Pakistan Economy - News & Updates - Archive

[Neo]

Forex reserves reach $11.228bn ​

KARACHI: The country’s liquid foreign exchange reserves rose to $11.228 billion on the week ending on April 11, 2009 as compared to $11.171 billion last week, figures released by the State Bank of Pakistan showed on Thursday. The overall reserves witnessed an increase of $57 million during the last week. The reserves held by the central bank witnessed a major increase of $60 million to reach $7.865 billion as compared with $7.805 billion last week. However, the reserves held by banks (other than SBP), witnessed a decrease of $3 million, as they fell to $3.363 billion.

 

[Neo]

Current fiscal: Estimates show nominal GDP to be $162.6 billion​

ISLAMABAD: Due to the economic slowdown in the country and the global financial crisis, nominal gross domestic product (GDP) of the country has been estimated at $162.6 billion in this fiscal year 2008-09 as compared with $167.5 billion in last fiscal year 2007-08 showing a decrease by $4.9 billion.

However, it has been projected that nominal GDP would grow to $171 billion in next fiscal year 2009-10 as compared with GDP estimates of $162.6 billion in current projection. The revised Macroeconomic framework for the current fiscal and proposed macroeconomic targets for the next fiscal year incorporated in PRSP II document by the Ministry of Finance show.

Exchange Rate: Exchange rate that had been at Rs 62.5 a US dollar in the last fiscal year 2007-08 is estimated to remain at Rs 79.8 a dollar in current fiscal year and Rs 83.6 a dollar in 2009-10, and Rs 95.9 a dollar in 20012-13.

Per Capita GDP: Per Capita Income that had increased to $1,041 in the last fiscal year would come down to $993 in the current fiscal year and again increase to $1,027 in next fiscal year 2009-10.

Agriculture: Agriculture growth has been estimated at 3.3 percent in this fiscal as against the growth of 1.5 percent in last fiscal year and projected growth of agriculture is 3.5 percent in next fiscal year.

Manufacturing: Manufacturing sector that had posted a growth of 5.4 percent in last fiscal year is projected to witness a negative growth of 2.9 percent in the current fiscal and projected to rebound to 2.5 percent in the next fiscal year.

Services: Services sector, which remained main contributor in GDP growth of the country during last few years, is projected to post a growth of 4.1 percent in the current fiscal as against growth of 8.2 percent in the last fiscal year. It has been projected that services sector to register a growth of 4.6 percent in next fiscal year 2009-10.

Inflation: Inflation based on Consumer Price Index (CPI) is estimated to stay around 20 percent in the current fiscal year as compared with 12 percent in the last fiscal and projected to come down to 6 percent in next fiscal year 2009-10.

Investment: Investmen as compared with GDP is estimated at 19.5 percent for the current fiscal as against 21.6 percent in the last fiscal and it has been projected at 20.3 percent in next fiscal year.

National Savings: National Savings has been estimated at 13.6 percent in current fiscal compared with 13.2 percent in last fiscal year. However, it has been projected that national savings to increase to 16 percent in the next fiscal year 2009-10.

Pakistan’s Consolidated Fiscal Framework: Total revenue has been estimated at Rs 1.973 trillion in current fiscal as compared with Rs 1.5 trillion in last fiscal year and it has been projected that total revenues would be Rs 2.271 trillion in next fiscal year. Total expenditures are estimated at Rs 2.535 trillion in the current fiscal as compared with Rs 2.279 trillion in last fiscal and Rs 2.746 trillion in next fiscal year 2009-10.

 

[Neo]

WFP approves $64m for food assistance to IDPs​

ISLAMABAD: United Nations World Food Programme (WFP) on Friday announced that it would continue providing food assistance to Pakistan's internally displaced persons (IDPs) until November under its new emergency operation, said a press release.

With a total value of $64.2 million, the WFP would be able to provide over 97,000 tons of food to about 600,000 beneficiaries who had fled Federally Administered Tribal Areas (FATA) and some districts of North West Frontier Province (NWFP) because of insecurity.

