Pakistan Economy - News & Updates - Archive

[haviZsultan]

Oh no don't tell me..... policies to be reversed???? Same way they were when bhutto came to power? OMG this is sick...

 

[Neo]

Ericsson gets $300 mln Warid Telecom Pakistan deal​

Sun, Mar 30, 2008

ABU DHABI (Reuters) - Abu Dhabi-based Warid Telecom said on Sunday it awarded a $300 million contract to Sweden's Ericsson to expand its network in Pakistan.

Telecom equipment maker Ericsson said on Tuesday it had won the order to expand and upgrade the GSM/GPRS network of Warid Telecom, without giving financial details of the deal.

"The GSM network extension in Pakistan gives us additional capacity for 5 million customers and coverage of additional 100 cities," Warid's CEO Bashir Tahir told Reuters after the contract signing. Warid, the third-largest operator in Pakistan, now covers 250 cities.

Singapore Telecommunications bought a 30 percent stake in Warid in June for $758 million.

Warid has also launched GSM and Wymax services in Uganda and GSM services in the Democratic Republic of Congo, Tahir said.

Warid is currently building a GSM network in the Ivory Coast and the former Soviet state of Georgia. "We expect to become operational before the end of 2008 in these places," he said.

Warid will continue to finance its expansion partly through equity and debt from banks and export credit agencies, he added.

Warid Telecom is part of Abu Dhabi Group, owned by a member of the Gulf Arab emirate's ruling family.

Ericsson gets $300 mln Warid Telecom Pakistan deal - Yahoo! India News

 

[Neo]

'Pakistan deprived of $500 million in basmati rice export' ​

KARACHI (March 31 2008): Pakistan has been deprived of a huge amount of $500 million from its basmati rice export alone in the July-February period of FY08, as the country got low unit price of this commodity against the average unit prices of basmati varieties earned by India, rice exporters said.

The losses of premium from export of coarse rice varieties were besides this, they added. The average unit price of Pakistani super basmati rice came to $855 per ton up to end of February 2008 against the price of Indian basmati rice of $1400 per ton during this period, they said.

Rice exporters told Business Recorder that for shipments effected during July 2007 to February 23, 2008, super basmati fetched average unit price of $855 per ton, Super Basmati Sela (Parboiled) rice could only fetch $680 per ton. The average price achieved for Basmati 385 was $716 per ton during the same period.

The huge difference in export prices could not open the eyes of sleeping concerned quarters although Quality Review Committee (QRC) Inspection Cell reports have been regularly sent to Director General Trade Development Authority of Pakistan (TDAP), Director (Rice) TDAP, Chairman and Vice Chairman of Rice Exporters Association of Pakistan (REAP).

On the other hand, Indian rice exporters remained the sole beneficiary of present rice market scenario and fetched premium prices wisely. According to details, at the movement Indians are exporting 'Sharbati' steamed rice at $950 per ton, 'Pusa' rice at $1100 per ton and newly developed extra long grain non-basmati variety 1121 Sela (Parboiled) at $1500 per ton, while 1121 white rice at $1700 per ton. Indian traditional Basmati rice at $1800 to $2000 per ton depending on brand and packing. The average unit price of Indian Basmati rice was $1400 per ton till end February 2008.

It is worthwhile to note that Indian rice exporters are not being supported by any kind of rebate or subsidy by their government but they have established their rice industry on strong footing by adopting wise strategy both at domestic and international markets.

Contrary to this, Pakistan's rice exporters, enjoying huge amounts of export refinance facilities, coupled with rebate on export packing materials, are hardly getting the cost. The rapidly increasing inflow of bank financing and export refinancing are bitterly increasing the domestic prices and making miserable lives of local consumers.

"There is no solution to arrest the alarming food inflation unless government withdraws bank financing to essential food commodities and export refinance from rice, as financing facilities are boosting speculation and hoarding powers of traders, importers and exporters," rice exporters said.

It was the Export Refinance Scheme of State Bank of Pakistan (SBP) that undermined the value of unit price of Pakistan's grain in the international market as exporters sell this precious staple more desperately to meet their export targets and enter into forward sale contracts to secure their annual export sales, one rice exporter said.

Export Refinance Scheme of State Bank of Pakistan (SBP) is one of the incentives which was originally designed for value-addition in exports but could not play significant role. Rather it has now started showing adverse impact on fetching higher export prices. Further, this facility is also meant for those commodities facing stiff competition abroad and financing at subsidised rate of interest enables that product viable for export.

Though Pakistani rice has never faced such stiff competition in selling abroad but has become the second largest export sector after textile, enjoying SBP Export Refinance facility of more than Rs 50 billion. The beneficiary club of ERS includes highly influential and well connected rice exporters that induced government to allow Export Refinance Facilities to rice.

These few bigwigs in rice export sector enjoy 70 percent of Export Refinance cake offered to rice sector. They are making hasty and long-term sales on much lower prices than that of prevailing domestic prices in order to meet their export performance mandatory against availed ERF facilities.

Incentives to exporters have always been odd tools of all governments to boost exports and fetch higher unit value. In spite of spending huge amount to various sectors, Pakistan's exports could not perform quantum leap and remained stagnant during past many years.

These incentives were aimed to strengthen export-oriented industries and trade but have gone into the pockets of bigwigs, resulting in increased inflation and growing trade deficit, increasing burden on the economy. Basmati, a fine textured long grain aromatic variety of rice, is considered as white gold commodity which is exclusively grown in Pakistan and India.

Both countries enjoy monopoly of producing Basmati due to special climatic and soil conditions, which always fetch premium price as compared to other rice varieties grown on the world. In current scenario of international market, Basmati prices have become almost double in major Basmati rice importing countries during last two years but Pakistani rice exporters have failed to reap true benefits and merely begged the cost owing to their desperate and long term sale of this indigenous staple.

There are many countries on the globe that earn huge premium through value addition despite of fact they do not produce or manufacture those goods at their home but their exports are incredible. Hong Kong, Singapore and UAE are good examples of this prudent practice. This award goes to their government's good governance and healthy policies without spending a single penny on incentives.

Major rice producing and exporting countries are reaping full benefits of current international prices by earning higher export prices while Pakistan has failed to fetch export prices in line with its domestic rice prices owing to lack of wise export strategy.

The Ministry of Commerce and State Bank of Pakistan had allowed export refinance to rice exporters after their pledge of value-addition but rice exporters remained busy in selling commodity at much lower prices as compared to other competitors in the region during past ten years.

Rice Exporters Association of Pakistan (REAP) despite fullest support from government could not change the perception of No 2 quality supplier. The increase in average unit price of Pakistani rice during past years was only windfall benefit of globally increased prices.

The final countdown has begun, if the economic managers do not wake up now, rapidly accelerating food prices may lead looming catastrophe as rising fuel cost may not damage as much as higher food prices will deeply wound lives of the poor masses, exporters said.

Business Recorder [Pakistan's First Financial Daily]

 

[indiapakistanfriendship]

'Pakistan deprived of $500 million in basmati rice export'


KARACHI (March 31 2008): Pakistan has been deprived of a huge amount of $500 million from its basmati rice export alone in the July-February period of FY08, as the country got low unit price of this commodity against the average unit prices of basmati varieties earned by India, rice exporters said.

