Pakistan Economy - News & Updates - Archive

[Neo]

FAISALABAD (July 17 2006): The overall performance of infrastructure industries measured by the composite index of seven infrastructure industries slightly weakened during the first nine months of FY06. According to official sources, these industries are electricity generation, natural gas, basic metals, petroleum products, crude oil, cement and coal.

The Infrastructure Industries Index registered an increase of 8.5 percent in Jul-Mar FY06 marginally less than 8.8 percent growth during the corresponding quarters of the previous year.

This deceleration was mainly attributed to a fall in the production of basic metal and crude oil during Jul-Mar FY06, which was partially offset by positive contributions by electricity generation, coal, natural gas, cement and petroleum products.

During the first three quarters of FY06, the User based Quantum Index (UBQI) registered a growth of 8.0 percent, which was significantly lower than the 15.4 percent growth witnessed in the corresponding period of last year.

According to official sources, the slowdown in all sub-indices (except of basic sub-group) of UBQI imitates the development seen in the LSM and mining & quarrying sub-sector.

The basic goods recorded the acceleration in output in Jul-Mar FY06, mainly due to acceleration in electricity generation and some industries of mining & quarrying, while the consumer goods, intermediate goods and capital goods industries witnessed a deceleration in growth compared to the corresponding period last year.

The biggest slowdown of 16.9 percentage points was observed in the capital goods industries during Jul-Mar FY06 over the same period of the previous year. The major contribution in the slowdown of capital goods stemmed from the decline in the production of buses, power looms and electric motors as well as deceleration in the production of tractors, LCVs, electric transformers and wheat thrashers during the first three-quarters of FY06.

Similar to capital goods, a deceleration was recorded in the growth of intermediate goods in Jul-Mar FY06. Most of the slowdown in the growth of output of intermediate goods came from the lower production of textile products, basic metal industry, petroleum products, fertilisers' products, etc.

Consumer goods group grew at a rate of 10.5 percent in Jul-Mar FY06 as against a growth of 17.6 percent during the corresponding period of the preceding year.

This slow growth is attributed to both durable as well as non-durable sub-groups.

The decline in the production of sugar, vegetable ghee & cooking oil, and in some items of the chemical group were the main reasons for the deceleration in the consumer non-durable group. Similarly, the deceleration in electronics products and rubber industry output slowed down the growth of consumer durable goods in Jul-Mar FY06.

 

[Neo]

FAISALABAD (July 17 2006): The pharmaceutical sector in the country presents accelerated growth, as 10 new pharmaceutical companies have been set up in Karachi, 45 in Punjab and 10 in the NWFP in recent times.

According to official sources, this industry has witnessed 14.2 percent growth. The high local demand (earthquake affected areas), increase in external demand, entry of new companies and expansion in production capacity by existing units are main factors for the growth of the pharmaceutical industry.

The growth in chemicals was mainly contributed by soap & detergents and toilets soap, which are the bi-products of vegetable ghee and cooking oil. While textiles-related chemicals such as caustic soda, sulphuric acid and hydrochloric acid had shown a deceleration trend as seen in the textiles sector.

The sources said the government was actively working for improving quality of drugs with special focus on export markets to ensure collection and destruction of expired drugs from the markets in the light of directions of Supreme Court of Pakistan and submission of a report on behalf of various pharmaceutical companies.

Secretary Health, Syed Anwar Mahmood, said the Ministry was going to arrange a convention in September this year and urged stakeholders to work together for the betterment of the country.

Meanwhile, on a proposal of drugs controller, a committee was constituted to resolve the issue unanimously with members included Dr Iqbal Soomro (PCDA), Riaz Hussain (Pharma Bureau), Mohammad Usman (PPMA), Shaukat Sindhu (PPIA), Naser Qureshi (Rawalpindi, Islamabad and Hattar Manufacturer Association) and Arshad Awan (PCDA). It was decided that the PCDA would collect evidence from their members and a meeting of the committee would be held next week, in the Ministry of Health to reach the final decision.

It was also decided that the stakeholders would submit their comments for future implementation within seven days positively.

A draft mechanism has also been proposed by the Ministry to put in rules for the recalls of substandard/ spurious/ adulterated/ misbranded and expired drugs to give legislative support without creating any dispute.

