Pakistan Economy - News & Updates - Archive

[PeacefulIndian]

Total trade between France and Pakistan remained $856.5 for the year 2007-08.

Are we looking at a typo here? Unless you guys traded only pizzas & sandwiches

 

[Neo]

A typo indeed, the correct amount should be $856.500.000.

 

[Neo]

Planning commission okays 98 projects ​

Thursday, 30 Apr, 2009

ISLAMABAD: Planning Commission has on Thursday approved 98 projects worth Rs146.2 billion, with maximum allocations of 51 per cent of the total going for the for the transport and communication sector.

The Deputy Chairman of the Planning commission, Sardar Asif Ahmed Ali, detailed the media over the decisions made in the Central Development Working Party (CDWP) meeting and said that serious move has been made towards development of Thar coal in the forthcoming budget.

‘A pilot project has been approved for extracting combustible gas from Thar coal,’ Sardar Asif Ahmed Ali said adding that the project would be launched by Pakistani firm.

He said that the physical location of 24.6 per cent of all the projects would be in Punjab.

‘There are 22 projects worth Rs36.1 billion in Punjab followed by seven projects worth Rs23.8 billion in the NWFP,’ Sardar Asif Ahmed Ali said adding that Sindh has 13 projects costing Rs16.9 billion.

Balochistan would have 10 projects amounting to Rs4.3 billion, FATA would have four projects worth Rs1.6 billion, Northern Areas three projects costing Rs10.3 billion and 37 projects amounting to Rs41.2 billion were approved for the all Pakistan implementation.

Among the projects approved by the CDWP, 51 are for infrastructure development having the cost of Rs103.4.

The sub classification of infrastructure projects includes 20 projects for transport and communication worth Rs32.6 billion, 16 water-related projects are approved amounting to Rs40 billion, 10 projects are for the energy sector worth Rs29 billion and physical planning and housing has five projects amounting to Rs1.2 billion.

In the production sector industries and commerce has five projects worth Rs1.9 billion, while eight projects are for the agriculture sector worth Rs3.8 billion.

The meeting has approved 30 projects in the social sector worth Rs25.1 billion, these includes five projects for the higher education commission worth Rs3.3 billion.

Twelve projects in the health sector worth Rs11.7 billion have been approved.

He said that fourteen projects have upward revision mainly due to delays, ‘those are the water related projects and the delays are mainly due to acquiring of land.’

Replying to a question Sardar Ahmed Ali said that most of the projects are vetted thoroughly by the planning commission before approval including those suggested by the president and the prime minister.

‘They only suggest projects and we have not received any single project from the higher authorities with directives for approval,’ the deputy chairman planning commission said.

He told media here in the planning commission that out of these 23 projects worth Rs128 billion would be forwarded to the ECNEC and finally to the national Assembly for approval.

‘Only those projects approved by the national assembly would be finally included in the Public Sector Development Project of next fiscal year.’ Sardar Asif Ahmed Ali said.

Deputy Chairman planning commission said that the development budget for the current fiscal year has been curtailed to Rs219 billion from its approved allocations of Rs371 billion due to the economic condition faced by the country.

 

[Screaming Skull]

Are we looking at a typo here? Unless you guys traded only pizzas & sandwiches

Good one LOL!

 

[Hyde]

good man i have forgotten going to newspaper websites i just come here and read the news from you guys you are doing a tremendous job for all of us. Good man share more news

 

[sohailbutt]

Textile exports decline by 7.58 percent​

ISLAMABAD: Textile exports during the first nine months of the current financial year witnessed negative growth of 7.58 percent as compared to the corresponding period of the last year.

Textile exports during July-March (2008-09) were recorded at $7.193 billion as compared to the exports of $7.783 billion during July-March (2007-08), according to Federal Bureau of Statistics.

During the period under review, exports of cotton yearn declined by 15.52 percent, cotton carded or combed by 5.62 percent, yarn other than cotton yarn by 53.30 percent while the exports of knitwear declined by 4.80 percent.