The losses of premium from export of coarse rice varieties were besides this, they added. The average unit price of Pakistani super basmati rice came to $855 per ton up to end of February 2008 against the price of Indian basmati rice of $1400 per ton during this period, they said.

Rice exporters told Business Recorder that for shipments effected during July 2007 to February 23, 2008, super basmati fetched average unit price of $855 per ton, Super Basmati Sela (Parboiled) rice could only fetch $680 per ton. The average price achieved for Basmati 385 was $716 per ton during the same period.

The huge difference in export prices could not open the eyes of sleeping concerned quarters although Quality Review Committee (QRC) Inspection Cell reports have been regularly sent to Director General Trade Development Authority of Pakistan (TDAP), Director (Rice) TDAP, Chairman and Vice Chairman of Rice Exporters Association of Pakistan (REAP).

On the other hand, Indian rice exporters remained the sole beneficiary of present rice market scenario and fetched premium prices wisely. According to details, at the movement Indians are exporting 'Sharbati' steamed rice at $950 per ton, 'Pusa' rice at $1100 per ton and newly developed extra long grain non-basmati variety 1121 Sela (Parboiled) at $1500 per ton, while 1121 white rice at $1700 per ton. Indian traditional Basmati rice at $1800 to $2000 per ton depending on brand and packing. The average unit price of Indian Basmati rice was $1400 per ton till end February 2008.

It is worthwhile to note that Indian rice exporters are not being supported by any kind of rebate or subsidy by their government but they have established their rice industry on strong footing by adopting wise strategy both at domestic and international markets.

Contrary to this, Pakistan's rice exporters, enjoying huge amounts of export refinance facilities, coupled with rebate on export packing materials, are hardly getting the cost. The rapidly increasing inflow of bank financing and export refinancing are bitterly increasing the domestic prices and making miserable lives of local consumers.

"There is no solution to arrest the alarming food inflation unless government withdraws bank financing to essential food commodities and export refinance from rice, as financing facilities are boosting speculation and hoarding powers of traders, importers and exporters," rice exporters said.

It was the Export Refinance Scheme of State Bank of Pakistan (SBP) that undermined the value of unit price of Pakistan's grain in the international market as exporters sell this precious staple more desperately to meet their export targets and enter into forward sale contracts to secure their annual export sales, one rice exporter said.

Export Refinance Scheme of State Bank of Pakistan (SBP) is one of the incentives which was originally designed for value-addition in exports but could not play significant role. Rather it has now started showing adverse impact on fetching higher export prices. Further, this facility is also meant for those commodities facing stiff competition abroad and financing at subsidised rate of interest enables that product viable for export.

Though Pakistani rice has never faced such stiff competition in selling abroad but has become the second largest export sector after textile, enjoying SBP Export Refinance facility of more than Rs 50 billion. The beneficiary club of ERS includes highly influential and well connected rice exporters that induced government to allow Export Refinance Facilities to rice.

These few bigwigs in rice export sector enjoy 70 percent of Export Refinance cake offered to rice sector. They are making hasty and long-term sales on much lower prices than that of prevailing domestic prices in order to meet their export performance mandatory against availed ERF facilities.

Incentives to exporters have always been odd tools of all governments to boost exports and fetch higher unit value. In spite of spending huge amount to various sectors, Pakistan's exports could not perform quantum leap and remained stagnant during past many years.

These incentives were aimed to strengthen export-oriented industries and trade but have gone into the pockets of bigwigs, resulting in increased inflation and growing trade deficit, increasing burden on the economy. Basmati, a fine textured long grain aromatic variety of rice, is considered as white gold commodity which is exclusively grown in Pakistan and India.

Both countries enjoy monopoly of producing Basmati due to special climatic and soil conditions, which always fetch premium price as compared to other rice varieties grown on the world. In current scenario of international market, Basmati prices have become almost double in major Basmati rice importing countries during last two years but Pakistani rice exporters have failed to reap true benefits and merely begged the cost owing to their desperate and long term sale of this indigenous staple.

There are many countries on the globe that earn huge premium through value addition despite of fact they do not produce or manufacture those goods at their home but their exports are incredible. Hong Kong, Singapore and UAE are good examples of this prudent practice. This award goes to their government's good governance and healthy policies without spending a single penny on incentives.

Major rice producing and exporting countries are reaping full benefits of current international prices by earning higher export prices while Pakistan has failed to fetch export prices in line with its domestic rice prices owing to lack of wise export strategy.

The Ministry of Commerce and State Bank of Pakistan had allowed export refinance to rice exporters after their pledge of value-addition but rice exporters remained busy in selling commodity at much lower prices as compared to other competitors in the region during past ten years.

Rice Exporters Association of Pakistan (REAP) despite fullest support from government could not change the perception of No 2 quality supplier. The increase in average unit price of Pakistani rice during past years was only windfall benefit of globally increased prices.

The final countdown has begun, if the economic managers do not wake up now, rapidly accelerating food prices may lead looming catastrophe as rising fuel cost may not damage as much as higher food prices will deeply wound lives of the poor masses, exporters said.

Business Recorder [Pakistan's First Financial Daily]

May be this is something we can co operate on. We can share experiences and learnings , watch ya say neo

 

[Neo]

Chichoki Mallian: Gilani to sign accord for 525 megawatts plant ​

ISLAMABAD (March 31 2008): Prime Minister Yousuf Raza Gilani is all set to ink the first-ever power sector pact of his government with a Chinese company, Dong Fong, here on Monday (today) for setting up 525 MW thermal power plant with an investment of $450 million at Chichoki Mallian (Sheikhupura), sources close to the Private Power Infrastructure Board (PPIB) managing director told Business Recorder.

Sources, however, expressed serious concern over the cost escalation, saying the project cost could have been negotiated by a team of experts. The Dong Fong was already in the process of setting up thermal power plant of 450-500 MW at Nandipur (Gujranwala), though several questions had been raised by the Euro Dynamics International, a Lahore-based firm, that the second lower bidder joint venture of Chinese company does not meet the qualification and requirement of combined cycle plant.

Earlier, former prime minister Shaukat Aziz had signed a memorandum of understanding (MoU) with the Qatar Investment Authority (QIA) and the Alstom-Marubini to set up 450-500 MW thermal power plant at Chichoki Mallian, but a couple of months ago, the pact was terminated when the sponsors did not come up with tariff petition.

The ECC, in its meeting on October 31, 2007, had directed the Ministry of Water and Power to issue a notice to the proposed sponsors, including the Alstom-Marubini and the QIA to come up with a deadline as to when they intend to file an application to the National Electric Power Regulatory Authority (Nepra) for tariff fixation and project completion to avoid any further delay.

The Government of Pakistan had sent several letters to QIA for this purpose, but they did not pay any heed despite the fact that gas allocation deadline of November 30, 2007, had expired.

Now the government has decided to award the contract to Dong Fong on the same terms and conditions applicable to 450-500 MW combined cycle power plant at Nandipur, the sources maintained. An official told this scribe that the Chinese company would complete the project within the estimated cost of $330 million.