Manufacturers/ importers will establish their internal mechanism for quality assessment throughout the shelf life of drug after marketing. In case of detecting defects through their internal assessment, they will immediately recall/ withdraw said batch of drugs from the market directly or through the authorised agents.

Manufacturers will also immediately recall the unutilised quantity of drugs from the market, if any batch of said drug is declared spurious/ sub-standard/ adulterated or misbranded by the drug-testing laboratory. The manufacturers may utilise the recalled stocks if the drug is subsequently passed by appellate Laboratory.

In case, the Appellate laboratory also declares the drug substandard or adulterated, the recalled stocks will be destroyed by a committee constituted by the provincial or federal government.

Manufacturer or importer will collect drugs from the market before expiry date.

The officials further said that 100 percent compensations would be given to purchasers if intimation on prescribed form is given in writing to the manufacturers, indenters or importers directly or through their authorised agents, three months prior to expiry dates.

Similarly, 50 percent compensation will be given to the purchasers if intimation is given one month prior to the expiry date, while 25 percent compensation will be given if intimation is forwarded one day prior to the expiry date.

Retailer, distributors or wholesalers, who failed to intimate manufacturer or indenters directly in writing or through their authorised agents in the prescribed manner and possess any expired drugs, will be held responsible and liable to be proceeded in accordance with the law.

 

[Neo]

SIALKOT (July 17 2006): State Minister for Railway Ali Asjad Malhi has said that plan is under consideration for starting fast train between Sialkot and Lahore to facilitate the people in general and in particular business community of this export-oriented city and hub of cottage industry of the country.

Talking to Business Recorder here on Saturday afternoon he said that the step was being taken keeping in view the pressing demands of the exporter community and trade bodies of Sialkot. Pakistan Railway was also considering on plying fast cargo train service from Sialkot-Lahore and other major cities for ensuring speedy delivery of cargo within the country he disclosed.

Ali Asjad said that in order to provide better and comfortable travelling facilities to the passengers Pakistan Railway was utilising huge funds for inducting modern bogies, engines and improvement of railway track and initiating fast trains on different routes in the country. Special steps would also be taken of the repair and improvement of railway track between Sialkot-Narowal section he added.

Ali Asjad disclosed that feasibility report was being prepared for the construction of an overhead bridge and underpass in most busy areas of Sialkot city aimed ensuring muddle-free traffic and work on the projects would be undertaken after finalisation of feasibility report.

The State Railway Minister further said that both federal government was spending huge funds for providing basic facilities like telecommunication, electricity, Sui gas, health, education and hygienic drinking water in far-off and neglected areas of the country. The sole aim of the government was to bring ignore and remote parts at par with the developed areas of the country, he added.

 

[Neo]

ISLAMABAD (July 17 2006): The Asian Development Bank (ADB) has signed a $180 million loan agreement with Pakistan for improving National Highway Network to enhance its efficiency and increase private sector participation in the road sector.

Under the National Highway Development Sector Project (formerly Sub-Regional Connectivity and Trade Facilitation project), the government in October last year held negotiations in Manila for the first tranche of $180 million, which is part of a Multi-tranche Financing Facilities (MFF) of $773 million, official sources told Business Recorder on Saturday.

The Multi-tranche Financing Facilities, a new ADB financing arrangement, will support the government's national highway development plan intended to overcome critical bottlenecks in the country's road network, they added.

Sources said the Asian Bank would provide this amount from its Ordinary Capital Resources (OCR), whereas the communication ministry would be the implementing agency of the project.

They said the ADB approved this project on December 13, 2005, and about its break-up, the Bank would provide $770 million from its Ordinary Capital Resources (OCR) and $3 million from its concessional Asian Development Fund (ADF).

The project has been designed to achieve two specific objectives ie improvement in road sector and transport efficiency by facilitating the adoption of national transport policy, strengthening performance of NHA in its management of national highway network, improving road safety and road maintenance and funding, they said.

The second objective of the project is to increase the private sector participation in the road sector by increasing outsourcing of road works and exploring opportunities for private operation of NHA assets.

Sources said under the project, different locations on which improvement and rehabilitation work would be executed are National Highway; N-25, Hub-Uthal, Balochistan; N-70, Multan-Muzaffargarh, Punjab; N-50, Khanozai-Mughal Kot, Balochistan-NWFP; N-35, Hasan Abdal- Manshera, NWFP; N-65, Sukkur-Jacobabad, Sindh; N-80, Tarnol-Jand, Punjab; N-70, Qila Saifullah-Wiagum Rud, Balochistan. Besides, sources said, the proposed project also included institutional strengthening of NHA.