Similarly, exports of beadwear witnessed negative growth of 11.68 percent, tents, canvas and tripulin 19.29 percent, readymade garments 13.10 percent, art, silk and synthetic textile 32.50 percent, made up articles (excluding towels and beadwear) 2.69 percent while the exports of other textile materials witnessed negative growth of 16.37 percent.

However, the exports of raw cotton during the period under review witnessed increase of 73.57 percent, exports of towels by 7 percent and exports of cotton cloth 3.53 percent as compared to the same period of last financial year.

Textile exports decline by 7.58 percent - GEO.tv

 

[sohailbutt]

Too many projects, too little funding: mismatch delays completion of uplift schemes​

LAHORE (May 05 2009): A mismatch between planned project funding, the budgetary allocations and the actual release of funds are one of the factors, contributing to delays in projects completion. The development experts believe that the planning, programming, budgeting and managing processes of the government are flawed.

The analysis of the Federal Public Sector Development Projects (PSDPs) and the provincial Annual Development Programmes (ADPs) for the periods 2000-01 through 2005-06, for major infrastructure sector projects - water, power, roads and irrigation - suggested that the number of projects in hand were much greater than the funds available for allocation, they opined.

"This implies large throw-forwards for projects each financial year, as is also evident from the large number of projects accumulated in the portfolio," they added. According to these circles, too many projects are taken up simultaneously with limited resources, resulting in a mismatch between the planned completion of projects and the funding made available.

For example, in the roads sector, where projects were typically planned to be completed within two to three years, the average allocations per year for the Federal projects were 17 percent of the cost of projects, which implied a completion period of six years, they added. For provincial projects, they said, average annual allocations were about nine percent of the cost, implying a completion period of almost 11 years.

Similarly, for the irrigation and power sectors, the completion time of projects based on annual allocation of funds was found to be 18 years. "Unavailability of funds as required cause delays in completion of projects, and such delays obviously have an associated cost effect.

"Further, the allocations and expenditures reviewed for the period show that out of more than 5,000 projects in the four years. Under the PSDPs and ADPs, there were only 744 projects, which had both allocations and expenditures. Out of 744 projects, 174 had expenditures less than the allocations, while 248 equal to allocations and 322 had expenditures substantially higher than allocations.

"Certain projects received additional allocations even at the expense of other "planned" projects, possibly due to political interference. There were many projects, which showed expenditures greater than the funds allocated and several projects, which had been allocated funds, but incurred no expenditures at all," they said.

"Similarly, there were projects where no allocations were made, but had incurred expenditures. Besides a mismatch of plans and allocations made, said the development experts, the funds were mostly released during the last quarter of a financial year.

In the water sector (which includes irrigation and power) for instance, they said, the percentage utilisation of the PSDP allocations did not exceed 50 percent in the first three quarters of 2005-06. As a result, more money was released to projects during the last quarter of 2005-06, than the first three-quarters put together. "The provincial data for Balochistan for the years 2000 through 2005, shows that except for 2001-02, the Balochistan government had released 100 percent of its share of project allocation each year.

"In contrast, the Federal government provided only 20 to 70 percent of its share in any given year. Projects are bound to be delayed when funds are not made available when needed," they said. According to the development circles, the portfolio of projects is clearly not manageable even at current levels of the PSDP with too many projects and too little funding.

The medium-term development framework (MTDF) envisages a total and an overall national PSDP expenditure on infrastructure of Rs 2, 162 billion. The annual phasing of the overall PSDP was in the range of Rs 272 billion during 2005-06, to Rs 597 billion during 2009-10. This is almost six times the average PSDP over the past three years. Besides the PSDP, projects undertaken through public-private sector partnerships and private sector financing are estimated to cost an additional Rs 554 billion in the power and transport & communications (T&C) sectors alone.

