Pakistan Economy - News & Updates - Archive

[Neo]

KARACHI: There is something new to worry the economic managers of our country. Money is going out of the country while the government is making all efforts to attract foreign investment. International real estate groups are here to take capital out into foreign lands.

There were quite a few stalls of groups, which help people invest money in UK’s lands, at the recently held International Property Exhibition and Conference. Although few people were seen visiting their stalls on the first two days, they managed to attract people on the third and the last day of the exhibition.

Already Pakistanis have been investing heavily in Dubai’s real estate sector, which causes flight of huge amounts outside the country. Developers assure investors that they would earn family visa and residency rights in the Gulf, which adds to the attraction of the investment. Besides, these investments are thought secure in an economy free of political influences and uncertainties. There are a number of real estate agencies in Pakistan, which help people invest their money in housing projects in Dubai. The authorities were perturbed over this flight of capital out of the country. And now another avenue has opened up.

Unlike Dubai there is no attraction of residency rights in buying land in UK because undeveloped land is offered to the investors. But usually the investors earn four to seven times the amount they had invested within a few years, the officials of these real estate groups claim. They say builders buy land from investors at much higher prices when permission to develop is granted.

An official of one of the groups, which had set up their stalls at the IPEC, claimed they already had around 3,000 investors from Pakistan before they set up their office in the country.

There are very few options for investment in the country. Setting up and running an industry is thought to be a troublesome work. Stock exchanges of the country are always unreliable with wild fluctuations every day shattering the confidence of investors.

Commercial banks offer very low rate of return to depositors. In this situation they find real estate and particularly the real estate out of the country most attractive option.

This capital flight causes depreciation of rupee in both inter-bank and the open currency market. Already the huge trade deficit last year has put the local currency under pressure.

Decline in supply of foreign currency against rupee depreciates local currency which also impacts interest rates and inflation.

The depreciation of local currency increases external debt burden and results in increased cost of imported raw material and consumer items causing inflation besides reducing per capita income.

 

[Neo]

ISLAMABAD: An aggressive plan has been chalked out by Private Power Infrastructure Board (PPIB) to produce 12,000 MW electricity within a period of four to five years.

Managing Director Private Power Infrastructure Board (PPIB) Khalid Irfan Rehman said existing Independent Power Producers (IPPs) have been persuaded to expand their production.

Various projects were continuing for enhancing electricity production. A project to produce around 2000 MW power would materialise in 2008. While 2500 MW production will be started in 2009. Another project for producing 7500 MW would start production in 2010.

Additionally, around 5500 MW more power would be produced from 2010 to 2015 through hydro source including from Diamer Bhasha and Munda dams.

Under another plan of producing 1550 MW cheap electricity would be materialised by 2012.

Likewise additional electricity would also be produced from Tarbella. Initial preparations in this regard were continuing, he added.

 

[Neo]

Saturday July 15, 2006

ISLAMABAD: The World Bank will provide $ 300 million a year as support to the programme besides funding for investment.
The integrated programme is indigenously designed and will cover different sectors like railways, ports, trucking industry, highways, trade logistics and civil aviation.

Delegation of the World Bank officials held a meeting with Dr. Salman Shah, Adviser to the Prime Minister for Finance to discuss the World Bank Support for National Trade Corridor Improvement programme here today.

They expressed appreciation for the quality of the programme.

The Adviser emphasized that the government’s commitment to this high priority programme which would bring a paradigm improvement in the country’s competitiveness.

The programme is spread over a period of six years and would be supported by other donors. The total cost of the programme is estimated at 6 billion dollars.

 

[Neo]

KARACHI (July 16 2006): Both the private sector credit off-take in FY06 and a discernible sluggishness in the import growth from February 2006 is pointing towards an economic slowdown, says the State Bank of Pakistan.

SBP's Third Quarterly Review of the economy, issued on Saturday, states that unlike most Asian central banks and departing from its own past practice, the monetary tightening in Pakistan was not achieved through raising the interest rate.

The discount rate remained unchanged through FY 06, and even in auction yields on benchmark 6-month T-bills the rate was almost unchanged, witnessing a rise of only 50 basis points during the period. Instead, SBP focused on draining excess liquidity from the interbank market through very frequent OMOs.