As country's ports and roads offer the most economical route to the landlocked Afghanistan, Central Asia and parts of Russia, the project will help Pakistan to a bridge between east and west Asia.

By alleviating physical, institutional and other constraints through this project, the country would take full advantage of its location and potential for increased trade through improved trade facilitation, rehabilitation of transport link, efficient cross-border movements and increased efficacy at ports.

Once the Gwadar Port is completed, the efficient and improved national highway system would contribute adequately to economy of the country by lowering transportation costs, the sources said.

 

[Neo]

Monday July 17, 2006

ISLAMABAD: United States Assistant Secretary of State for Economics and Business Affairs, Daniel Sullivan is exploring the prospects of establishing Reconstruction Opportunity Zones in the earthquake affected region and along the border with Afghanistan.
United States Assistant Secretary of State for Economics and Business Affairs, Daniel Sullivan travelled to Muzaffarabad, AJK, and Balakot, Mansera District, NWFP to see to see firsthand the effects of the October 8 earthquake.

The goal of ROZs is to foster economic growth by providing tariff-free access to the US market for goods produced in areas that face significant development challenges.

The United States Assistant Secretary of State for Economics and Business Affairs was also briefed on the United States Government’s US $510 million of economic assistance to the earth-quake affected region and visited a US Agency for International Development program to remove rubble from Muzaffarabad’s central business district.

The program is being implemented by the International Office for Migration (IOM).

 

[Owais]

Trade Policy announcement today

ISLAMABAD (July 17 2006): Commerce Minister Humayun Akhtar will announce the 'Trade Policy 2006-07' on Monday evening, prepared much in line with the directions of President Pervez Musharraf communicated to the Commerce Ministry on Saturday.

Official sources told Business Recorder that a lot of changes had been made in the original draft of the trade policy in the light of the guidelines given by the President, who also set the export target of $19.5 billion for 2006-07.

"The President has given export target of $19.5 billion and the directions, which are being incorporated in the trade policy.

We have changed all sectoral export targets as per the new target but last-ditch efforts will be made to bring the exports down to $19 billion," said an official of Commerce Ministry on Sunday.

Commerce Ministry was expecting export target of more or less $18 billion, but it has been given a wishful target, which somehow the ministry has to accept, he said.

Another official said that Commerce Secretary gave a revised presentation to Commerce Minister on Sunday to finalise the summary for the Cabinet, which would accord 'ceremonial' approval to the policy.

He said that the Commerce Minister would announce a re-export scheme, according to which those exporters would be encouraged who would import goods for re-export purpose.

He said that measures would be announced to encourage cottage industry on recommendations of Sindh Chief Minister, while special export processing zones would be established in Balochistan.

"We have proposed to the Cabinet to import second-hand construction machinery, airport handling machines, chillers, medical equipment, fire fighting vehicles and garbage carrying vehicles," the official added.

However, import of cars under the baggage scheme would be more tightened through reduction in depreciation from two years to one year, he said.

According to foreign trade data of 2005-07, exports remained short of the target by $440 million--at $16.56 billion--against the target of $17 billion, showing a growth of 14.9 percent.

The country's imports jumped all time high to $28.2 billion, showing an increase of 36.7 percent when compared with $20.627 billion imports of last year.

The trade gap reached an alarming level of $11.64 billion during 2005-06, but, according to Commerce Minister, the import level might remain the same during the current fiscal year.

Sources said that Commerce Minister would also announce establishment of much-awaited Trade Development Authority of Pakistan (TDAP) which would replace Export Promotion Bureau (EPB), and added that several proposals of the initial draft have been withdrawn, including inspection of warehouses and brokerage houses.

It is expected that President would promulgate an ordinance to replace EPB with TDAP, as approval from the parliament would take time.

While reviewing the Trade Policy 2005-06, analysts say that several export-related initiatives, announced in Trade Policy 2005-06 did not materialise due to one reason or the other.

For example, Commerce Ministry announced that trade lobbying firms and consultants would be hired to enhance export and market access in the United States and the European Union (EU).