Sources said that initially the Investment Division, which saved the deal was handling the project, but later on it was transferred to the PPIB. They said that a ceremony would be held in the Prime Minister House on March 31 to be attended by the Chinese dignitaries and local officials.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Cement industry's contribution to GDP under-reported ​

ISLAMABAD (March 31 2008): The overall contribution of manufacturing sector particularly cement industry to Gross Domestic Product (GDP) is under-reported due to non-availability of basic/vital statistics of cement units, regarding, production and capacity utilisation.

First study of its kind on cement sector conducted by FBR Fiscal Research and Statistics Wing headed by Dr Ather Maqsood Ahmed, revealed that cement industry haw been enjoying all kinds of tax incentives during the last few years, but no increase in revenue collection was noticed with the manifold hike in production.

The average annual growth in production from 1990-91 to 2001-02 was 2.3 percent, it increased to 16 percent between 2002-03 and 2006-07. The contribution of 10 units was 80 percent of total quantity produced in 2006-07. This share has increased from 64 percent in 2004-05 to 80 percent in 2006-07. The industry's capacity has increased by 37.2 percent whereas the production has increased by 12.3 percent during last three years.

According to FBR analysis, cement manufacturers have increased prices by forming cartel. Average price of cement per bag has varied between Rs 213 and Rs 250 since January 2007. In places like Multan and Hyderabad, the average price was much lower than the national average during most of 2007 while it was generally higher at Quetta and Rawalpindi/Islamabad. The wholesale price index of cement has recorded a declining trend in recent months compared with a steady surge during last five years.

Similarly, the retail price has also declined from over Rs 270 to Rs 250 per bag clearly indicating that price-hike had more to do with the existence of a cartel-like situation rather than the interplay of market forces. The FBR study also confirmed that cement industry has deposited meager amount of duties/taxes despite significant expansion of plant's capacity.

On the basis of available information, the FBR has found that the most disturbing aspect is the tax compliance of distributors, wholesale and retail traders of cement. Despite a regular increase in the number of registered persons within these three categories, the tax compliance has not improved.

Concentrating on tax paid by the industry over the years, it is evident that tax contribution in total tax collection has hovered around 2.5 percent only during the last three years. While indirect taxes were about Rs 20 billion in 2006-07 against Rs 12.6 billion in 2000-01, direct tax contribution has been quite low. It also appears quite inconsistent with expansion in the industry.

On the whole, notwithstanding the expansion in production capacity and boost in economic activity, the contribution of cement industry in total sales tax collection has declined over the time. The declining trend has continued in 2007-08 as well.

The unit-wise analysis reveals that out of 28 manufacturing units, the contribution of top 10 units has varied between 58 percent and 77 percent during last three years. Among the major contributors are the DG Khan Cement with 13.5 percent share in collection, followed by Lucky (12 percent) and Attock (10.4 percent).

The report highlighted that the high input claims by the manufacturers have raised valid concerns in the light of the fact that all plants, machinery and equipment are mostly zero-rated. There is, therefore, a suspicion that the facility of input adjustment is being misused, thereby causing revenue losses to the national exchequer. However, to verify this claim there is a need to undertake comprehensive audit of the industry.

The study pointed out that a comprehensive market analysis of cement industry has not been possible due to non-availability of relevant statistics and gross inconsistencies in information available from different sources like Board of Investment (BoI) sector paper, Cement Wing of Ministry of Industry, and Pakistan Economic Survey.

The anomalies are of peculiar nature. The robustness of data on domestic demand is also not quite sound. Absence of transparency has also been observed as far as the role of All Pakistan Cement Manufacturers Association (APCMA) is concerned.

The analysis uncovered multifaceted issues concerned with the cement industry. There are various question marks, but the situation warrants their solutions. Undoubtedly, the industry witnessed significant expansion in terms of its capacity but its contribution to the national exchequer in the form of tax revenues remained unsatisfactory. In fact, the situation has worsened steadily since 2006-07.

This assertion holds true when viewed within the context of wide array of incentives awarded by the government to the industry from time to time. The reduction in duty and tax rates has been the most visible concession. The simple rationale behind this move was that the revenue loss due to reduced rates would be compensated by expansion in production. However, this anticipated benefit has not taken place.

Instead, the input claims by the industry have risen exponentially over the years thereby jeopardising the collection of tax revenues as per the requirements of the government for its infrastructure development needs. Prima facie, this has not worked well partly due to deficient and inadequate system of audit and penalties to deter tax evasion.

Unfortunately, despite the huge significance attached to this sector some very basic and vital statistics are not available with the government. There is serious discrepancy between available information within various government departments. If it is not for inaccuracy of data, then the natural question is why additional investment, in the expansion of existing plants and new plants is taking place when the existing capacity is not being fully exploited.

One possible reason could be a deliberate attempt of under-reporting of production by the industry. But if this claim turns out to be correct, then it literally means under-reporting of value addition by the industry.

In turn, under-reported value added by one of the leading manufacturing sectors implies that the overall contribution of the manufacturing sector in GDP is under-reported and finally the GDP figures do not remain robust.

This is a serious conclusion with far-reaching implications. Thus, the onus falls on the Federal Bureau of Statistics and the Ministry of Industries to work together for exact statistics of the industrial sector, particularly the cement industry.

Unfortunately, without basic statistics, it is impossible to have proper planning of the economy. As a consequence, the resource mobilisation by FBR would also remain sub-optimal as appears to be the case today, the report added.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

ADB experts say sound industrial policy is imperative ​

FAISALABAD (March 31 2008): Sound industrial policy as a central part of Pakistan's Development Strategy is imperative to increase the share of manufacturing sector's output in GDP from about 16 percent to about 25 percent and share of manufacturing employment from 13 percent to about 18 percent in next decade, said Asian Development Bank (ADB) experts.

"If Pakistan is to maintain and even increase its growth rate, then it has to accelerate its structural transformation and improvements in the quality and diversification of its exports", they urged.

They suggested to increase labour productivity in manufacturing by an average of 3 percent per annum and to increase share of medium and high-technology manufacturing (non-electrical machinery, electrical machinery and transport equipment) in total manufacturing output from about 12 percent to about 20 percent during the next decade.

ADB URGED PAKISTAN TO EXAMINE THE FOUR QUESTIONS:

(i) What information is needed to assess completely where Pakistan's structural transformation stands, and what are the possibilities for upgrading the country's production structure?

(ii) What institutional framework and policies should Pakistan's policy makers design and implement to ensure the successful transformation of its economy and rapid growth, and how should this process be conceptualised and undertaken?

(iii) How are the sectoral imbalances and reallocation of labour that structural transformation entails to be managed?

(iv) How can Pakistan design a plan for structural transformation?

According to update studies of Central and West Asia Department (CWRD) of ADB, developing new activities and products is not easy for most developing countries. Lack of markets and coordination problems can create insurmountable difficulties. For this reason, new activities are rarely created in a vacuum, as their development has to take place in the context of the existing capabilities, which are useful to the extent that they are similar to those of the new products and activities. However, the degree of similarity of capabilities might vary between any pair of activities.