In addition, they said, there were other emerging infrastructure programmes that were required to respond to the rapidly developing economy, and were not entirely included in the 2005 MTDF. These include the National Trade Corridor Improvement Programme (NTCIP), the construction of large water reservoirs (Kalabagh, Diamer, Bhasha), the rehabilitation of the key barrages, delivery of clean drinking water, sanitation and electricity to all, and the new Islamabad airport, which alone requires substantial investments over and above the MTDF.

Clearly, delivery of the projects planned under the MTDF will be a challenge given the current institutional capacities of the government stakeholders.

Business Recorder [Pakistan's First Financial Daily]

 

[sohailbutt]

FDI declines by eight percent​

ISLAMABAD (May 05 2009): Foreign Direct Investment (FDI) has declined by eight per cent during the first eight months of current fiscal to $3.0421 billion against $3.306 billion in the same period of last year, according to Ministry of Finance's "Review of Economic Situation".

The Review of Economic Situation released here on Monday for July-March 2008-09 showed that FDI declined in Chemical and Petro-Chemicals by 15.4 per cent to $72.3 million from $85.5 million during the period under review. The cement sector received 64.9 per cent less FDI during the period under review against the same period of last year. The FDI inflow in cement sector squeezed to hardly $31.3 million this year against $89.1 million a year ago.

Automobile sector received 64.5 million FDI during July-March of current fiscal which is 12.2 per cent less from $73.4 million a year ago while FDI in power sector declined by 5.7 per cent to $140.4 million from $149 million in the same period of last year.

The FDI in communication sector declined by 12.7 per cent and shrank to $806.1 million against $922.2 million a year ago. In financial business, the FDI dwindled by 28.7 per cent during the ongoing year to $672 million against $942.7 million in the same period of last year while in personal service it declined by 3.2 per cent.

According to the economic outlook, Pakistan External Debt and Liabilities (EDL) have risen to $49.7 billion during at the end of March 2009 against $46.3 billion at the end of June 2008.

The EDL recovered in the third quarter and actually fell in absolute as well as relative terms between end-December 2008 and end-March 2009, mainly because of lower than anticipated net disbursements and positive translation impact of appreciation of dollar versus Yen, SDR and Euro. External debt stood at $49.7 billion or 30.7 per cent of the projected GDP for the 2008-09 at the end of March 2009 which is higher than end-June 2008 stock of $46.3 billion or 27.6 per cent of GDP.

It implies that EDL grew both in absolute and relative terms during July-December period but witnessed some correction in the third quarter. Almost all categories of EDL barring Paris Club, Eurobond and military, have witnessed increase; however, highest increase in absolute term was recorded in debt stock owed to the IMF as a result of inflow of $3. 1 billion on account of Stand by Arrangements (SBA) signed with the IMF in end-November 2008. On the liabilities side $500 million are added by Bank of China, the review added.

Business Recorder [Pakistan's First Financial Daily]

 

[sohailbutt]

Sale of agricultural land to foreigners: move fraught with serious repercussions​

ARTICLE (May 05 2009): The Ministry of Investment has decided to offer one million acres of farmland for long-term investment or sale to the foreigners and emirates investment group is in the process of acquiring farmland in Pakistan to export more food to the Gulf region.

Apparently, the decision looks continuation of privatisation process similar to selling shares of PTCL, DFIs, banks and other state enterprises or attracting foreign investment, but if seen in-depth and historical perspective, this can have serious repercussions in future. Selling one million acres of farmland means once again inviting East India Company to our country.

It is due to the sale of Kashmir to the Dogra Maharaja that Kashmiris were deprived of freedom despite the fact that the State of Jammu and Kashmir was having an overwhelming majority of Muslim population in 1846 when Amritsar Treaty was signed and it was having 95% Muslim population in 1947 and there was no reason as to why it should not become part of Pakistan.

Despite the fact Jammu and Kashmir was contiguous to the area which was declared Pakistan in 1947, but due to the Maharaja Hari Singh's dishonest act Kashmiris could not reap the fruit of freedom. Selling of farmland is in fact selling of homeland and can give birth to many evils. It can create security risks for the country.