Quinngillespie Associates, an American firm, had been hired for lobbying for Free Trade Agreement (FTA), Bilateral Investment Treaty and Trade and Investment Facilitation Agreement (TIFA), which has been given a chart of tasks to be completed in one or two years.

However, the name of marketing company has not been finalised which would be given the task of match-making and procurement of orders for Pakistani exporters in the EU member states. Pakistani embassy has dispatched the names of three companies, but the matter is still undecided.

It was also announced that retail sale outlets would be established in major importing countries for introducing and exporting high quality and brand-name exports of Pakistan, but no one is ready to act one the scheme.

The Commerce Ministry had also promised that steps would be taken to reduce cost of transportation but there was no substantial reduction in freight forwarding.

The scheme of promotion of Pakistani trademarks announced in the policy did not attract the exporters.

In the scheme, it was announced that exporters who registered their trade marks abroad for export purposes would be provided subsidy equal to 50 percent of registration fee, sources said, adding that the scheme was announced but no exporter was prepared to follow it.

 

[Owais]

SBP may set Rs 15 billion target for treasury bills auction

KARACHI (July 17 2006): The State Bank of Pakistan (SBP) is likely to set the target of Rs 15 billion in the upcoming auction of treasury bills where most of the participation is expected in three-month and one-year bills.

The money market week ended on a tight note with Rs 180 million worth of discounting taking place on July 14. The week started off liquid, with overnight repos trading as low as 3.5 percent during the week while the bulk of trading was witnessed in the 6.5 percent to 7.5 percent range.

The short term yield curve slipped slightly during the week with one-, three-, and 6-month repos trading at 8.08 percent, 8.28 percent, and 8.41 percent respectively, at the end of the week, against previous week's levels of 8.19 percent, 8.31 percent, and 8.52 percent, respectively.

The SBP conducted Open Market Operations (OMOs) on three occasions during the week in order to mop up excess liquidity.

Salman Jafri, fixed income dealer at JS Capital Ltd, said in a report that a large volume of OMO maturities would flow back into the market on July 20 totalling Rs 67.7 billion. In addition, Rs 14 billion of Treasury Bills would also mature on July 20, bringing total inflows on that date to approximately Rs 76.8 billion.

The SBP is expected to announce an auction of Treasury Bills on July 17 for settlement on July 20 and pick up the inflows via sales of Treasury Bills. The pre-auction target is likely to be in line with that of maturing T-bills ie Rs 14 to 15 billion.

Participation in the auction is likely to be heavy, keeping in view the excess liquidity situation prevalent in the market. "We expect the bulk of participation to target the 3-month and 12-month T-bills. Mop up OMOs of up to two weeks maturity are expected subsequent to the auction to dry up any excess liquidity."

The JS PGBI, which is the primary indicator of Pakistan Bond Markets, showed an increase of 0.0288 points over the week, bringing the index value to 89.2803 with a weighted index yield of 9.5713 percent on July 15, 2006. The JS PGBI has shown an overall decrease of 10.7197 percent since its inception on July 1, 2004 and has fallen 1.4018 percent since December 31, 2005.

Last week the 10-year yield fell to 9.82 percent from previous week's level of 9.85 percent; the 5-year yield fell to 9.64 percent from 9.66 percent, and the 3-year yield fell to 9.35 percent from previous week's level of 9.39 percent. The State Bank of Pakistan conducted the first successful auction of Pakistan Investment Bonds on May 18, 2006, after two years of non-issuance by the Government.

Cut-off yields for 3-, 5-, and 10-year PIBs rose to 9.4515 percent, 9.6674 percent, and 9.8746 percent, respectively, from levels of 4.3506 percent, 5.3492 percent, and 7.3698 percent.

In the period since the auction, trading volume has fallen off to negligible levels. This is due to the fact that a large portion of the freshly issued bond holders resides in corporate sector inventories and is unlikely to be traded since the corporate sector typically holds instruments to their maturity rather than actively trading in them.