Upgrading Pakistan's production and export structures does not happen without a well thought out and crafted push. Structural transformation in the successful Asian economies did not come naturally or easily.

Pakistan has achieved a technological level that allows it to manufacture nuclear weapons, while Singapore lacks that particular technology. This, however, is no guarantee that Pakistan can undergo successful structural transformation.

The capabilities and institutions needed to develop a broad-based and sophisticated manufacturing sector that employs millions of workers are different from those required to be able to make nuclear weapons.

While both undertakings call for political will, the latter requires the mobilisation and coordination of a much wider group of participants in society, within the context of a market economy where globalisation, fast technical change, competition, and the demand question of what consumers want, are the rules the game. Singaporean companies understand this.

Business Recorder [Pakistan's First Financial Daily]

 

[khanz]

Oh no don't tell me..... policies to be reversed???? Same way they were when bhutto came to power? OMG this is sick...

i think they will just reverse the bad ones i don't see why they will change ones which have done good.

 

[opinion786]

Even if they do reverse some policies.... the bottom line is, that the economy should NOT fall below this 2007 perfromance, as recorded by State Bank Pakistan.

These below will always be basis of comparison, of their performance:

Pakistan's economy grew by 100% --- to become $ 160 billion
Revenue grew by 100% --- to become $ 11.4 billion
Foreign Reserves grew by 500% --- to become $ 17 billion
Exports grew by 100% --- to become $ 18.5 billion
Textile exports grew by 100% --- to become $ 10.2 billion
Karachi Stock Exchange grew by 500% --- to become $ 65 billion
Foreign Direct Investment grew by 500% --- to become $ 8 billion
Annual Debt servicing decreased by 35% --- to become 26%
Poverty decreased by 10% --- to become 24%
literacy rate grew by 10% --- to become 54%
Public development Funds grew by 100% --- to become Rs 520 billion


Other observations: The external debt and liabilities (EDL) in ratio to ‘Foreign Exchange earnings’ were:
1999 - 347%
2000 – 297.2%
2006 – 137%
2007 – 122.5%

External debt & liabilities (EDL):
1988 - $ 18 billion
1990 - $ 20 billion
1999 - $ 39 billion
2007 - $ 40.17 billion

The external debt and liabilities (EDL) declined from 51.0 percent of GDP in FY2002 to become 25.7 percent of GDP by end-September 2007.

 

[Neo]

Business community welcomes new government's policy statement ​

MULTAN (March 31 2008): The business community has widely welcomed and appreciated the policy speech of Prime Minister of Pakistan Syed Yousaf Raza Gilani, which he made after securing an unprecedented unanimous vote of confidence from National Assembly on Saturday.

The business tycoons were of the view that the policy of the new government spelled out by the Prime Minister in his policy statement was in the "best interest of the country". In a statement issued here President Multan Chamber of Commerce and Industry (MCCI) Khawaja Muhammad Jalaluddin Roomi and other office bearers have congratulated Yousuf Raza Gilani on getting unanimous vote of confidence.

The MCCI leader also appreciated goodwill gesture extended by the opposition parties in the assembly. President of Federation of Pakistan Chamber of Commerce and Industries (FPCCI)Tanvir Ahmed Shaikh while talking to newsmen appreciated the 100-days plan of the government announced by PM and said the decision to increase the support price of wheat to Rs 625 per 40-kg was praiseworthy. He said that the announcement of PM in context of development of coal-based energy generation would motivate foreign and domestic investors.

Chairman All Pakistan Bedsheets & Upholstry Manufacturers Association (APBUMA)Mughis Ahmed Shaikh said that the austerity drive launched by the Prime Minister was the need of the hour and if it is implemented in letter and spirit it would have a long lasting impact.

He said that new premier had the potential to overcome the problems particularly being confronted by textile manufacturers and exporters owing to crucial situation in the international markets by taking long term and bold steps.

Ex-Chairman APBUMA Khawaja Muhammad Younas said it is a matter of great concern that during the first seven month of the current financial year, there has been 6 percent decrease in export of cotton yarn, 8.3 percent in cotton cloth, 6.2 percent in Bedlinen and 6.7 percent in Towel exports as compare to corresponding period of last year.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Indus river pollution a risk to livelihoods​

A RECENT seminar organised by the Environmental Protection Agency (EPA), Sindh, was informed that the Indus river is highly polluted. The levels of various parameters are high enough to classify the river as polluted. Even the coliform level, which should have not been present in water bodies at all, averaged 800 per 100 ml.

It is a fact that the Indus river is polluted due to indiscriminate discharges of untreated municipal and industrial wastewater, the Manchar Lake discharges make the pollution further distinct during periods of low flows (December-January). But the comparison of water quality of this river and other water bodies with the international standards made at the seminar, was not justified. The water quality of Indus river was compared with the WHO’s guidelines for drinking-water and the EU’s drinking-water standards.

The international drinking-water guidelines and standards do not apply to waters of the surface water bodies (Indus river, Phuleli Canal, Manchar Lake, Danistar Canal, Haleji Lake, Pinyari Canal, etc). It is just like comparing oranges with apples.

The surface water treatment revolves around pumping of water from a river and its treatment in a water treatment plant. Conventional water treatment plants (rapid-sand filters for major cities; and slow-sand filters for rural towns), depending on the quality of raw water, design and operation of the plant, remove conventional pollutants (fecal coliforms, turbidity, suspended and dissolved solids, colour and inorganic elements) to a varying degree. For example, coagulation and sedimentation are effective in removing colour and turbidity, slow-sand and rapid-sand filters are effective in removing bacteria, colour and turbidity, but have no effect on the hardness of water.

The statement that coliforms should not be present in water bodies reflects lack of understanding of water engineering.

There are eight rivers in North America, 10 in Central and South America, nine in Europe and 14 in Asia and the Pacific, which have fecal coliform levels ranging from 100 to 1,000 per 100 ml. There are three rivers in Asia and the Pacific region with fecal coliform levels of more than 100,000 per 100 ml.

Water pollution in the Indus results from three sources: municipal wastewater discharges, industrial wastewater discharges and, return-agriculture flows through drainage structures. Most cities and towns of Sindh discharge their untreated municipal wastewater into the Indus. With wherever treatment facility exists (e.g., at Tando Muhammad Khan), the wastewater does not receive the desired degree of treatment.

The parameter of major concerns is the discharge of organic matter. This causes depletion of dissolved oxygen in river water. In extreme cases, when the assimilative capacity of the river is exceeded, anaerobic (septic) conditions result. This could be a problem in the river, during the months of low dilution (December and January), or, when there is water shortages in the Indus river. Under anaerobic conditions, iron and manganese become more soluble and become a potential source of groundwater pollution. Due to high coliform content, use of water for drinking purposes without appropriate treatment, would result in water-borne diseases like malaria, typhoid, cholera and dysentery.