As a result, the short-term interbank interest rates remained fairly close to the discount rate and contributed to an increase of 202 basis points in weighted average lending rates during July to May 2006.

The report says that the rise in interest rates had a visible impact on credit growth. Consequently by June 10, 2006, the major monetary aggregates were showing significant weakening compared with FY05.

The deceleration in growth in money supply, M-2, to 13.3 percent during June to July 10, 2006 from 16.2 percent in the same period in FY05 was entirely primary due to slowdown in private sector credit offtake.

While government borrowing during July 1, 2005 to June 10, 2006 from the banking system rose from 4.1 to 4.4 percent, credit to non-governmental sector during the period came down from 14.3 to 11.3 percent.

Besides the rise in real lending rates being a factor in slowdown of credit off-take, sectoral distribution of credit showed a reduction in credit to textiles and tapering of demand from telecommunication industries. This slowdown was despite the larger increase in trade related loans and private sector commodity finance during July-May FY06 compared with the preceding year. "This slowdown in the credit market appears to be driven by both demand and supply side factors," says SBP.

The SBP review also underlines a significant slowdown in import growth from February 2006 onwards. "The detailed analysis of the data shows that growth in major heads is much lower in February-May 2006 compared to July-January 2006. Furthermore, almost 80 percent of the growth in the February-May period is being contributed by two categories, 'petroleum' and 'other inputs.' The share of machinery in imports growth has gone down from 29 percent in July-January 2006 to five percent in February-May 2006.

 

[Neo]

ISLAMABAD (July 16 2006): The economic co-ordination committee (ECC) of the cabinet on Saturday approved a package of Rs 22-25 billion for the textiles sector, but most of the recommendations made by the textiles committee to reduce cost of doing business, especially rationalisation of utility's rates, have not been entertained.

Presided over by Prime Minister Shaukat Aziz, the ECC also decided to continue Research and Development(R&D) support to garments and apparel sector, the impact of which would be Rs 15 billion.

Briefing journalists after the meeting, textiles and industry minister Mushtaq Cheema, flanked by textiles secretary Masood Alam Rizvi and economic adviser to the finance ministry Dr Ashfaque Hasan Khan, said this time R&D support of 3 percent would be extended to printed fabrics and home textiles whereas 5 percent would go to dyed, printed home textiles.

However, the garment sector, which includes woven garments and knitwear, would continue to enjoy 6 percent R&D support during 2006-07 but it would be reduced to 3 percent from 2007-08, he added.

Cheema said export quality scheme has been changed as there were complaints of fund lapse, adding now mark-up on three years loan would be 6 percent while for seven-and-half-year period loan, it would be 7 percent.

Clarifying the procedure, he said the State Bank (SBP) would extend loans to commercial banks at 6 percent interest, which would extend it to exporters along with 2 percent spread, one percent less than the last year. He said the amount of loan would also be increased keeping in view exporters requirements but did not give details.

Earlier, according to the textiles minister, the export quality loan had been divided equally for the SME and corporate sector, but now it has been clubbed, however, preference would be given to the SME sector.

He was of the view now the SME could enjoy this facility through the commercial importer, adding import of thermal power generators has also been included in the scheme.

Replying to a question, he said there was no need to have equity, escrow account and the SBP approval for the loan, as all these conditions have been abolished to facilitate the textiles sector. Answering another question, he said, earlier, only imported machinery was included in the scheme but now the loan could be used to procure local manufactured machinery.

Loans taken by the textiles industry at 6 percent interest, after which interest rates increased to 12 percent or above, would be swapped at 6 or 7 percent, he said, adding it was the longstanding demand of the textile sector but spinning would not be included in the scheme.

He said refinancing rates have been reduced by 1.5 percent from 9 to 7.5 percent of which 6 percent would be charged by the SBP from commercial banks and 1.5 percent by banks as spread.

He hoped with the implementation of this package, textile exports, which constitute 60 percent of total exports, would show a growth of 22 percent during 2006-07.