 

[Spring Onion]

Enhancement of trade between Pakistan, Kazakhstan stressed

RAWALPINDI, July 17 (APP): The Economic Councilor, Embassy of
Kazakhstan, Gali Shaimakov has stressed the need for enhancing trade volume between Pakistan and Kazakhstan, maintaining that the current volume between the two countries was very low.
Addressing business community here, Gali said, Kazakhstan and Pakistan
had great potential for trade and stressed the need that economic cooperation should activate the development of mutually beneficial collaboration.
He said, a high level Kazak delegation visited Karachi to look into
present investment opportunities and invite Pak companies and businessmen to avail business opportunities in Kazakhstan.
He urged upon the business community of Rawalpindi to take active part
in further strengthening the trade and economic relations between the two countries.
He said, Kazakh President, Nazarbayev has identified a strategic
objective before the nation to join fifty most competitive countries in the world in near future. He said, the president stressed the need of enhancing trade relations with Pakistan.
Gali stressed the need of result-oriented cooperation between the
Islamic countries and assured Pakistan of its full support on all international forums like Economic Cooperation Organization (ECO) and Organization of Islamic Countries (OIC).
Speaking on the occasion, President Rawalpindi Chamber of commerce and
Industry (RCCI), Jalil Ahmad Malik maintained that there was great scope to expand economic and trade relations between the two countries.

APP

 

[Neo]

ISLAMABAD (updated on: July 17, 2006, 19:19 PST): The Federal Cabinet on Monday approved the trade policy 2006-07 and set an export target of $18.6 billion for the current fiscal year.

The cabinet also approved setting up of the Trade Development Authority of Pakistan (TDAP) to boost exports.

Chairing the Cabinet meeting, Prime Minister Shaukat Aziz said the consistency and continuity of policies are showing results in every sector of economy.

He noted that during the last financial year, exports were the highest in the country's history and the government also exceeded revenue collection target by Rs 21 billion.

The government has so far collected Rs 711 billion against the annual target of Rs 690 billion for the previous financial year.

The figure is expected to rise further after final calculations, the prime minister said.

Mr Aziz said that increase in the revenue collection reflects buoyancy in the economy which has doubled in size to $ 134 billion in the last seven years since President General Pervez Musharraf took the office.

The prime minister said that higher than targeted figures of imports during the last financial year were due to higher import of machinery and the surge in prices of oil in the international market.

Last year's oil bill (2005-06) was $ 2.5 billion over and above than the previous year's bill which posed many challenges to the economy, he added.

The prime minister said that the challenge of continuing increase in the price of oil has to be faced squarely.

The primer said that the reform agenda of the government which is based on the philosophy of deregulation, liberalisation and privatisation accompanied by transparency, consistency and continuity of policies have changed the entire landscape of the economy.

He said the TDAP will make focused efforts to enhance exports. He asked the newly created TDAP to increase and diversify the country's exports by exploring new markets and by identify new export products.

Prime Minister Aziz said in this era of globalisation, industries must focus on competitiveness and productivity. He said government is making an all out effort to facilitate the private sector in this regard.

The prime minister said the government is also focusing on trade and economic diplomacy.

To increase market access for the goods produced in Pakistan, the government is vigorously pursuing signing of Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs) with various countries.

 

[Neo]

ISLAMABAD: July 17, 2006

The government has fixed export target of $18.6 billion and import target of $28 billion for the current fiscal year.

Announcing the new trade policy on Monday, Commerce Minister Humayun Akhtar Khan said the export target represents an increase of around 13 percent on the export level, attained during last year.

He said the focus of the government would be on trade diplomacy, trade facilitation, domestic commerce and development of human and physical infrastructure to boost our exports.

He announced a strategy to facilitate annual exports of leather products, engineering goods, chemical and pharmaceuticals, towels, denim and services to a level in excess of a billion dollars within three years.

He said the prime minister has tasked the Deputy Chairman Planning Commission to develop sectorial strategies for traditional or core industrial sectors as well as the developmental ones with good potential.

He announced a number of initiatives and concessions for different sectors.

TRADE DEVELOPMENT AUTHORITY

In view of the rapidly changing international trading environment it has been decided to establish the Trade Development Authority of Pakistan replacing the Export Promotion Bureau to effectively exploit opportunities for increasing Pakistan's prosperity through enhanced trade.

CARPET CITIES

Carpet cities are to be set up in Lahore and Karachi to make our carpets more competitive in terms of price as well as quality and other standards.

EXPO CENTRES

Three more expo centres would be set up in Islamabad, Quetta and Peshawar. Those in Quetta and Peshawar will have modern warehouse facilities and play an important part in promoting exports to Iran, Afghanistan and the Central Asian States.

GEMS EXPORT

An integrated facility to be known as the Dazzle Park is being established near Karachi airport to facilitate export of gems and jewellery. A specialised SME Export House is to be established to act as a strong catalyst to SME exports.