Industrial wastewater discharges, depending upon the nature of industry, comprise wide-ranging variables. These include organic matter; ions like sodium, potassium, calcium, magnesium, carbonates and bicarbonates, chloride; other inorganic variables like fluoride, silica, cyanide; metals like cadmium, chromium, copper, mercury, lead, zinc, nickel, etc. The return-agriculture flow characteristics include salinity, total dissolved solids, sodium adsorption ratio (SAR), nitrates, phosphates and pesticides.

In case of industries, like thermal power plants, the variable of major concern is temperature and mercury poisoning which results in death.

At Jamshoro, where power plants are also located, presence of mercury in Indus river water has been reported. Sudden increase in surface water temperature by three degrees Celsius is harmful for marine organisms. Required level of oxygen is usually not available, as the increased water temperature decreases solubility of oxygen in water.

Salinity, in case of return-agriculture flows, is an important property and, in the present case, is of major concern. Disposal of saline effluent in the Indus river degrades its water quality. The ground water quality in the Indus Basin is impacted by the water quality of the river.

According to a case study conducted by the United Nations Economic and Social Commission for Asia and the Pacific, Bangkok, titled “Desertification in Indus Basin due to salinity and water-logging, 1989”,...ground water is becoming increasingly saline making it less useful for agriculture. A large population in the area is also affected because they are using the saline underground water for drinking purposes.”

While the EPA, Sindh, has taken samples from various points, the water quality of the Indus river, at any given point, depends on (a) the proportion of surface run-off from catchment areas, and groundwater, (b) reactions within the river system governed by internal processes, (c) the mixing of water from tributaries of different quality (e.g. from Manchar Lake), and (d) inputs of pollutants from municipal and industrial sources (e.g., municipal wastewater from various towns and, power plants located at Jamshoro).

Water quality variability also depends on the hydrological regime of the river. Dissolved substances in the river are highly variable from one place to another, depending on their sources, pathways and interactions with particulates.

Monitoring water quality of the Indus river, conducted in isolation, would be inadequate if the pollutants are put to true perspective. It is customary in environmental engineering field to conduct biological monitoring along with physiochemical monitoring to have a complete pollution scenario.

Physiochemical monitoring may classify a river as good, when pollutants, not specifically tested for (e.g. pesticides), are present; or where the sampling points do not detect intermittent pollution events. Unlike water quality monitoring which examines the water itself, biological monitoring looks at the abundance and diversity of the tiny creatures (macro-invertebrates) that live in the river. Biological monitoring can reveal the effects of pollution not detected by physiochemical monitoring.

There is a serious water shortage at the Sukkar Barrage. As a result, less water is supplied to the off-taking canals, which in turn, is affecting Rabi crops. The water shortages are further expected to aggravate in the coming days. Despite being the lifeline of Sindh, it seems the Indus river water quality is being taken for granted, with no control over it. No department seems to be responsible for the water quality of the Indus river.

The wake-up calls given by environmental engineers, from time to time, to stop pollution of the Indus river and degradation of the river ecosystems, need to be heeded by the Sindh government. There is a need to set up an Indus river authority to control the discharge of all municipal and industrial wastewater effluents into the river including discharges from other sources (e.g., Manchar Lake).

Polluted Indus threatens the livelihoods of people, affects the agricultural produce and, makes water treatment for drinking purposes increasingly difficult.

http://www.dawn.com/2008/03/31/ebr4.htm

 

[Neo]

Paralysed without electricity​

“Eleven hours load-shedding from month- end”, says the banner in a sober city newspaper sending a scary message to Karachiites to face the sweltering summer without depending on the KESC.

Press reports have also been carrying messages from official IT experts saying Pakistan will soon be among the ten IT states in the world. The first headline in effect contradicts the second. Without adequate power, Pakistan cannot become an IT centre in real terms. And yet unconcerned with the power situation, the former chief minister of Punjab, Shahbaz Sharif talks of converting the chief minister’s chamber in Lahore into an I.T centre. The shortage resulting in the prolonged load shedding may take at least a year or two to run its course.

The load shedding is not scheduled and it may occur any time. Sometimes it is brief, often it is very long. The breakdowns in the system are frequent. Promises of repairing and rehabilitating of the old and ill-maintained system have not materialised. Privatisation of the KESC has made the system worse and the utility’s financial crisis is deepening. .

Many persons who use ‘uninterrupted power supply’ (UPS) find they have run out of options as the UPS can provide relief only for about two hours or so. And after that it is darkness again.

Those who bring generators find they have to invest heavily both on the rising cost of generators and on the high-priced oil. Generators have become too expensive to maintain and can run out of oil late at night. Efforts are being made to develop the Alternate Energy System but the approach is not very scientific and systematic. The companies which want to set up the wind power in Sindh cannot get the land and have run into endless hassles. Instead of facilitating, the government machinery makes things more difficult..

How does one become an IT centre without enough power? Serious thought is not given to this problem and earnest and sustained efforts are not being made. This is the age of call centres for export. Some developing countries like India have made major headway in this area but Pakistan suffers from a handicap for want of power.

How do we attract enough foreign investment without power? Every foreign investor who may need large amount of energy, may not be willing to make huge additional investment on energy in a period of rising oil price. The investor depends on the government for power instead of making additional investment to reduce profits. Self-employment is a means of solving joblessness but how can it be promoted without energy?

The former industries minister, Jehangir Tareen wanted to follow the Thai model and develop one industry in one village and made some headway but couldn’t achieve much for want of adequate power in the rural areas. Does that mean that each village should invest on its own power plant? No model of development can be a success without adequate power. Lack of smooth power hurts the women who work in their homes. They stitch clothes of various kinds and earn a living. In Bangladesh, the women are a major work force. They work in their homes and have helped the Bangladesh exports in a big way.

The women are behind the success of the Bangladesh garment industry and the Grameen Bank. Self-employment can be promoted only if there is enough power to run women enterprises.

How do the children study without enough light? In the good old days, some of the successful students studied under street lights but now many street lights are not on or they are bright enough. Children ,of course, cannot study sitting on noisy and traffic congested thoroughfares.

One hears plenty about power from coal, particularly from Thar, and about wind power, but with very little progress. One cannot become an IT country by having an IT minister or minister for state but by having the right policy and a consistent approach to pursue it.

When there is no power, there is no water at home to drink, to bathe, to cook or to wash clothes. The children’s education also suffers due to these sudden power outages. Electricity breakdowns have led to a shortage of clean drinking water and bottle water cannot be trusted for its purity and many a times is found to be adulterated.

http://www.dawn.com/2008/03/31/ebr7.htm

 

[Neo]

A new approach to raise remittances​

The workers’ remittances rose nearly 21 per cent to $4.126 billion during the July-February compared to the same period during last fiscal year. In 2007, the remittances were at a healthy $6.1 billion as compared to India’s $27 billion. However, a new approach is required to increase these remittances to finance economic growth and improve peoples’ livelihood.

In other South Asian states, remittances are not only the largest source of foreign exchange but these contribute to economic development. Remittances of $1.6 billion now exceed exports and tourism in Nepal. In Sri Lanka, remittances of $2.7 billion are more than tea exports. In Bangladesh, remittances of $6.4 billion are five times the foreign assistance.