As Emirates Group is looking for international partner and total land available for sale is one million acres, as such, our enemies can manage to become partners or individual buyers directly or indirectly. The history has recorded the biggest blunder of Palestinians when they sold land to Jews and gradually rich Jews took their land and Israel appeared on the world map.

The authorities are requested to kindly read the history and see how Israel managed to capture the land of Palestinians and appeared as an independent country on the world map. Palestinians are the victims of their own mistake and Israeli has become permanent pain in their neck.

The decision to offer farmland of one million acres to foreigners is far away from foresight and vision and is only to draw short term gains at the cost of selling the homeland.

THE JURISTS HAVE DEFINED CONTENTS OF A STATE AS UNDER:-

1- Land

2- Population on land

3- Unanimous decision of people about their right and obligations (constitutions)

4- Body to implement the constitution and control the state (government) with legislation and judiciary as part of it. Human population on a piece of land is the basic requirement to form a state.

On world map we can see the countries whose area is less than one million acres. The decision to sell one million acres of farmland can prove extremely dangerous in the long run.

Pakistan allowed some foreigners in tribal areas to fight against Russia and these foreigners were allowed to reside in these areas without proper immigration documents and passports, as a result these foreign elements have become the greatest threat for the country and our government has failed to send them back to their native countries.

These so-called Mujahideen occupied some area of our tribal region (less than one million acres) and despite the Drone attacks, both USA and Pakistan have failed to get rid of these people who are not only a threat to Pakistan, but for whole world.

It is known to every one that Usama Bin Laden, Baitullah Mahsud and others were having free movement in Afghanistan before 9/11 and a few years before they were allies of USA in the war against Russia. Now Baitullah Mahsud accepts the responsibility of all suicidal bomb attacks in Pakistan while living in tribal areas of Pakistan, ie, on our land.

While selling the land we always keep in our mind its lithosphere only and are not aware of natural resources like gas, oil and other minerals under it. The land at Sui in Balochistan may look barren to our eyes, but who knew that it carried trillions of cubic feet of gas under it. Similarly, barren areas of Sindh are rich in minerals.

Pakistan discovered the world's largest coal reserves in Thar. We may need foreign exchange to meet our requirements to import our luxuries, but it would be immodest and cruel to our future generations. The concept should be that we have not inherited the homeland from our forefathers but merely borrowed it from our children. Our future generations would never forgive us for this mistake which amounts to spoiling their future.

By selling one million acres of land we will introduce new type of feudalism and create relative deprivation in the area which can spoil the future of our sons of the soil, who are already victims of our short-sightedness. Pundit Nehru, the first Prime Minister of India, introduced land reforms in India and feudalism was buried once and for all and total land divided among landless farmers.

As a result, the per-acre yield in India is much more that what we get in Pakistan. The decision of selling farmland may result into corruption and future scandals.

There are many other options to utilise this land and some of these are: Instead of selling the government should offer such land on 30 years lease, secondly, the farmland may be offered to domestic investors on comparatively easy terms. Thirdly, government may distribute this land among landless farmers and help them to cultivate the same.

Instead of selling land it would be better to sell its yield to the people in the Gulf region. The countries with food and water resources have a great future provided they don't sell their land and water for short-term gains. It is surprising why the media has been silent on this issue of national importance. The issue must be discussed in the parliament before making any deal with any foreign groups.

If the authorities are bent upon selling the land, then it would be better to lease it so that Pakistan has a right on its land to get it back after the expiry of the lease period like Hong Kong and Macao who remained under foreign occupation for more than 99 years and were returned to China after the expiry of the lease deed which China was forced to sign after its defeat in the opium war.

For the utilisation of such land the government should prefer local investors and poor landless farmers and support them in cultivation of land to increase our GDP and per capita income. Finally, government can easily assess the population growth in the country in coming years and our country would be needing more and more cultivated area to feed our own population, rather than feeding other nations.

This issue is full of adversities and needs caution and thorough discussion in parliament before signing any such deal. Availability of land is a great fortune in our hands and the same can become misfortune if sold to foreigners.