MODERN WARE HOUSE

It has also been decided to explore setting up the modern ware-house city in Karachi to ensure availability of adequate and modern warehouse facilities within the country.

CEMENT

In order to facilitate the export of cement, a specialised coal, clinker and cement terminal is planned to be set up in Port Qasim.

25 PERCENT FREIGHT SUBSIDY

Export of all items except those to be notified separately will now be able to avail a twenty-five percent freight subsidy provided they are exported to Africa, Pacific Islands and Eastern Europe.

Similarly, export of products falling in the developmental category will be entitled to twenty-five percent freight subsidy even if they are to the to twenty export destination.

6 PERCENT COMPENSATORY REBATE

The six percent compensatory rebate to readymade garments and knitwear as research and development support would continue till end June next year at the same rate and at the rate of three percent till end June 2008.

Like textile garments, footwear sector would also get six percent research and development support to enable it to make improvements in its processes and products.

HALAL MEAT EXPORT ZONES

Halal meat export zones would be established in Karachi, Lahore, Peshawar and Quetta with state of art infrastructure to target export markets in the Islamic world.

First six percent of the mark up rate for credit utilised in setting up cool chain facilities for the purpose will be picked up by the Export Development Fund.

Subsidy will also be provided for refrigerated transportation of such meat to export markets.

POULTRY ZONES

Similarly, specialised poultry export zones would also be set up in Karachi, Faisalabad and Hazara.

LONG TERM FINANCING REVAMPED

The commerce minister also announced revamping of the special long-term financing facility on concessionary terms with fixed interest rates.

IMPORT STRATEGY

Mr. Humayun Akhtar Khan said it lays emphasis on import liberalisation with a view to ensuring an economical supply of machinery and raw material to our industry so that the exportable surpluses they produce are internationally competitive.

Similarly, import of those items is being facilitated which are required for enhancing public welfare at affordable cost.

Essential items especially food stuff are imported to ensure their availability to the public at reasonable prices.

He said country's imports during first eleven months of the last financial year were to the tune of 25.6 billion dollars mainly because of higher prices paid for higher imports and higher demand for machinery and raw materials.

IMPORT OF USED MACHINERY

He announced permission for import of certain kinds of used machinery. These included used machinery and parts for construction, petroleum and mining sectors, used cargo handling equipment for airports and seaports, mobile cranes for industrial units, equipment needed by licensed call centres, waste disposal trucks and fire engines, mobile clinics and medical equipment, security and surveillance equipment and transportation of fruits, vegetables, meat and flowers.

IMPORT OF NEW/USED AIRCRAFT

Public and private limited companies will be able to import new or used aircraft subject to fulfilment of relevant licensing formalities.

Only vehicle assemblers registered with the Ministry of Industries will be allowed to import CKD kits.

About export performance during the last financial year, the Minister said our merchandise exports were around 16.5 billion, defence exports in additional 275 million dollars and services exports another 392 million dollars.

He pointed out that for the first time in Pakistan's history non-textile exports exceeded six billion dollars. Similarly the exports of rice have also exceeded one billion dollar mark.

 

[Neo]

By John Zarocostas
The Washington Times

GENEVA -- Pakistani Prime Minister Shaukat Aziz says Islamabad hopes to position itself as an energy corridor linking oil- and gas-rich countries in the Persian Gulf and Central Asia with the dynamic economies of India and China.

With energy needs growing rapidly throughout Asia, Pakistan's strategic location puts it in a favorable position to tap this potential, Mr. Aziz said during a recent visit to Geneva.

Brushing aside U.S. sensitivities over a proposed $7 billion gas pipeline running from Iran through Pakistan to India, Mr. Aziz told reporters that his government was engaged in negotiations with Tehran over transit fees for gas piped through Pakistan.

The United States is pressing both Pakistan and India not to deal with Iran, a country Washington considers a sponsor of terrorism.

"We have repeatedly expressed concerns about international participation in energy projects with Iran," a U.S. official told The Washington Times.

"This concern reflects not only long-standing U.S. policy and law, but also the growing international recognition of the threat posed by Iran's policies, including its pursuit of nuclear weapons and support for terrorism."

Energy analysts say the benefits to India and Pakistan in terms of energy security and profits are too great to be easily brushed aside. But the United States is adamant that a venture with Iran would not be a plus.

