 9. Every year, Shandur (3,734 meters) invites visitors to experience a traditional polo tournament between the teams of Chitral and Gilgit from July 7 to 9.

This time, the Pakistan Tourism Development Corporation (PTDC) has been assigned the responsibility to organise the event with the media partnership of Aaj TV channel.

In this connection, PTDC Managing Director Salman Javed told Business Recorder and spelled out government's plan to hold festival on the world's highest polo ground. He said the government has almost completed all the necessary arrangements and event would be highlighted at the world level to attract maximum tourists.

The Pakistan State Oil (PSO) is the main sponsoring organisation of the event, whereas a number of other stakeholders have also joined hands with the government to make the gala a success.

Salman said they have added colours to the festival activities like folk dances and musical performances, trout fishing, mountaineering, trekking, hiking and horse riding. Paragliding and fireworks are also parts of the festival.

Crystal clear lakes, snow-covered mountains, alpine flowers and vast stretches of green grassy fields are added attractions, he said, adding a tourist village with restaurant facilities is being sprung up in the tournament.

Merchants from Peshawar, Chitral and Gilgit would set up souvenir and folk craft shops. The most exciting polo tournament of Northern Pakistan is played on top of 3,734 meters high Shandur Pass. "It is a place unique and exotic in itself, surrounded by some of the most spectacular mountain scenery in the world," PTDC chief said, adding they have extended invitations to all parliamentarians and diplomats who would hopefully make sure their presence in three-day festival.

Speaking about the required infrastructure, he said the government has made arrangements to provide electricity at the site and road infrastructure has been improved.

Talking about the media, Salman Javed said international media would cover the event and it would be helpful in projecting soft image globally and Shandur would be turned into a tourist resort.

Salman promised to hold such mega events in future as well and was of the view that holding such events would not only play a major role in providing recreational facilities for the local people, but it would also help in developing the area. The PTDC MD urged the private sector and people to come forward and join hands with the government for the promotion of tourism industry.

 

[Neo]

KARACHI (July 05 2006): Sindh Advisor for Alternate Energy, Noman Saigol has said that one US firm has expressed interest to transfer solar energy technology to Pakistan. Addressing a press conference here on Tuesday.

He said that the Orlando-Florida based firm, International Energy Smart Solutions that was already dealing in solar energy in the United States, had agreed to transfer the technology and their delegation would visit Pakistan in mid-July.

Noman said that in the first phase the parks and streetlights would be operated through soar energy and added that they were also considering running IT awareness centres through solar energy.

Giving details about his recent visit to Holland, USA, UK and Brazil, he said that ethanol was another alternate energy option, which was effectively being used in Brazil and apprised that approximately 80 percent of vehicles were using ethanol as a fuel.

"Ethanol is extracted from sugarcane and is an environment-friendly fuel. Now we have come to know that ethanol is also being prepared from wheat in the US where three to four million vehicles are using it as the fuel," Saigol said. He said that the main purpose of promoting alternate energy resources was environment pollution control.

He further said that the sugar industries would be contacted regarding production of ethanol and expressed hope that they would cooperate, which would save installation cost. Otherwise, separate plants would have to be set up, he added. Ethanol is not only environment-friendly but would also be 40 percent cheaper against petrol.

To a question, he said that the bureaucratic red-tape and low competency level were the main hurdles in the implementation of such projects and claimed that the past projects collapsed due to these factors. "Therefore, we are planning to involve the private sector for the execution of such projects and an alternate energy board is also under consideration," Nomad maintained. He further said that the private sector would be independent in its operations and there would be no interference on the part of government.

Talking about the low-competency level of officers, he said that two competent officers having sound technological and technical knowledge were needed for the Environment Protection Agency (EPA) and added that experts from the private sector would be hired for the alternate energy department.

Noman Saigol informed the press that he had proposed replacement of some officers, as they did not deserve the positions because of their incompetence and Director General EPA, Nazneen Ansari was on top of the list.

To a question, he said that an investment of $10 million would be required for the implementation of ethanol energy project while transfer of solar energy technology and its local generation would cost about $40 million.