For the last two decades, remittances in Bagladesh have been around 35 per cent of export earnings, making it the single largest source of foreign currency earner for the country.

This has been used in financing the import of capital goods and raw materials for industrial development. The steady flow of remittances has eased the foreign exchange constraints, improved the balance of payments, and helped increase the supply of national savings.

The remittances also help promote access to financial services for both--the sender and recipient--- increasing financial and social inclusion. About 10 per cent increase in per capita remittances, according to some estimates, leads to a 3.5 per cent decline in the share of poor people. A striking example of the effects of remittances on poverty reduction comes from Nepal where the poverty headcount ratio has declined by 11 percentage points between 1995 and 2004 – a time of great economic and political difficulties.

In Pakistan, remittances have more than doubled over the past five years. However, remittances through ‘hundi’/money courier, friends, relatives, and parents are still high.

’Hundi’ system provides the quickest method for sending money while bank transaction requires complex paper work.

The system uses the social network of migrants with a door-to-door service. And the cost of remittance transfer through official channels at both sending and receiving ends are high. At the receiving end, the official channel costs include service charge, speed money, conveyance, etc. For ‘hundi, costs involve phone charges, conveyance, and small fees for transaction.

Normally, remittances through official channels take a week or four working days as compared to a ‘hundi’ which takes 24 hours to three days.

The government has taken steps to rejuvenate the banking system by reducing the minimum limit for the reimbursement charges from $200 to $100, converting money changers into foreign exchange companies and enhancing the bank efficiencies.

But the cost of transferring money through banking channels are still high and should be rationalised. A typical poor migrant sends about $200 or less per transaction. For sending $100, he would typically have to pay $16. Reducing remittance fees would increase the disposable income of poor migrants, as well as their incentives to send more money home. Banks tend to provide cheaper remittance services than money transfer operators. Encouraging account-to-account transfers is likely to increase savings from remittances, and will contribute to financial development of remittance recipient countries.

The transfer time needs to be minimised and the banks’ efficiency also needs are improved. The banking industry exploits different technologies to deliver financial services with the proliferation of automated teller machine (ATM) and point-of-sale (POS) network and devices.

The use of a mobile phone to conduct payment and banking transactions (m-banking) is at an early stage in a number of developing countries and is growing as mobile phone service providers are penetrating the developing markets. Some banks have started improving their infrastructure for the purpose.

A good percentage of those who are remitting money and their families are less educated, and are not familiar in dealing with formal institutions. Migrants are not aware about the need for having a bank account. But bank officials should be trained and motivated about the importance of remittance. Migrant workers should be encouraged to open accounts before their departures abroad.

The State Bank may consider allowing banks to appoint brokers/agents who help in mobilising individual remittances. This appears to be an effective tool to mobilise remittances of Bangladeshi migrants.

Both sending and receiving countries can increase banking access of migrants by allowing origin country banks to operate overseas, providing identification cards (such as the Mexican matricula consular) which are accepted by banks to open accounts, and facilitating participation of microfinance institutions and credit unions in the remittance market. These institutions can deliver remittance services in poorer communities and in remote areas. They can in turn benefit as the availability of remittance services may attract customers for their loan products.

A segment of migrants mainly send remittances through informal channels. Therefore bank procedure must be simplified for them. In Philippine, banks overseas facilitate opening of account by accepting documents other than passport.

Foreign missions can organise regular meetings with community associations to encourage official remittances. In order to design their targeted interventions, they should collect information regarding a number of migrants, their professional background and area of concentration in the receiving countries. Indian government has generated global data on migrants of Indian origin.

Bilateral agreements for training and skill development of migrants also increase the flow of remittances. A MOU on Temporary Migration Programme has been signed between Pakistan and South Korea to train and employ Pakistani workers there. Incentives shouldalso be provided to private recruiting agencies to undertake such training programmes.

Vocational training should be incorporated in mainstream primary and secondary level curricula. Even, in provinces and federal level syllabus Arabic should be treated as an international language. The migrants from India, Sri Lanka and Bangladesh in their first three months put all their efforts in GCC states to learn Arabic to get a better job.

The Bureau of Emigration & Overseas Employment says that in the last seven years, more than 271,000 Pakistanis left abroad for employment. It means that , on an average, over 38,700 Pakistani workers set foot on foreign soils every year. Officials do admit that the number is low and Pakistan needs to export at least 60,000 workers annually to compete effectively with countries like Bangladesh, Sri Lanka and the Philippines—the countries that are fast outnumbering Pakistanis in the Middle East.

In this situation, the government should take measures and equip their migrants with modern skills and needs. Philippine raised the number of nursing schools from 13 to 700 to compete the demand of hospital attendants and today nursing is a main source of remittances it receives. Now India and China are following suit. Pakistan can also learn from the experiences of other Asian countries to increase its remittances.

http://www.dawn.com/2008/03/31/ebr8.htm

 

[Neo]

Encouraging investment in renewable energy​

OIL prices remain an important macroeconomic variable. Higher prices inflict substantial damage on the economies of oil-importing countries and the global economy as a whole. Oil importing developing countries like Pakistan generally suffer the most as their economies are more oil-intensive and less able to weather the financial turmoil wrought by higher oil-import costs.

Majority of our power generation is thermal, with furnace oil, high speed diesel and natural gas as fuels; coal is almost non-existent. As per Energy Yearbook 2007, around 65 per cent power generation in 2006 was from thermal sources; the break-up is 36.4 per cent by natural gas, 28.5 per cent by oil, and coal is only 0.1 per cent.

Majority of our upcoming power projects would be based on oil and gas. According to the PPIB, 23 new projects with cumulative power generation of 5,129 MW have been planned with oil and gas as fuel. This represents our fragile and vulnerable power generation scenario.

Now the furnace oil is touching Rs40,000 per ton and the IPI gas pipeline is hanging in the balance. Even if it materialises one can easily guess the rate of natural gas at which this multi-billion dollar gas pipeline will deliver. Any pricing and supply-chain issue with these fuels can impede the power generation capacity and seriously affect the economy.

Cost of power generation from thermal resources increases every quarter of the year due to fast changing fuel prices. Since tariff of thermal power is heavily dependent on the cost of fuel, it will rise almost with the same ratio the cost of fuel increases. It can be easily assumed that if a new thermal power plant based on furnace oil gets a tariff of 14 US cents per kWh today, it will be around 22 cents per kWh in the tenth year and 34 cents per kWh in the twentieth year. This alone is a frightening scenario. But our regulatory authorities, in a state of dilemma, are knowingly making these expensive power deals.

The brighter side of the picture is that Pakistan is located in one of the most abundant renewable energy resources zone on earth. Whether we talk about hydro with both dam and run of stream projects with sizes ranging from micro hydro project on a canal to large multi-billion dollar mega dam projects, or we talk about power generation by wind blowing moderately well in southern Sindh, Balochistan and northern parts of the country. And last but not the least the potential of solar thermal power projects for which Pakistan presents a very good case, having one of the best solar insulation in the world.

Talking about these three renewable resources one by one, first we take the much discussed about and less worked through resource of hydro energy. Since many decades we have been told by authorities and experts that Pakistan has hydro resource of around 40,000 MW, but unfortunately we are exploiting only 16 per cent of it, a meager 6,500 MW.