The number of displaced people eligible for humanitarian assistance had been increasing due to progress with their registration while their resources were being exhausted. Although some IDP families were said to have returned to their home areas, their number in IDP camps was still increasing. The WFP assistance would be available to IDPs in communities and camps.

The WFP has been providing food assistance to over 360,000 IDPs living in camps and in host communities. The data, compiled by Social Welfare Department of NWFP and UNHCR, allowed the WFP to revise its distribution strategy by establishing a single distribution point (humanitarian hub) for each district and food assistance was made available at a 'one-stop-shop'. These humanitarian hubs also facilitate provision of non-food assistance from other UN agencies.

WFP Country Representative in Pakistan Wolfgang Herbinger said, "NWFP is traditionally a province that is not self-sufficient in wheat production and depends on food imports. In neighbouring FATA region, food prices are currently the highest in the country."

He said, "Majority of the IDPs is residing in host communities and depend on their generosity. However, most host families are poor themselves and cannot sustain the additional burden in these days of high food prices and declining economic opportunities."

The newly approved WFP emergency operation had already received generous pledges and confirmed contributions from the US, Germany, Japan, UK, European Commission, Australia and the government of Punjab.

 

[Neo]

Friends pledge $5bn for Pakistan​

* 31 countries, 18 world organisations take part in meeting
* Aid targeted for areas like health, education, governance and building democracy
* Participants concerned over Pakistan’s security situation
* FM says next donors’ conference will be held in Turkey​

TOKYO: Pakistan secured more than $5 billion in fresh aid over two years at a donors’ conference on Friday after President Asif Ali Zardari vowed to step up the fight against the Taliban.

The pledges, bigger than an expected $4 billion, reflect the international community’s worries that an economic meltdown in Pakistan could fan popular support for Al Qaeda and other militant groups. “The participants also noted concern about the security situation in Pakistan and the impact on development, the investment climate, and growth,” co-chairs Japan and the World Bank said in a statement.

The new aid is targeted for areas such as health, education, governance and building democracy. World Bank Vice President for South Asia Isabel Guerrero told a news conference: “It is very important that these development resources are used in a way that they do reach the poor, that they do increase the productivity of Pakistan’s economy, so that Pakistan can go back to a high growth path and to poverty reduction.”

US special envoy Richard Holbrooke lauded the outcome of the donors’ gathering, telling reporters it was “an extreme success”, Reuters reported. Japanese Prime Minister Taro Aso told the gathering he was impressed by President Zardari’s resolve to combat extremism.

Turkey: Foreign Minister Shah Mehmood Qureshi said the next donors’ conference would take place in Turkey, adding the conference’s schedule would be announced after a meeting and consultation with the Turkish foreign minister, Online reported. agencies

 

[Neo]

Current account deficit narrows down by $2 billion ​

KARACHI (April 18 2009): Pakistan's current account deficit has posted a decline of some 2 billion dollar (21 percent) during the first nine months of the current fiscal year, mainly due to the higher home remittances and sharp decline in the trade deficit. "Decrease in the current account deficit has occurred due to rising home remittances, decline in imports and trade deficit, besides aggressive performance of services sector," analysts said.

Strengthening the current account would also help stabilise the exchange rate to a reasonable level and further build the country's forex reserves, they added. They said that month-on-month basis current account deficit is also narrowing, which reflects that the country's current account deficit would be around 8-8.5 billion dollar by the end of June 2009.

"The improving current account situation also indicates an overall economic stability and we are expecting further stability in the near future," they added. Official statistics revealed on Friday that the country's current account deficit has declined by 1.982 billion dollar during the July-March of fiscal year 2008-09.

With this decrease, the country's overall current account deficit has narrowed down to 7.645 billion dollar in the first nine months as compared to some 9.627 billion dollar in the same period of last fiscal year. The country had also registered a slight current account deficit of some 172 million dollar during the March 2009.