Business Recorder [Pakistan's First Financial Daily]

 

[sohailbutt]

Government urged not to allow flour export to Afghanistan​

PESHAWAR (May 05 2009): The bakers, atta dealers and people of the food insecure NWFP has asked federal government to reject the demand of the flour milling industry for the export of flour to Afghanistan to avoid flour crisis again. "The allowing of export would once again push the country towards the food crisis surfaced in the year 2008," Jehanzeb, a baker feared while talking to Business Recorder.

The government, he said should never allow the flour millers to export the commodity to anywhere and create artificial shortage in the country in general and in NWFP in particular. The flour millers, he said would indulge in the smuggling of the commodity pushing the prices in the local market high.

Munazam, a resident of Peshawar alleged that in the garb of the export, the flour millers are bent upon to push the province to another flour crisis. He said that flour millers utilise all such kind of situations in their favour to fill their pockets. However, he urged on the government not to accept the demands of the millers and foil the conspiracy hatched by the vested interest. "The people of the province will not bear waiting in long queues for the sake of a single sack of the flour," added Munazam.

Shabbir, a worker at the baking shop alleged that the flour millers used to export the good quality flour while the substandard commodity is being marketed in the local market. He complained that the baking of bread from the substandard flour is very hazardous.

Abdul Sattar, another baker while opposing the export of flour to Afghanistan said that the neighbouring country instead of importing the commodity from Pakistan to create crisis should make arrangements from other countries. "We have come out of crisis afresh and the allowing of the export in such a situation would not be considered a wise decision. It could once again push Pakistan into a food insecure state," added Sattar.

Ikhtiar Wali, a businessman said that they would oppose any move in this direction. The production of the bumper crop does not mean the selling of the commodity to other countries. He said that the export of the commodity could create problems in our own country. "The government, instead of the export should provide cheap roti to the people," he suggested.

"The export of the commodity could create artificial shortage of the commodity in the local market and would promote black marketing," feared Latif, an atta dealer at New Rampura Gate. He urged the government to reject t the demand of the flour millers for the export of the commodity.

Interestingly, Muhammad Akbar Khan, chairman Pakistan Flour Mills Association (PFMA) NWFP Chapter out rightly rejected the hue and cry of the bakers, atta dealers and common man saying the export will not create any kind of crisis in the country.

He said that the country was heading for a bumper crop and according to estimation it would produce 23.5 million ton wheat against the domestic demand of 21 million ton. He said that the after the completion of the procurement the country would have a stock of 2.5 million ton as surplus.

He said that per hectare production of wheat as compare to 2000-01 has went up by 2 mounds per hectare. The production this year has climbed to 29 mounds per hectare as compared to 27 mounds per hectare produced in the year 2000-01.

The government in the year 2001 allowed the export of flour to Afghanistan, but banned in 2007 in the pretext of the demand of the commodity in the local market. He said that the total requirement of Afghanistan is 0.5 to 0.6 million ton. We are demanding permission of the export of flour not wheat to Afghanistan as the country has low grinding capacity. The allowing of the export of flour to Afghanistan, he said would help strengthen the flour milling industry of NWFP. Defending the demand of the flour millers, he said Punjab has the market of NWFP while the flour milling of Industry of this part has sole market in Afghanistan.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Review of Economic Situation 2008-09: ‘External account remains vulnerable’​

By Sajid Chaudhry

ISLAMABAD: The Ministry of Finance (MoF) said on Monday the fiscal deficit target of 4.3 percent of GDP and the current account deficit target of 5.9 percent of GDP were achievable.

However, recent global financial crisis and extremely vulnerable security environment added risks to the economy. The external sector data for the last quarter (April-June 2009) would give a real reflection of the impact of global financial crisis on Pakistan’s external sector.

In a report on July-March period of 2008-09, MoF stated that the global economic slowdown was making inroads into real economy through contraction in demand in the export sector and as well as shrinkage of external inflows. Pakistan’s economy continues to remain exposed to the vagaries of international developments as well as internal security environment, it said. Despite support from the IMF and other bilateral and multilateral donors, Pakistan’s external account remains exposed to a host of uncertainties, it said.