The Prime Minister informed the ECC Qatar would invest $2 billion in Pakistan to set up plants in cement and other sectors, according to the economic adviser, he did not give details of proposals submitted by the Qatar government.

The ECC approved a plan of the agriculture ministry regarding procurement of gram, moong and mash pulses through Passco at intervention price during 2006-07.

Dr Ashfaque said intervention price for gram has been fixed at Rs 750 per 40kg; moong (Rs 1200 per 40kg); and maash by Rs 1300 per 40kg.

As the government felt prices in the local market were declining, Passco would start procurement to stabilise prices, so that farmers could get better return of their yield.

Dr Ashfaque further said the ECC discussed another proposal to fix support price for the paddy, but it was deferred till Monday as some information on international trends was missing.

Minfal has been asked to submit additional information to the Prime Minister by Monday to take final decision, he continued. The ministry has proposed Rs 625.25 per 40kg intervention price for super basmati and basmati against Rs 560, showing an increase of 12 percent, basmati 385, Rs 520.45 against Rs 460 per 40kg, an increase of 13 percent; and Irri-6, Rs 303.41 against Rs 260 per 40kg. He said the issue of income tax exemption proposed for Rs 8 billion Wapda Sukuk bonds would be resolved by Wapda and CBR chairmen.

He further said a package has also been approved for the IPPs, including reduction in performance guarantee and extension in commercial operation date and financial close. The ECC has also approved setting up of a 100mw thermal power station at Khuzdar on International Competitive Basis (ICB).

 

[Neo]

KARACHI (July 16 2006): Gradually increasing weakness in fiscal indicators, and the widening of the current account deficit are of serious immediate concerns, requiring corrective policy measures to protect long-term growth prospects of the economy, says the State Bank of Pakistan.

The SBP's Third Quarterly Report for the year 2005-06, issued on Saturday, describes the 2007 Federal Budget as expansionary - aiming to give a fiscal stimulus. This will add to aggregate demand and, therefore, to inflationary pressure.

"The impact could be worsened if the government depends heavily on central bank borrowings to finance the deficit. The budget for FY07 envisages a receipt of Rs 35 billion from SBP profits, (a substantial portion of the central bank's profitability is from the interest earned on its holding of government securities mainly accruing through the financing of governmental fiscal deficits) which suggests this may be the case, and therefore the burden of containing inflationary pressures will fall disproportionately on monetary policy," cautions SBP.

A relative slowdown in aggregate demand has significantly reduced inflationary pressures. However, as the aggregate demand is still strong, and the economy will benefit from the expansionary fiscal stance, loosening of monetary policy is, therefore, clearly not advisable, says SBP.

Further, due to the current account deficit at 4.3 percent of GDP in FY06 and the availability of external financing, SBP has opted to keep the monetary policy tight to contain excessive volatility in the exchange rate and inflation.

SBP sees strong agri-growth in FY07, due to low base provided by relatively poor performance by major crops in FY06. "This in turn would support an improved performance in key industries such as textiles and sugar, thus supporting large-scale manufacturing."

Going forward, the impact of credit slowdown on inflation may be substantially augmented, by a continuing decline in food inflation following the implementation of the recently announced administrative measures and subsidies by the government, says the report.

The current account deficit at $6.3 billion is expected to be covered by privatisation receipts and strong aid inflows. "This, however, would primarily depend on the realisation of the anticipated moderation in import growth, as forecast in the annual plan and continued strong export growth."

In case the current account deficit proves to be substantially higher, it would be extremely difficult to sustain - without either raising external debt or a recourse to an undesirable drawdown in reserves, or strong measures to contain aggregate demand or a more focused policy of containing external demand, says SBP.

The pressure on the country's external accounts increased substantially during FY2006, as the current account deficit swelled to a historic peak of $4.1 billion by end of April 2006, sharply higher than $0.94 billion recorded in corresponding period of FY2005.

Even more significantly, as a percentage of GDP, the annual current account deficit is estimated to rise from an innocuous 1.4 percent in FY2005 to a more troubling 3.2 percent in FY2006, indicating a continued weakening would cause grave risks to hard-won macroeconomic stability achieved in recent years.