In the earlier five months of the current fiscal year 2009, current account was constantly on the rise with an average deficit of some 1.36 billion per month on the back of high imports, slowdown of exports and slow foreign inflows.

However, since the last three months things are improving and after a long gap the current account deficit - a major economic indicator, is presenting a positive indication. With this decline in the current account deficit, the average deficit has also plunged. The average monthly current account deficit till February 2009 was over one billion dollar. However, after the March statistics it has declined to 955 million dollar.

Trade and services sector have presented a significant improvement and contributed major share in narrowing current account deficit, while income deficit is still witnessing an upward trend.

Services deficit has declined by some 38 percent during the first nine months of the current fiscal year. Services sector deficit stood at 2.954 billion dollar with 2.633 billion dollar exports and 5.587 billion dollar imports in July-March of the current fiscal year as compared to a deficit of 4.782 billion dollar with 2.384 billion dollar exports and 7.166 billion dollar export in the corresponding period of last fiscal year.

Overall deficit including goods, services and income stood at 15.776 billion dollar against the current account transfers of 8.227 billion dollar during the July-Mach of fiscal year 2008-09. The country's overall goods imports stood at 24 billion dollar and exports at 14.46 billion dollar with a trade deficit of 9.51 billion dollar during the first nine months of the current fiscal year.

 

[Neo]

MoU to be inked with China for oil and gas exploration ​

ISLAMABAD (April 18 2009): Pakistan and China are set to sign memorandum of understanding (MoU) to enter into joint venture for oil and gas exploration. The MoU will be signed by Advisor to Prime Minister on Petroleum and Natural Resources Dr Asim Hussain, who left here for China on Friday.

Sources revealed to the Business Recorder that the MoU would enable Pakistan Petroleum Limited (PPL) to enter into joint venture with China state run oil and gas exploration companies for exploration activities in Pakistan as well as in foreign countries.

The government had increased the well-head gas price cap to 100 dollars per barrel crude oil price from 45 dollars per barrel crude oil in 2009 Petroleum and Exploration Policy that would also attract the Chinese companies to explore oil and gas reserves in Pakistan, sources said.

The PPL has already entered into joint venture with Australian Company, MOV, which has already secured Block-29 for oil and gas exploration in Yemen. This step is a milestone by virtue of being the first effort by a local public sector company to extend its exploration activities beyond the border with a minimum financial commitment of 15 million dollars.

The sources said that PPL was also expecting to sign a MoU with the government of Turkmenistan during the forthcoming visit of Dr Asim Hussain to Turkmenistan during the last week of the current month. The PPL is one of the pioneer exploration and production (E&P) companies in Pakistan oil and gas sector that has qualified to participate in the second field development bidding round for substantial E&P opportunities in Iraq that was launched on December 31, 2008.

There were 35 companies, which participated in the first bidding round, and The PPL was among the nine companies that have qualified for the second round to participate for the 19 fields offered by the government of Iraq for development. Few other opportunities that are currently in focus are in the process of technical screening and evaluation includes Libya, Algeria, Morocco, Armenia, Uzbekistan, Senegal and Mauritania.

Dr Asim Hussain has directed the PPL and OGDCL to go into world in pursuit of exploration and production of hydrocarbons, particularly in the countries like Yemen, Libya, Iran, Turkmenistan and Iraq, in a bid to secure much needed energy security and sustainable future for the country.

 

[Neo]

Country could face export slump this year: economist ​

Sunday, April 19, 2009

KARACHI: Leading economist Dr Kaiser Bengali has pointed to the decline in exports as the root cause of local economic slowdown and predicted that the country would face the worst export slump in August or September this year.

He was speaking at a seminar on ‘Financial Meltdown & Global Economic Recession: Causes & Effects’, organised by the Karachi Council on Foreign Relations, Economic Affairs & Law (KCFR), here on Saturday. First nine-month (July 2008 to March 2009) figures show that the country’s exports were mere $13.41 billion against $26.12 billion of imports, with trade deficit widening to $12.71 billion. He maintained that the local crisis has a 30-year history, beginning from 1977, and has no or little linkage with the world financial meltdown.