Wapda’s vision 2025 indicates that a total of 20,770 MW of new hydro power generation will be added to the system in next 17 years with 14 new projects at a cost of $32 billion. Moreover, the PPIB is also sponsoring 22 hydro projects with a cumulative power generation of 5,720 MW with an estimated investment of $6.5 billion. Some of these hydro projects would provide water storage also. Due to not having enough storage capacity in the country, either we are facing flood or drought, both extremes in the same calendar year. On one hand flood devastates our infrastructure costing us billions and on the other drought increases import bill of essential food commodities; so it is a two-edged sword ripping apart our economy.

Therefore, we should focus sincerely on implementing these 26,500 MW projects and expeditiously search for other mini and micro hydro projects.

Wind: Another renewable resource is the wind energy. However, despite many multi-pronged efforts by the government and the private quarters, the country does not have a single grid connected wind farm on ground.

According to a detailed study conducted by the National Renewable Energy Laboratory, USA (NREL) in collaboration with the USAID and the Pakistan Meteorological Department, the total exploitable wind potential is 132,000 MW. The NREL has prepared solar and wind maps of Pakistan indicating the potential of power and prospective locations of the projects.

The potential wind corridors highlighted for the wind farming are southern Sindh (Keti Bander-Gharo-Hyderabad), northern Punjab (Kallar Kahar), Mardan area in NWFP, Nokundi, Kolpur, Makran and Chaghai areas in Balochistan. By virtue of actual wind measurements and calculations, Pakistan Met Department has defined the potential of only one corridor i.e. Keti Bander-Gharo-Hyderabad as 43,000 MW. One can easily understand if all these corridors added together can go up to 132,000 MW. Only one quarter of this value i.e. 33,000 MW can be attained without a puff of fuel, there can be nothing like this.

The Met Department of Pakistan, after completing six years wind data acquisition project in the coastal areas of Sindh and Balochistan, has launched second phase of the project which will collect imperative wind data in the northern areas. Additionally, the UNDP Pakistan is also planning to install some weather stations specifically for wind data acquisition in some potential areas like northern Punjab, etc. These exercises will definitely pave the way for wind power generation with full government support to the private sector.

For wind power generation, the actual land use is very small as compared to the total area. In fact only 2-3 per cent area is used by the installation of turbines, sub-station and internal wind farm roads. The rest of the area is available for any low height cultivation or cattle grazing. Coincidentally almost all potential wind corridors in Pakistan are situated in barren areas; hence wind farming is the best utilisation of that barren land.

Wind energy is now increasing more than any other power technology in Europe. The world has already seen 95,000 MW wind power projects installed on its face and some concrete plans to enhance this figure to 185,000 MW in 2020 and 300,000 MW before the sun of 2030 sets. European Union is under an obligation that by 2020 they must have at least 20 per cent of their energy needs through renewable resources and wind is among the top choices along with hydro, solar and biomass. EU has also set a binding minimum target of 10 per cent for the share of bio-fuels in overall transport petrol and diesel consumption by 2020. Across the Atlantic, USA is doubling its installed wind power every year, currently standing at 19,000 MW (if it is really called standing).

Why the technologically advanced world is dying for wind power projects? And why we are so reluctant in adopting it?

Investment: It is time to discuss why investors from private sector have not been able to implement wind power projects. First, our policy makers did not foresee the changing technology needs and are still skeptical about it.

Second, for every new technology there is an incubation period. One has to follow a learning curve to gain confidence about the new technology, whether it is the investor or the regulator.

Third, our late start has put us in most unfavorable position to launch the projects. The booming wind market makes it almost impossible to ink a deal with the turbine manufacturers within a three-year period even with hefty advance payments. Apart from turbines, other allied equipment like generators, transformers and HV/MV equipment have long delivery dates. The North American and Chinese markets absorb much of the global production of these equipment. This is a source of frustration for the investors and narrows down their choices.

Fourth is the law and order situation. The turbine manufacturers are now reluctant to come because travel advisories by several countries are adopting a safety-first and wait-and-see approach for the time being.

Fifth, is the GoP policy and the power purchase agreement. Although agencies like AEDB, NEPRA and NTDC have put in lot of efforts to prepare these documents for wind power projects, improvement is required to make them clear and attractive for investors. The government functionaries need to enhance their capabilities through active training and visits to running wind farms, preferably in the European Union and China. Two issues that need immediate attention are the extension of validity date of the Renewable Energy Policy and the ownership of CERs that can be generated through these projects.

Sixth is the problem of availability of land and its lease/sub-lease to investors. Although enough land is available in the wind corridor of southern Sindh, its lease/sub-lease to investors is a very long drawn process. Co-operation and active follow-up by GoP and the Sindh government is essentially required for leasing this land. It will bring in lot of economic and infrastructural up-gradation activities in the area.

Solar radiations: There are two main techniques of power generation through solar radiation; one is solar PV technology and the other is concentrated solar power technology (CSP). The PV is best suited for stand alone power requirements of homes and offices. Although the world has experience of grid connected solar PV power plants, still it is a kind of domestic business. In contrary, the CSP technology is best suited for grid connected power plants; however, examples of small size captive power generation through sterling dish also exist in this technology.

In addition to power generation, solar energy is also used for heating, cooling and cooking purposes with very simple-to-use technologies. In Pakistan, except some isolated examples, there is no mass scale implementation of these simple technologies. Solar cookers in northern areas can greatly help in saving forests. Solar water heaters in cities can save valuable natural gas. There are many individuals making effort in this field but we have to integrate them for focused efforts and better results.

An area where solar PV can be used on mass scale is the lighting, indoor and outdoor. Indoor lighting meant for offices and homes for which solar PV modules can be coupled with LED lights which require very little electrical energy for the same luminosity and at the same time have very long life.

Alternatively we can use energy saver bulbs. Outdoor lights mainly comprised street lights. It is the time when city fathers should plan and implement a phased change-out of traditional lights with solar PV and LED lights for streets and parks; we can start with alternate light poles, if not all. Housing societies like DHA, Bahria Town, etc., builders like Emaar and Al-Ghurair Giga and the townships of industrial units must also come forward to launch such projects. These projects will trigger local mass production of solar PV modules and LED lights, which will result in low cost of such systems.

Whenever one talks about these renewable energy sources in Pakistan, it is often taken as very expensive, un-reliable technologies. If it is so, why world markets of these technologies are exploding? In fact these renewable technologies are very reliable and are not expensive if the whole lifecycle of the project is taken into consideration.

As earlier discussed a thermal power plant starting the tariff with 14 cents will reach to 22 cents in 10th year and 34 cents in 20th year. In contrary a wind power plant, if started with 14 cents per kWh will continue to be almost the same during first ten years with minor changes due to increase in operation and maintenance (O&M) charges, but with start of 11th year the tariff will drastically decrease to around five cents per kWh and continue to be around the same till the end.

The same is true for hydro and solar with different starting points on the tariff ladder. The energy price of power generated through Wapda hydro facilities is around 0.5 cents per kWh. This is what is called energy security.