As in the previous year, the deterioration in the current account deficit during July-April FY2006 emanated essentially from the trade deficit, wherein gains from a robust 13 percent increase in exports was eclipsed by the exceptionally strong 28.5 percent increase in imports.

Within the current account, the trade deficit of $6.5 billion was accompanied by services account deficit of $3.5 billion, up 36 percent from last year (mainly due to higher transportation and other business charges associated with higher imports).

The income account also recorded a deficit of $2.1 billion. The rise in deficit in the trade, services and income account was partially offset by an increase in the current transfers, which rose from $7.1 billion in July-April 2005 to $8.1 billion in July-April 2006, largely on account of the overseas' Pakistanis' remittances and increases in official grants.

Pakistan was, however, successful in tapping the international markets to finance its deficit, attracting FDI (including for its privatisation program) and in obtaining financing for developmental projects. All of these, together with rising portfolio investment, are reflected in the country's substantial $5 billion financial account surplus during July-April FY2006, as compared to a surplus of only $24 million in the corresponding period of FY05.

As a result, the overall balance witnessed a surplus of $1.4 billion during July-April FY06.

This also helped sustain the relative stability of the exchange rate as the rupee depreciated only 0.88 percent against the US dollar during July-May FY2006 to Rs60.22/$, and sustaining the SBP reserves around $10.6 billion mark by the end of May 2006.

 

[Neo]

ISLAMABAD (July 16 2006): President General Pervez Musharraf has set export target for 2006-07, at $19.5 billion and asked concerned authorities to work out an effective strategy to show better performance on foreign trade front this time.

The President was not satisfied with the performance of the government economic team on many fronts. The downward trend in key sectors of the economy during the last fiscal year was a cause of serious concern to him. He directed the government economic managers to take critical view of their strategy to improve performance in weak areas for ensuring growth in double-digit in 2006-07.

One participant of the meeting told Business Recorder on Saturday, the President referred downward trend in growth in agriculture, large-scale manufacturing (LSM), exports in 2005-06 in his speech and told ministers of respective ministries in clear terms he will like to have better result in all these areas next year to make economic growth robust in real sense.

He noted single-digit growth will not help the government cope with serious problems being faced by the people such as poverty, unemployment and rising trend in prices of daily-use items.

The President also took big shortfall in exports in 2005-06 very seriously and sought reasons from commerce minister Humayun Akhtar Khan, who was among the participants of the meeting.

He asked the commerce minister to take everybody onboard to work out an effective strategy to achieve the export target for the current fiscal year. The President gave broader outline for the future export strategy based on an approach having diversified market to get more share to achieve enhanced exports target.

An official handout issued after the meeting quoted the President as saying growth target of 7 percent for 2006-07 was achievable through yield intensification in agriculture and higher productivity in the industrial sector.

He said new achievable targets for the industrial sector should be set, which registered a decline from 14.5 percent to 9 percent in the outgoing financial year and review of factors which caused the decline in exports.

The handout said the meeting was informed export target during the last year was set at $17 billion and there was a shortfall of $1 billion, however, exports registered an increase of 14 percent as compared to the previous year.

It was also informed new exports target for the current financial year would be achieved through higher growth in industrial and agriculture sectors, especially through value-addition in textile.

The President expressed satisfaction over foreign direct investment, which remained at $3.78 billion in the last financial year.

The Prime Minister, who also attended the meeting, assured the State Bank (SBP) will extend support to any sector of the economy requiring intervention on short-term basis and said it will provide temporary relief to the textile sector to enhance its competitiveness.

He said monthly review meetings would be held to evaluate achievements of targets and to take timely measure if required.

The meeting was attended by commerce minister Humayun Akhtar Khan and industries minister Jehangir Khan Tareen, adviser to prime minister on finance and revenue Dr Salman Shah, ministers of state Hina Rabbani Khar and Umar Ayub Khan, Dr M. Akram Sheikh, chairman, Export Promotion Bureau, governor, State Bank and senior officials of concerned ministries.

 

[Neo]

KARACHI (July 16 2006): Overseas Pakistanis' remittances touched the highest mark at $4,600.12 million during 2005-06), against $4,168.79 million received in the previous year (2004-05), registering an increase of $431.33 million or 10.35 percent.