The local crisis would hit its peak in 2009-10, he foresaw. Throwing light on the history of the crisis, he revealed that the Social Policy and Development Centre (SPDC), under his chairmanship in 2003, had predicted 2009 as a year of crisis on the basis of the last regime’s policies. The crisis, therefore, occurred one year earlier in 2008, he added.

He explained that the crisis began with Gen Zia period, as the state made a major shift in its policies from ‘state development’ to ‘state security’. From 1977 to date, no factory, power station and industrial complexes were set up nor were any dams and highways constructed.

Especially since 2000, no expansion in power generation was made. The county, however, witnessed a number of collapses including Rann Pathani Railway Bridge, Karachi Port Berths and Karachi flyover during 30 years of assets depletion period.

Bengali further said that the annual growth rate of country’s defence budget rose to nine per cent in 1980’s from two per cent in 1970’s, witnessing 4.5 fold increases. Simultaneously, the annual growth rate of development budget fell to 2.7 per cent in 1980’s from 21 per cent in 1970’s, registering 7.8 decline. He declared these changes in figures as paradigm shift in state policies from pro-development to pro-security.

He also suggested to the government to give tax relaxation to the manufacturing industry in a bid to make the sector sustainable and added it should eliminate sales tax on shares transactions and impose capital gain tax instead.

Ambassador (R) Najmul Saqib Khan stressed to develop a strong regulatory framework at the world level to keep the risk lower in running financial sector i.e. banks and stocks markets so that the tax payers’ money would not be pumped again into the system to save it from collapsing. He suggested to the government to shift its focus towards establishing production, goods and services sectors, as they should be the engine of economic growth, instead of taking care of the banks and stocks markets.

State Bank of Pakistan Governor Syed Salim Raza said Pakistan’s economy was likely to grow between 4-4.5 per cent in the next fiscal year. Responding to a question, he said that the purpose of revising set target of minimum paid-up capital requirement (MCR) to Rs10 billion by banks by 2013 against Rs23 billion earlier was to support medium size banks in the country, while revised target was still higher as compared to other countries banks’ MCR.

 

[Neo]

Trade deficit to come down by $4bn in FY08-09: MoF​

* Trade deficit is projected to be $11.3 billion in 2008-09 as compared with $15.3 billion in last fiscal year​

ISLAMABAD: By putting in place the restriction on import and protectionist policies by the economic managers, the trade deficit is projected to be $11.3 billion in 2008-09 as compared with $15.3 billion in last fiscal year, according to the Balance of Payment Outlook 2007-08 to 2012-13 of the Ministry of Finance.

Outlook incorporated in PRSP II document reveals that exports of the country are projected to post, a negative 5.5 percent growth with total exports at $19 billion in the current fiscal year 2008-09.

Trade policy 2008-09 had projected taking country’s exports to $22.1 billion, however, revision in macro-economic targets reveals that exports target is to be missed by a big margin of $3.1 billion, in case exports stood at $19 billion by June 30. The outlook further reveals that the country had managed to export goods worth $20.1 billion in 2007-08 and is projected to realise exports to the tune of $19 billion in the current fiscal and it has projected exports at $19.3 billion for 2009-10.

Similarly, after putting in place the measures to slow down the economy, the imports are also projected to register a negative growth of 14.5 percent with total imports at $30.3 billion in current fiscal year 2008-09.

According to the outlook, the macroeconomic framework projects a drastic reduction in the trade gap from $15.3 billion in FY 2007-08 to $11.3 billion in FY 2008-09 that would enable reduction in the current account deficit from $14.0 billion to $9.7 billion in 2008-09 and $7.4 billion in 2009-10.

As a percentage of GDP the current account deficit is projected to decline from 8.4 to 4.2 percent of GDP during this period. The reduction in the trade deficit is mainly on the back of drastic compression of non-essential imports as well as stabilisation of prices of crude and edible oil along with commodity prices.