The outlook for economic growth remained pessimistic as import demand shriveled, tax collection declined, and inflows of foreign investment and privatization dampened.

Real Sector: Notwith-standing the vulnerabilities, the economy is set to post economic growth in the range of 2.5 percent to 3.5 percent, far lower than its historical average, but relatively satisfactory in the given international environment. The real GDP growth outlook drew strength from positive outlook of the agriculture sector, which has given all indications of a healthy growth. The outlook is based upon anticipated high wheat crop and above target growth of minor crops and reasonably good outturn by the livestock sub-sector.

Manufacturing Sector: Large-scale manufacturing depicted negative growth of 5.73% during July-February 2008-09 as against 5.27% positive growth in the comparable period of last year. Going forward the situation may improve to some extent because of lower base effect and some improvement in energy supplies.

The LSM growth is adversely impacted by a sharp reduction in demand from both domestic and international buyers.

Services sector has exhibited resilience to fluctuations in the economic activity. The FDI inflows in the telecommunications, financial businesses and personal services have reached a level of saturation in the first nine months (July-March) of the current fiscal year. There are enough anecdotal evidence that financial sector is set to provide substantial growth.

Inflation: Pakistan still faces high double-digit inflation. The dirty work of extra-market forces kept fruits of falling inflation away from Pakistan’s consumers. Given current trends and barring any adverse shocks, it is expected that the average inflation for the year (2008-09) as measured by CPI will be close to 20 percent.

Capital Market: The local bourse remained buoyant throughout the month of March 2009 thanks to encouraging developments on the political and economic fronts. The recovery phase of the premier stock exchange after floor removal has been hopeful and this outstanding performance has made it one of the best performing markets of the world in 2009.

Fiscal Policy: The fiscal improvement in the first nine months (July-March 2008-09) has largely based on reduction of oil subsidies and a cut in development spending. The government received Rs 141.1 billion in gross external inflows against outflow of Rs 104.1 billion which means net availability of Rs 37 billion.

Tax Collection: Tax revenue collected by the Federal Board of Revenue (FBR) stood at Rs 813.6 billion (net) during the first nine months (July-March) of the current fiscal year (2008-09) compared with Rs 679.9 billion in July-March, 2007-08 — posting a healthy increase of 19.7%. Given these developments, the tax revenue target of Rs 1250 billion seems a herculean task.

External Sector: The external sector has shown definite sign of improvement. The current and trade account balance has improved but there were some slippages on account of current transfers. However, buoyancy in remittances is more than offset by substantial declining trend in inflows through exchange companies.

CAB: Current Account Balance (CAB) shrank by 20.8 percent during July-March 2008-09. Current account deficit shrank to $7.6 billion during this period as against $9.6 billion during the same period of last year. Pakistan need investment driven current account deficit neutralized to some extent by rising savings level.

External Debt: External debt and liabilities (EDL) stood at $49.7 billion or 30.7 percent of the projected GDP for the 2008-09 at the end of March 2009 which is higher than end-June 2008 stock of $46.3 billion or 27.6 percent of GDP.

 

[Neo]

Agri sector to achieve growth target of 3.3%​

ISLAMABAD: The agriculture sector is likely to achieve its growth target of 3.3 percent for the current year, according to ‘Review of Economic Situation, July-March (2008-09) released by the Ministry of Finance on Monday. According to the report, all livestock products witnessed an increase in prices and thus the target of 3.2 percent would be achieved as the demand for livestock products was growing at a phenomenal pace. The agriculture had been facing acute irrigation water shortages and the water intensive Kharif crops sugarcane and maize fell short of the target and depicted a negative growth of 18.5 percent and 7.5 percent in 2008-09. However, other two major crops cotton and rice have registered positive growth of 7.3 percent and 13.5 percent, respectively. The combined weight of sugarcane and maize in overall agriculture was 6.2 percent while that of cotton and rice was 13 percent.