According to the State Bank of Pakistan (SBP), the amount, $4,600.12 million, includes $12.09 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

The previous (second) highest amount of $4,236.85 million sent by overseas Pakistanis, was recorded during the fiscal year 2002-03. The inflow of remittances into Pakistan during the period under review from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $1,242.49 million, $750.44 million, $716.30 million, $596.46 million, $438.65 million and $119.62 million, respectively against $1,294.08 million, $627.19 million, $712.61 million, $512.14 million, $371.86 million and $101.51 million during 2004-05.

Remittances received from Canada, Switzerland, Norway, Australia, Japan and other countries during last fiscal year amounted to $724.07 million as compared to $532.90 million of 2004-05.

During last month (June 2006), workers remitted $463.87 million, against $358.98 million of June 2005, registering an increase of $104.89 million, or 29.22 percent.

The monthly average remittances for the year 2005-06 was $383.34 million as compared to $347.40 million of 2004-05, depicting an increase of $35.94 million, or 10.35 percent.

The inflow of remittances into Pakistan from all countries of the world increased last month as compared to June 2005. According to the break-up, Pakistan received remittances during June 2006 from USA $123.15 million, UAE 80.76 million, Saudi Arabia $79.51 million, GCC countries, including Bahrain, Kuwait, Qatar and Oman $59.07 million, UK $38.65 million, and EU countries $9.70 million as compared to the corresponding receipts from the respective countries during June 2005 ie $109.15 million, $60.50 million, $59.65 million, $40.29 million, $33.65 million and $9.25 million. Remittances received from Canada, Switzerland, Australia, Norway, Japan and other countries during June 2006 amounted to $72.04 million as compared to $45.14 million of June 2005.

 

[Neo]

LAHORE (July 16 2006): Federation of Pakistan Chamber of Commerce and Industry (FPCCI) held a farewell reception in the honour of outgoing Export Promotion Bureau (EPB) Vice Chairman Zafar Mahmood here on Saturday. FPCCI Vice President Azhar Saeed Butt, incoming EPB Vice Chairman Naveed Arif and other FPCCI office bearers and members were also present on the occasion.

While addressing the gathering, Zafar Mahmood said that part of a government role is to facilitate business community. He was of the view that role of private sector is vital in the national economy, thus it needs to be strengthened and facilitated at all level so that it could contribute effectively in the growth of the national economy.

"In the past the private sector in Pakistan was ignored, but in the recent that has changed, its participation is encouraged. Under this perspective, we make efforts to facilitate FPCCI and resolve issues of business community," he added.

According to him, in policy making, priorities should be clear, and among the priorities should be strengthening of the private sector so that it could play an effective role in the nation building.

He was against red tapism, which he viewed as a hurdle, which wastes precious time of the business community. Naveed Arif disclosed that work on the set up of a body on trade was in progress and its structure and working would be announced in the Trade Policy 2006-07 on July 17. It would prove an effective body for the traders, he added.

Later, the FPCCI praised the outgoing Vice Chairman for service to the EPB and the traders and acknowledged his efforts to accommodate requests of FPCCI relating concerns of the business community.

 

[Neo]

ISLAMABAD (July 16 2006): Prime Minister Shaukat Aziz on Saturday said that Qatar would invest $2 billion in cement and other fields in Pakistan. Presiding over a meeting of the Economic Co-ordination Committee (ECC) of the Cabinet, he said that 'Qatar-Pakistan Investment Company' would be established which would be owned by Doha.

Economic Advisor to Ministry of Finance, Dr Ashfaque Hasan Khan, later said that the ECC reviewed the prices of essential commodities and noted increase of 0.5 percent in sensitive price indicator during the week ended on July 13, 2006, as compared to previous week ended on July 6.

The ECC was informed that the Central Board of Revenue has so far collected Rs 710.2 billion for financial year 2005-06, against target of Rs 690 billion.

 

[Owais]

Risk in reliance on real estate collaterals


KARACHI (July 16 2006): In July-April FY06 auto loans, housing finance and personal loans registered a slowdown while credit card financing increased by 177 percent over July-April FY05. In the same period, non-performing loans of most of the domestic banks (other than the five large network banks) increased, while NPLs of the big five registered a decline. NPL's as a percentage of net advances are still at a very low level.