Exports are expected to grow in the single digit, which is below their long-term average of 14-20 percent in the medium term. With the declining trade deficit, the current account deficit will also fall and thus necessitates external debt reduction from 27.3 percent of GDP in FY 2007-08 to 26.0 percent by the end of the macroeconomic framework period 2012-13.

According to an analysis of the Ministry of Commerce, some of these structural challenges relating to both the demand and supply are Pakistan’s low ranking on the competitiveness scale due to its internal inefficiencies, thus making the cost of doing business in Pakistan relatively higher. Poor governance coupled with excessive red tape results in extra costs for producers and exporters. Power supplies are inadequate and a costly input for producers. Infrastructure especially relating to transportation is substandard resulting in extra costs for exporters. High cost of capital, low reliability of the legal dispute resolution system inhibiting investment and increase in commercial activity. Low productivity of human resource due to lack of education and skills deficit, lack of emphasis on quality in production and service provision and lack of diversification of our export portfolio and over reliance on textiles.

 

[opinion786]

Excellent website for Economic facts & figures: Economic Pakistan



1- Economic way forward for Pakistan - written by ex- PM Shaukat Aziz

2- Textile Industry

3- Pakistan’s Financial Services Sector (updated)

4- Pakistan’s Hydroelectric Power Development

5- Pakistan’s Defense Industry goes UAV

6- Cement Industry

7- Musharraf Era: Pakistan Flourishes

 

[Neo]

Pakistan and Iran may reach gas agreement this week: disputes to be resolved under UN law​

ISLAMABAD (April 20 2009): Pakistan and Iran are said to have agreed to resolve the disputes on gas pipeline project in accordance with the United Nations Commission on International Trade Law (UNCITRAL), sources in Petroleum Ministry told Business Recorder.

The two countries are expected to trim the Gas Sale Purchase Agreement (GSPA), possibly during the current week, to materialise the much-delayed multi billion dollars project.

On April 8, 2009, the Federal Cabinet gave approval for the project, subject to the condition that, for the present, Pakistan should not commit to purchasing more than 750 mmcfd gas, against the initial plan of one billion cubic feet, at offered crude oil parity of 80 percent.

"If the parties are unable to settle any dispute through mutual consultation then, depending upon nature of dispute, either party may refer it to either an expert or to arbitration, in accordance with clause 19 (Dispute Resolution). Arbitration will be governed in accordance with UNCITRAL Arbitration Rules which provide for appointment of three arbitrators," sources said.

They said that arbitrators would be appointed by Director, Kuala Lumpur Regional Centre for Arbitration, and their determination will be final and binding for both parties. The agreement will be for contracted supply of up to 750 mmcfd gas for 25 years, renewable for another five years. Delivery point for the gas is at the Iran-Pakistan border, near Gwadar, at an agreed pressure of not less than 798 psig (55 barg).

The GSPA provides for ramping up of supplies from 35 percent (350 mmcfd) in the first year to 65 percent (650 mmcfd) in the second year, followed by full capacity of 1bcfd starting third year.

Elaborating the GSPA, sources said that this is a supply contract, wherein the gas supplier is legally bound to supply the contracted volumes, or otherwise pay liquidated damages.

"In the case of supply shortfall, the seller has to pay following to the buyer: (i) 9 percent discount on the contract price for the corresponding shortfall volume; (ii) buyers shipment tariff, ie transportation charges from border to pipeline system; (iii) difference of price between the contract gas price and a basket of alternative fuels (HSFO and HSD in a ratio of 80:20)."

According to sources, GSPAs are confidential in nature, and not available in public domain information. Therefore, exact details are not available. However, as per media reports, the Iran-Turkey GSPA is that it is for 1 billion cubic feet daily (bcfd) over a 25-year supply period, starting 1996. The contract volume has recently been increased to 2.0 bcfd.