The Rabi season started with an estimated water shortages of 31.6 percent, however, widespread rainfall during December 2008 to February 2009 in most parts of the country had a positive impact on the outlook for the Rabi crops. Fertilizer off-take (both urea and DAP) decreased by almost 6.5 percent during July-March 2008-09 amid weak demand due to higher prices and vague market signals, which led to shortages. Disbursement of credit to agriculture sector by commercial and specialised banks has increased by Rs 13.3 billion or 9.6 percent on yearly basis to Rs 151.9 billion during nine months (July-March) of the current fiscal year (2008-09) from Rs 138.6 billion of corresponding period of last fiscal year (2007-08), the report added.

 

[Neo]

Cotton production falls by 2.8m bales in 2008-09: PCGA​

By Razi Syed

KARACHI: Pakistan’s cotton production for 2008- 09 crop season witnessed a shortfall of 2.8 million bales, chairman Pakistan Cotton Ginners Association (PCGA) said Monday.

Chairman PCGA, Rana Abdul Sattar while talking to Daily Times said it remained below the government’s target of 14.1 million bales on account of non-supply of better quality seeds, short supply of quality inputs and insufficient water supply.

He said the Pakistan Central Cotton Committee keeping in view the situation had revised the target to the level of 12.5 million bales, but the production could not touch the revised target.

According to Pakistan Cotton Ginners Association (PCGA) Monday, the country achieved 11.7 million bales of cotton during 2007-08 production year, which was lower than 2.4 million bales than the the initial target. In 2007-08 the country had failed to meet the cotton production target set by the government.

Member on Cotton Committee of Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Ghulam Rabbani said the last arrival on Monday shows the final figures.

Rabbani said final arrival for 2008-09 stood at 113,49029 bales at the ginneries, out of which textile sector purchased 103,19134 bales, private sector exporters bought 294,865 bales, Trading Corporation of Pakistan bought 185,033 bales while stocks remained at 546,547 bales.

The higher cotton prices would put further pressure on the gross margins of textile manufacturers, and at the same time, the 23 percent rupee depreciation (year to date) is expected to translate a significant revenue increase impact for export oriented ventures, which would ultimately help them to more than mitigate the pressure on margins, he added.

“The textile and spinning sector will have to bear additional burden around of $1.20 billion on the import of lint to keep their wheels running,” said Rabbani.

The US Department of Agriculture’s World Agricultural Supply and Demand Estimates for September 2008 also indicate lower world cotton production on the back of reduced contribution from India, Australia, Pakistan, African Franc Zone and Turkey.

During August 2008, average domestic cotton prices reached an all-time high level of Rs 4,235 per maund, he added.

He said though, with the initial arrival of new crop in the market during April 2009, domestic prices receded to the level of Rs 3,650 per maund. He said lint price was still 25 percent higher than last year’s average price level of Rs 3,300 per maund during the same month.

The cotton prices are likely to remain at soaring levels with lower production and comparatively higher consumption.

The clash of short-term negative supply fundamentals and the outlook for lower production and a sharp drop in stocks for the 2008-2009 season should help keep cotton prices volatile for the short-run.

The International Cotton Advisory Committee indicates that world cotton ending stocks for the 2008-2009 season falls by 5 percent to 10.96 million tonnes. This is down from 12.7 million tonnes two years ago.

He said lack of expertise in fighting cotton virus and minimising crop from heavy rainfall, around 20 percent crop in the Punjab and interior Sindh has been affected.

Other factors attributing behind lower production are less area under cultivation due to shift towards sunflower and sugarcane etc, severe weather conditions and crop diseases like Cotton Leaf Curl Virus (CLCV) and mealy bug.

On the consumption side, ICAC projects 1 percent yearly decline in world cotton consumption during 2008-09 due to slowdown in global economic growth and relatively higher cotton-polyester price ratio.