"We question whether dependence on a gas pipeline link with Iran would enhance the energy security of either country," the U.S. official said.

Extension of Iran-Pakistan-India pipeline under consideration
Mr. Aziz, a former Wall Street banker, said the Iran-Pakistan-India pipeline also could include a spur running to western China. Other possible projects include the transport of energy from Tajikistan via Afghanistan to Pakistan and on to India, he said.

Mr. Aziz also said a new seaport at Gwadar, near the Iran-Pakistan border, "will be ready in a few months. We are positioning it as an energy port and hub for storage and refining."

An energy security report from the United Nations prepared for the Group of Eight summit in St. Petersburg concluded that global security risks have "increased sharply because of steeply rising oil import demand in developing countries."

Tightness in the supply situation and the heightened threat of supply disruptions due to war and terrorism are adding to the insecurity, said the report, which proposed the promotion of more investment in the energy sector to meet future needs.

Mr. Aziz, noting rapid growth in the economies of both Pakistan and India, said moves to develop his country as a regional energy hub "would be win-win for all."

Pakistan's economy is surging by 6 percent to 8 percent a year, India's by about 8 percent and China's by more than 9 percent a year.

http://wpherald.com/articles/355/1/...ghout-Asia.html

 

[Neo]

KARACHI, July 17: An impressive export performance of 17 per cent growth in the fiscal year 2004-05 gave enough confidence to Commerce Minister Humayun Akhtar Khan to announce in the Trade Policy in July last year an export target of $20 billion. In the final assessment, a caution prevailed and a more realistic export target of $17 billion was fixed. On Monday, the minister in his Trade Policy 2006-07 speech announced final export figures at $16.46 billion for the fiscal year 2005-06.

Export proceeds of a little more than $500 million from defence products and services were clubbed together to push up export figures near $17 billion. This may be good for self-consolation but issues confronting the trading sector cannot be wished away by such an exercise.

With Pakistan’s import bill likely to close at $28 billion plus this end-June, the resultant trade gap of about $11.50 billion would not be easy to digest. The trade imbalance is almost equal to Pakistan’s official foreign exchange reserves. This trade gap is further aggravated by the imbalance shown in insurance and shipping services and there had been more outflow than inward transfers. Remittances, foreign debts and privatisation proceeds provided some temporary cushion. This cushion may prove to be too fragile to withstand the pressure of widening trade gap in coming days.

What is moral of the whole story? Pakistan’s international trade remains a gamble rather than a well designed and thought out strategy designed to respond to the fast changing situations. Even a cursory glance at month-wise tempo of exports during the fiscal year 2005-06 shows that there was a downslide since January this year.

In January 2006, exports were down by $206 million than the target. In February, the exports were short by $49 million. The export showed a small improvement of $37 million in March but then again went down by $69 million in April, $81 million in May and finally more than $200 million in June.

Even before January 2006, the tempo of exports during July-December 2005 was far from satisfactory. In four months, the exports were hardly close to proportionately monthly targets. What were export planners doing all these 12 months of 2005-06? Was this downslide taken notice of in the recent meeting of the Export Promotion Board chaired by Prime Minister Shaukat Aziz?

Let’s look at the export structure from another angle. Pakistan has signed a free trade agreement with Sri Lanka. The official export figures for Sri Lanka during July-February 2005-06 tell us that these came down to $102.32 million from $110.08 million in 2004-05. After an FTA it was expected that Sri Lanka would be a conduit for a variety of Pakistan goods for re-export to India. It did not happen. Why?

Another question that begs for an answer is tempo of Pakistan’s trade with Saarc countries after the signing of Safta. The powerful lobby of super patriots in Islamabad is perhaps not yet ready for a normal and smooth flow of trade between the Saarc countries. Why cross-border trade possibilities with India in Punjab and Sindh are not being considered?

China remains Pakistan’s big trade partner so far as imports from official and unofficial channels are concerned. But exports to China are very dismal despite an Early Harvest agreement. Total exports to China during the first eight months of 2005-06 amounted to hardly $300 million. A 45 per cent increase in exports during 2005-06 looks impressive but figures are far too unimpressive and insignificant. Hong Kong was a dumping ground for Pakistan’s yarn for too long. It remained a god market for Pakistan’s exports. In eight months of 2005-06, total exports are hardly $435 million.