Turkey pays 80 percent crude oil parity price. This information has not been officially confirmed by either Iran or Turkey. However, unofficial sources have confirmed this price. Further, there is a clause in the Iran-Pakistan GSPA that the gas price will be the weighed average of all pipeline exports from Iran including Turkey.

The Iran-Turkey pipeline is 2,577 kilometres long natural gas pipeline, which runs from Tabriz in North-West Iran to Ankara in Turkey. The construction of the pipeline started in 1996, after signing a gas deal between Turkish and Iranian governments. The GSPA was signed on August 8, 1996 for a supply period of 25 years. The contract volume during plateau is 10 BCMA (lBcfd), which accounts for about 22 percent of Turkey's natural gas imports. The pipeline has a maximum capacity to pump 14 BCMA, commissioned on 26th July 2001.

The Turkish section, operated by Botas, cost $600 million. In Erzurum, the South Caucasus Pipeline is linked to the Iran-Turkey pipeline. In future, these two pipelines will be the main supply for the planned Nabucco Pipeline from ISGS engaged a UK based pricing consultant Energy Contract Company to advise on the gas pricing regimes in the global gas trading hubs.

The consultant has advised that in the pure gas trading hubs such as Henry Hub (USA) and NBP (UK), where the gas is traded as a commodity it is not linked with crude oil. However, based upon historic data, natural gas on the average is being sold at 70 percent of crude oil parity. The consultant has also advised that where the gas is linked with crude oil and oil products, the parity is comparatively higher, the sources maintained.

The consultant has advised that, based upon the price formulae in pipeline gas supplies to Southern Europe, at an oil price of $62/bbI ($10.88/mmbtu), and including an estimate of the transportation price, an estimate of the current price under two supply contracts to Southern Europe is as under:

-- Algerian GME delivered Spain $7.7/mmbtu 71 percent oil parity

-- IE Italian Benchmark @ border $8.1/ mmbtu 75percent oil parity

As regards, the Iran-Turkey or Iran-Armenia gas prices, the consultant has advised that the benchmark price offered to Pakistan is that at which it is selling gas to Turkey which is assessed at 85 percent oil parity, as also confirmed by Pakistan Embassy at Tehran.

The consultant has also advised that although there are certain global gas pricing parameters, the gas prices are frequently negotiated considering the peculiar markets dynamics.

As per press reports, all recent gas price negotiations have been concluded at much higher gas prices as compared to the previous in the major gas trading hubs. Iran has recently (in February 2009) finalised a deal to import gas from Turkmenistan. The price of gas being paid by Iran to Turkmenistan is $300-350/MCM, which translates to $8.5-10/mmbtu, as compared to $8.2/mmbtu offered to Pakistan. The price agreed ranges from 81 percent to 94 percent at a crude oil price of $60/bbI as against 78 percent to Pakistan.

In a recent agreement, in January 2009, Ukraine agreed to pay Russia on the average $260-300/MCM ($7.36-8.5/mmbtu during 2009 as against the $179/MCM ($5.1/mmbtu) in 2008. The agreed price comes to 70 percent-81 percent of the crude oil parity as against at 50 percent crude oil parity in 2008.

In addition, of the recent developments in the global gas market, the most critical development to note is that in future the Gas Exporting Countries Forum (GECF)--of which Iran is a member along with Russia, Qatar and others--is expected to play a proactive role in controlling the world gas/LNG prices. Although not stated, the prime objective of the forum appears to establish the minimum floor for the gas prices while ensuring the indexation of the gas price as close as possible to the oil prices.

Recently, during December 2008, in the context of adoption of the charter of GECF, the Russian Prime Minister was quoted by the press saying as: "The era of cheap gas is over". Industry analysts interpret this equally applying to LNG.

 

[Neo]

All set to launch 90 reconstruction projects in AJK​

MUZAFFARABAD (April 20 2009): As many as 90 reconstruction projects are being launched through Muzaffarabad city development project (MCDP) under JICA Master Planning programme, here. Two Chinese construction companies CWE and Xingjian Beixing Engineering company have arrived in AJK capital Muzaffarabad.