 

[Neo]

Deep-sea fishing policy may be revised​

ISLAMABAD (May 06 2009): The government is reportedly revising the terms and conditions of the deep-sea fishing policy, approved by General Pervez Musharraf (Retd) as Chief Executive in 2001 as the amended policy did not yield desired results, official sources told Business Recorder here on Tuesday.

Musharraf government had approved a "buffer zone" of eight nautical miles, between 12 and 20 nautical miles from the coastline, aimed at providing exclusive fishing rights to small-scale fishermen in the specified area. "We have recommended that royalty and licence fee should be reverted to the position of 1995 policy, besides declaring the Federal area between 12-20 nautical miles (buffer zone) as Zone-II and from 20 to 200 nautical miles as Zone-III.

The main reasons for the failure of Musharraf-backed deep-sea fishing policy are poor response from foreign vessel operators due to high royalty, licence fee etc as compared to neighbouring countries, unprecedented increase in the price of fuel, sizeable reduction in the annual foreign exchange earning from Rs 80 million to Rs 40 million, reduction in other government revenues from Rs 90 million to Rs 37 million annually and considerable decrease in the annual fish landings from 15,000 metric tonnes to 3,000 metric tonnes from the Federal waters due to fishing by low number of vessels.

The sources said the Inter-Ministerial Scrutiny Committee (IMSC), comprising the representatives of the Ministry of Livestock and Dairy Development, Ministry of Finance, Ministry of Port and Shipping and other stakeholders, including Sindh and Balochistan, were of the unanimous view that the amended deep-sea fishing policy had not given tangible results and it should be revised.

The IMSC had also taken into consideration that the royalty and licence fee prevailing in the neighbouring countries were much less as compared to the fees being charged by the government of Pakistan, said the sources.

"We have proposed changes in the deep-sea fishing policy that would bridge the yield gap through increasing productivity, increasing investment, increasing foreign exchange, rationalising fee structures vis-à-vis neighbouring countries, thus achieving economic growth, increasing fishing vessels operations in Zone-III with increase in the landed catch at Korangi Fish Harbour," said an official of the Ministry of Livestock.

According to the prevalent policy, fishing in Zone-I is exclusively reserved for traditional small-scale fishermen of Sindh and Balochistan provinces, while 100-250 Gross Registered Tonnage (GRT) medium size vessels have been allowed to fish in Zone-II, and 300-500 GRT stern trawlers/300-l000 GRT long liners for industrial fishing in Zone-III under licences issued by the then Minfal (now Minfa). The small-scale fishing vessels, though limited by their capability and capacity, are free to fish beyond Zone-I limits.

 

[Neo]

833 percent growth in cement sector July-March profits​

KARACHI (May 06 2009): The cumulative profit of listed cement sector companies increased to Rs 3.7 billion in the nine months of FY09 depicting a massive growth of 833 percent over the corresponding period in FY08 of Rs 395 million.

"Although total dispatches were down 0.4 percent, net retention prices up 64 percent to Rs 230 per bag (partly down to effective price arrangement between manufacturers) and better export based revenue amid rupee depreciation (21 percent on year-on-year basis) resulted in net sales growth of 74 percent", Atif Zafar, an analyst at JS Global Capital, said.

As a result, gross profits depicted 287 percent growth with gross margins increasing by 1,491bps to 27 percent, compared to the nine months in FY08 gross profit margins of 12 percent. However, 96 percent increase in financial charges due higher average 6-month KIBOR (434bps) during the period took some gloss off the bottom line as net margins recorded an increase of just 317bps to 4 percent, he said.

He said this massive earnings growth has been largely due to price arrangement between companies in the local market to keep prices high. However, local demand-supply dynamics do not suggest such high prices would continue. Moreover, the export market only looks attractive for the short term as new capacities could soon come online in the Middle East along with weak domestic demand on the back of low PSDP and economic growth.

"Our sample includes 18 out of total 21 listed companies, representing 94 percent of cement sector market capitalisation. Moreover, we have removed one-time impairment loss on acquired goodwill recognised by Javedan Cement of Rs 3 billion", Atif said.