Pakistan, therefore, must increase its share of indigenous and renewable resources to reduce dependence on oil imports.

http://www.dawn.com/2008/03/31/ebr13.htm

 

[Neo]

economic vulnerabilities​

PAKISTAN People’s Party and Pakistan Muslim League-Nawaz have told the international donor agencies that the country’s economic and financial system was ‘crumbling’ and new innovative policies were needed to tackle the looming crisis.

Representatives of the donor agencies, who met PPP and PML-N leaders, were also told that “from now onwards the defence budget would be discussed in parliament to gain public support to defence spending”.

Party sources said World Bank Vice-President for South Asian Region Praful Patel could not get an assurance from PPP co- chairman Asif Zardari that the new government would not bring any major shift in the economic policy pursued so far.

“When officials of the donor agencies meet politicians they generally prefer to listen more than talk, but this time Mr Patel discussed serious economic issues with Mr Zardari”, PPP spokesman Farhatullah Babar told Dawn.

Farhatullah Babar said: Mr Patel was interested to know how the new government would offer new subsidies to the people and whether it would economically be a viable solution. He also wanted to know about the policy direction of the new government. Mr Zardari told him that macroeconomic stability had to be achieved but that did not mean we should forget the common man as was done by previous rulers”.

Mr Zardari regretted that former prime minister Shaukat Aziz had left behind a mountain of economic problems and that the new government would facing numerous challenges.

He also informed Mr Patel that the coalition partners had serious reservations over the privatisation policy pursued over the last eight years. People need to know how the sale proceeds of the privatisation were spent by the previous government. Zardari wants to spend this money more for the welfare of the people.

The new government would encourage transparent sell-off that did not deprive employees of the privatised corporations from their jobs. There will be an audit of sale proceeds of the previous government.

There was also a need to audit $10 billion US aid received over the last few years. A lot of funds were provided by the United States for tackling terrorism and militancy. The issue is whether these funds were actually used for addressing the menace of terrorism and militancy. A number of serious economic issues were needed to be sorted out .

Ahsan Iqbal: Central information secretary of the PML (N) told Dawn that the international donors were being taken into confidence about the state of the economy and to suggest measures to improve it drastically for the benefit of the people.

”We want to know from everyone including the donors to tell us where the $70 billion has gone which came to Pakistan after 9/11”. Giving the details, he said $30 billion was sent by the overseas Pakistanis and $10 billion provided by the US. The central bank purchased $15 billion from the market during this period and foreign loans worth $14 billion were acquired. “And then they also received $5 billion from privatisation. This makes a total of $70 billion”.

While $70 billion came after 9/11, not a single power project was installed. “Not a single mega project started. Not a single hydro project and not a single infrastructure project launched and where had these $70 billion gone”, he asked.

“The nation wants to know where the $70 billion has gone specially when there was no poverty reduction, no significant job creation and bigger economic activity. The donor community should also try to know where this huge money had gone. The agricultural production today was the same it was eight years back in 1999-2000. Wheat and rice production were at 21 million and 5 million tons respectively in 1999-2000 which stood at the same figures today.”

He was filing a reference as to who should be held responsible for the current energy crisis. “While there will be an internal accountability, issues concerning donors will also be raised with a view to ensuring judicious spending of foreign assistance”.

Trade deficit has reached $12.5 billion during the first eight months of the current fiscal year. There were all indications that it would touch $17 billion at the end of 2007-08 and this would be very bad for the new government.

The people were ready to give a chance to the new government, provided it conducted itself with honesty, dedication and sincerity. “But if that does not happen, I am afraid, we cannot escape the wrath of the people”.

Analysts said that the PPP-led coalition face tough challenges ahead and quote the recent remarks of State Bank Governor Dr Shamshad Akthar: “ unless immediately addressed the present economic vulnerabilities emerging in Pakistan’s economy risks reversal of the high growth trajectory and even disruption of gains achieved”. It is facing “the twin shocks, global and domestic.”

A World Bank source, when approached, said it was basically establishing a contact with the new government and its political leaders. The donors were also offering possible solutions to various issues.

“Donors are currently in a listening mode and that is why they are meeting different politicians”, the source said. However, he said donors had assured Mr Zardari and others that they would remain active partners to help Pakistan resolve its economic problems.

PPP manifesto: A glimpse of the PPP’s economic manifesto indicates the programme and polices it is likely to pursue with the support of its coalition partners.

While anchored on social market economy, the manifesto 2008, approved by the electorate in February, is a blend of continuity and change in policies.

It aims to reinforce “economic liberalism” with “strong social democratic agenda.” Pursuing “business-friendly” “farmers-friendly” and “taxpayers- friendly” policies, it promises economic growth with social justice.

Investment: PPP has pledged to embark on an investment climate reforms programme to ensure a favourable and enabling environment for all businesses, foreign and domestic, especially for small and micro-businesses, to flourish. The private sector and export-led development will be the main engines of growth. Foreign direct investment will be encouraged in export goods manufacturing. Reforms will be initiated to reduce cost of doing business and market-based and fiscally affordable incentives will be extended to develop non-traditional exports.

Growth with equity: PPP will help individuals set up small businesses and provide a framework for development of a vibrant middle class It will address the basic needs of the low income persons. Food , clothing and shelter will be provided through “unique emphasis “ on full employment. It will develop a welfare state where market forces are balanced with safety nets for the poor. PPP recognises the right of every individual to food, clothing and shelter.

Agriculture: Farming and rural development will be an important pillar of growth and poverty reduction strategy. As a farmer-friendly party, the PPP will help farmers boost production and obtain fair prices. It will provide surplus electric power during off peak hours for tube- wells free of cost to farmers. Banks would be encouraged to expand rural lending , while maintaining sound credit policies.

Employment: High growth will be the main driver of full employment. A Public Works Programme to guarantee employment , for at least one year, to one working member of the poorest 25 per cent of the families of the country.

A short-term employment to educated youth would be provided through a Literacy and Health Corp Scheme. Employment for two years will be guaranteed to all youth completing intermediate, graduation and post-graduation in a single year.

Wages: Minimum wages would be enhanced to meet escalating needs of the labour.

Inflation: High inflation will be managed by prudent fiscal and monetary policies and special steps, including more agricultural credit to increase food grain production; enhancing competition in manufacturing and domestic trading and reducing supply chain constraints so that costs of essential goods are reduced; unleash competitive forces and combat monopolies and cartels.

Woman empowerment: The 10 per cent job quota for women in public service initiated by Benazirgovernment will be increased to 20 per cent.

Fiscal autonomy: Concurrent Legislative List to be abolished. Provinces to be given their share in]their natural resources. NFC Award to take into account contribution to revenues, geographical size, backwardness, level of development and population. Natural gas rates and royalty formula will be determined by 1973 Constitution

Sales tax will be progressively returned to the provinces. Octroi will return to local governments.

Companies engaged in exploration and exploitation of natural resources will be required to train local people and allocate funds for social development.

Privatisation: Provinces will be given a part of the sale proceeds of federal assets.

http://www.dawn.com/2008/03/31/ebr15.htm