Afghanistan is one country where exports had more than doubled to about $644 million in eight months of 2005-06. But this improvement in exports was at the cost of Pakistan’s cement and wheat flour and eventually the government had to enforce a regulatory duty.

There is a lot of talk about export potential available in central Asian republics. Envoys’ conferences were held. The end result is that during eight months of 2005-06, total exports to Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan were not even $15 million. Indian exports exceed billion dollars as it is main supplier of a variety of consumer items, hospital equipments and other goods.

Indonesia and Malaysia are the two brotherly Muslim countries with which Pakistan seeks FTA. Pakistan’s exports to these two countries are showing downward trend in 2005-06. There are improvements in export to South America, Africa and East Europe in ratios but these are insignificant when it comes to hard cash.

On the import side, almost $6 billion have been claimed by petroleum and products. Increasing number of automobiles on roads has pushed up demand for oil. Automobiles worth more than $1.5 billion have been imported in completely built-up (CBU) by the importers and in semi knock down condition by the assemblers to meet the rising demand. What is the identity of this neo rich class? How many of them would be able to pay back their auto loans to banks and leasing companies?

The government never releases details of imports. But there are reasons to believe that quite a big chunk of imports is consumer items. These include edible—cheese, butter, honey, juices, beverages, cosmetics, toiletries, apparels, home textile, furniture, jewellery and what not.

Pakistan’s economy is coming under increasing pressure of a double-edge sword, the fiscal deficit and the current account deficit. The business and trade look for liberal loaning from banks that too are under pressure of a huge debt portfolio of more than one trillion rupees. A State Bank report has obliquely drawn government’s attention to vulnerable fiscal indicators. It is in this backdrop that the commerce minister wants to achieve $18.6 billion export in 2006-07 and bring down import from the $28 billion level.

 

[Neo]

Monday July 17, 2006


ISLAMABAD: United States Assistant Secretary of State for Economics and Business Affairs, Daniel Sullivan is exploring the prospects of establishing Reconstruction Opportunity Zones in the earthquake affected region and along the border with Afghanistan.
United States Assistant Secretary of State for Economics and Business Affairs, Daniel Sullivan travelled to Muzaffarabad, AJK, and Balakot, Mansera District, NWFP to see to see firsthand the effects of the October 8 earthquake.

The goal of ROZs is to foster economic growth by providing tariff-free access to the US market for goods produced in areas that face significant development challenges.

The United States Assistant Secretary of State for Economics and Business Affairs was also briefed on the United States Government’s US $510 million of economic assistance to the earth-quake affected region and visited a US Agency for International Development program to remove rubble from Muzaffarabad’s central business district.

The program is being implemented by the International Office for Migration (IOM).

 

[Owais]

Orient Petroleum to provide natural gas to SSGC KARACHI: Orient Petroleum International will provide daily 90 to 100 million cubic feet of natural gas to Sui Southern Company Limited (SSGC) for a span of fifteen years.

The provision to Sui Southern Company Limited will be managed from Mirpur Khas block and Khapro block gas fields.

In this connection, two pacts of sale and purchase were signed between Orient Petroleum International and Sui Southern Company Limited.

On this occasion, Sui Southern Gas Company managing director Munawwar Baseer said this pact would serve to fulfil increasing demands from industrial sector.

 

[Owais]

Textile sector production in 9 months rose by mere 4% KARACHI: Textile sector production during the nine months of the previous year could be raised by merely 4 percent as compared to the 29 percent surge witnessed during the same period, 2004-05 fiscal year, which culminated into the largest single factor hitting large scale manufacturing sector performance.

State Bank’s report for the third quarter said that the agriculture sector and large industries production rise during the fiscal year 2005-06 remained much below the targets.

However, services sector growth witnessed a significant boost to 8.8 percent as compared to 4.3 percent in fiscal year 2004-05, when finance and insurance sectors taking the lead showed a robust growth of 23 percent, while wholesale and retail trades grew by 9.9 percent.

Agriculture sector performance during the previous year turned out to be quite disappointing, as the targeted productions from cash crops including cotton and sugar could not be achieved and the agricultural production trailed behind to mere 2.5 percent as against 6.7 percent growth recorded in 2004-05.

Similarly, growth in the production of large industries as against 15.6 percent in 2004-05 also lagged behind to poor 9 percent during the previous fiscal year.