The State Bank of Pakistan in its third quarterly review, issued on Saturday, says that 50 percent of the total increase in outstanding advances during July to December FY 06 were extended against real estate as collateral.

"A continuation of this trend would not be a welcome development as a high level of concentration in collaterals could prove detrimental for banks' soundness at the time of financial distress," warns SBP.

The exposure of banking sector to real estate can take any form including, (1) holding of real estate assets in banks' portfolios; (2) lending to customers for real estate purchases; (3) financing of real estate developers and construction companies; (4) lending to NBFIs, especially housing finance companies; (5) relying on real estate to collateralize other kind of lending.

In any case, risk to the banking sector is clear: if the property prices fall, the value of collateral starts declining and the risk of the banks increases. This decline in prices forbids banks to finance real estate, purchasing which further reduces the demand and thus the price of real estate. Hence higher exposure of banks in real estate worsens the impact of any price falls, says a SBP study.

Lending booms, real estate bubbles in East Asian crisis, in the nineties, show that well supervised and well-capitalised banks can absorb swings in the real estate market and not cause financial distress in the economy, says SBP. Although profitability of banks can be hampered significantly, their capital adequacy remains well above the minimum target.

 

[Owais]

Money supply growth slows down

KARACHI (July 16 2006): As a result of tight monetary policy, monetary aggregates have weakened significantly as on June 10 for FY2006 compared with the corresponding period of last year. According to the State Bank (SBP) Third Quarterly Report issued here on Saturday, the growth in money supply (M2) has decelerated to 13.3 percent during July-June 10 FY2006 from 16.2 percent in the same period last year.

This slowdown was driven primarily by deceleration in the growth of both private sector credit and net foreign assets. The SBP maintained a tight monetary policy throughout FY2006 in order to contain inflationary pressures.

The instrument used for containing monetary growth was predominantly open market operations through which the SBP drained out excess liquidity from the interbank market without bringing any significant change in the benchmark six-month T-bills rate. The discount rate was also kept unchanged during the period.

The downtrend in the NFA of the banking system during most of July-June 10 FY2006 is driven by two apparently contradictory developments - sharp widening of country's current account deficit, and firming expectations of exchange rate stability.

Although receipts from the PTCL privatisation and the Eurobond issues prevented a net decline in the NFA of the banking system during the period, the growth is still significantly below of previous year's levels.

The NDA of the banking system showed a growth of 16 percent during the financial year 2006 compared with the growth of 19.6 percent during the same period of last year.

As in previous year, the current increase in NDA was driven principally by the growth in credit to the non-government sector. By end of February 2006, the government borrowing for budgetary support from the banking sector had exceeded Rs 98 billion annual target set for FY2006 by 64 percent, principally due to substantial borrowings from the SBP.

However, inflows under the PTCL privatisation and issuance of Eurobonds during March 2006 allowed the government to retire a large part of these borrowings.

As a result, cumulative government borrowings from the banking sector dropped to Rs 120 billion during July-June 10 FY2006, which remains higher than last year.

The growth in private sector credit during the period under review was a little higher than the annual credit plan estimates for the year, but was significantly lower than the increase during the same period of FY05.

This slowdown is despite larger increases in trade-related loans and the private sector commodity finance during July-May FY2006 compared with the preceding year. This slowdown in the credit market appears to be driven by both demand and supply side factors.

 

[Owais]

Rules for used cars import relaxed


ISLAMABAD (July 16 2006): The government has decided to allow import of all those five years old vehicles which were laden on shipping vessels on or before June 30, 2006 (12 midnight) under the transfer of residence (TR) scheme. Sources told Business Recorder on Saturday.

The Central Board of Revenue (CBR) would soon issue instructions to all customs collectors to allow clearance of all those five years old vehicles, where shipping vessels have left their respective country up to June 30 midnight. In this regard, the department would see relevant shipping documents, including invoice and bill of lading showing pre-shipment of freight.

The board is drafting a directive for regional collectors to remove hardships in genuine cases where vehicles were shipped prior to the applicability of new amendment from July 1, 2006. In this connection, the board has consulted stakeholders.

Through an SRO.696(I)2006, the government had amended the Import Policy Order, 2005, under which vehicles more than five years old shall not be allowed to be imported under gift, personal baggage and transfer of residence scheme. This condition shall apply to vehicles arriving on or after July 1, 2006.

In the meantime, the CBR had categorically announced the board would charge 30 percent redemption fine in addition to duties and taxes on the import of more than five years old vehicles under the TR scheme arriving on or after July 1, 2006.

Meanwhile, the board received letters about relaxation of five years old condition in cases where vehicles were already laden on ships before the announcement of the amendment as applicable on July 1, 2006.

Once the directive is being dispatched to regional collectors, the restriction of five years on cars import by overseas Pakistanis under the TR scheme would not be applicable in the above-mentioned cases.

When asked whether the board has proposed any new amendment in the baggage rules in the Trade Policy, sources said no new amendment has been proposed and recently issued 'baggage rules' would remain intact.

Responding to another question, sources said submission of the "earning certificate" duly signed by the Pakistan Mission Aboard" by the importer of vehicle under the TR scheme would remain enforced. No new provision has been added in the relevant rules for demanding any additional 'source of income' from overseas Pakistanis. 'Earning certificate' specify the foreign exchange earning/savings by Pakistani nationals for import of vehicle under the TR scheme. The diplomatic mission of Pakistan also certifies the total legitimate income and net-saving after deduction of tax of concerned overseas Pakistani.

 

[Owais]

THE RUPEE: 15 paisa gain versus euro

KARACHI (July 16 2006): Firmness prevailed in the interbank market on Saturday as the rupee did not move to any side in relation to dollar for buying and selling at Rs 60.29 and Rs 60.31, respectively. Market men said that the rupee was likely to maintain softer tone versus dollar in the coming days due to strong demand for the greenback.

In the international markets, the dollar gained marginally versus other currencies.

OPEN MARKET RATES: In the open market, too, the rupee retained overnight levels versus dollar for buying and selling at 60.70 and 60.75, dealers said. However, it picked up 15 paisa versus euro for buying and selling at Rs 76.53 and Rs 76.63, respectively.

================================Buying ($) Rs 60.70Selling ($) Rs 60.75================================

 

[Owais]

SCRAs post marginal decline


KARACHI (July 16 2006): The Special Convertible Rupee Accounts (SCRAs), which amounted to around $15 million ($14.8 million to be exact) during the first 12 days of FY07, registered a marginal decline to $14.6 million on July13, according to the latest SBP update posted on the central bank's web on July 14.

USA, whose SCRAs receded by over $2 million from nearly $6 million ($5.7 million to be exact) on July 12 to $3.6 million on July 13, was mainly responsible for the decline. Minor additional withdrawal of $0.004 million also took place in the case of Hong Kong whose overall withdrawals increased, marginally, from $0.024 million on July 12 to $0.028 million on July 13.

The largest fresh inflow, of $l million, was reported in the case of Singapore, whose balance improved from $11.3 million on July 12 to $12.3 million on July 13. Singapore thus continued to hold the first position during FY07 so far.

Withdrawals by Swiss investors, which amounted to about $5 million ($4.7 million to be exact) on July 12, squeezed to $4 million on July 13, meaning a fresh inflow of about $0.7 million.

Other minor to moderate inflows were also reported in the case of UK (up $0.1 million over July l2) and UAE (up $0.08 million).

In the meanwhile, KSE 100 Index (November 1991=100) rose from 9,604 on July 3 to 9,921 on July 12 and continued rising to close above the 10,000 mark at 10,027 on July 14.

It may be recalled that earlier on, KSE 100 Index had plummeted to 8,767 on June 14 2006 amid allegations on stockbrokers of a foul play after having surged to 12,274 on April 17.

Comparably, the SBP General Index of Share Prices (2000-01=100), which covers all other shares, rose from 413 on July 3 to 421on July 13 after having dipped to 389 on June 14. Like KSE 100, SBP Index was also at its highest of 538 during FY06 on April 17.