This was said in a press release issued here by the Office of MCDP of AJK government working under the Earthquake Rehabilitation and Reconstruction Authority (Erra) administration.

These companies will undertake the reconstruction of projects under Muzaffarabad city Development projects in accordance with the Master plan of JICA and Nespak and some 90 projects would be launched including buildings, parks, commercial plazas, satellite town, bus terminals, road and bridges.

It said that approximately 60 Chinese Engineers have arrived in Muzaffarabad to start the construction work. Initially they have started survey and planning work of the projects.

Whereas, the project Management Unit and MCDP is completely co-ordinating with the Chinese construction companies and providing all sorts of support, help and guidance according to their demand, it added.

 

[Neo]

Sialkot industries putting efforts to double exports volume​

SIALKOT (April 20 2009): Sialkot is an export-oriented city of Pakistan and possesses a century old industrial heritage. It has developed a remarkable exports culture over the period and is contributing more than $1billion to the national exchequer annually.

Yet the exporters' community is putting their outmost efforts to double the volume of exports despite tough competition in the world market to fetch valuable foreign exchange for the country.

Undoubtedly, the Small and Medium Enterprise (SMEs) were playing a significant role not only in strengthening the national economy but also providing employment to thousands of workers in Sialkot.

In order to develop true and secure SME culture in the district of Sialkot, the government should formulate a special package of incentives and concessions for the SMEs of the area to increase the exports volume and to redress their problems. The city is sprinkled with thousands of small and medium enterprises, which are successfully honouring their global commitments for export of value-added quality goods such as sports goods, surgical instruments, leather goods, gloves, badges and musical instruments etc.

Moreover, the development of cottage industries in Sialkot has assumed a model status for the developing world. The city has developed industrial edge over other cities of the country, especially in the manufacturing of sports goods and surgical instruments.

Over 1.20 lakh industrial workers are engaged with both the industries and are earning their livelihood in a respectable way. Many researchers of different foreign universities are considering conducting research on the unique export culture of Sialkot, which is a hub of cottage industries and export-oriented city of Pakistan. The researchers would penetrate on ascertaining how the successfully the industrialists of Sialkot are doing their export business and where every third businessman is an exporter.

The business community of Sialkot is playing a tremendous role not only in bringing boom in exports but also fulfilling the social responsibilities and the uplift of the city on voluntarily basis.

The soccer ball industry had totally been purged from the menace of child labour and Sialkot has set a role model for others to follow for the elimination of child labour.

The business community had managed to develop the culture of 'Do it yourself' in Sialkot under which, the businessmen were playing a pivotal role for the development of the city and welfare of the people.

For the construction of city roads and drains, Sialkot Chamber of Commerce and Industry (SCCI) initiated Sialkot City Package in collaboration with other trade bodies in the city.

Under the programme, exporters are voluntarily contributing 0.25 percent against their export invoices. As a result, many city roads and drains have been constructed. The mega project of Sialkot International Airport has become operational, which has been constructed by the local business community on the basis of Build, Operate and Own (BOO) worth over Rs3 billion.

Three international and one domestic flights are operating, while Qatar Airline is operating its cargo flights from Sialkot airport.

It is expected that regular cargo flights would be started from Sialkot international airport very soon. Sialkot International Airport is a unique project in private sector and first of its kind in not only in the country, but also in South-East Asia.

Despite of extra-ordinary contribution of the local exporters, the city, which deserve a special status, was being ignored in many respects. Keeping in view the importance and contribution of Sialkot towards country's economy, the city should be treated, as city of cottage industry and both federal and Punjab governments should announce special concessions and incentives for this export-oriented city for the larger interest of the SMEs. Further, a mega project of Sports Industries Development Centre (SIDC), which was approved by the federal government in 2006 at the cost of Rs272.61 million, was in doldrums.

The concept of initiating the SIDC project was to enable sports goods industry to cope with the changing trends by adopting modern technology of machine stitched footballs. It may be mentioned that new technology was introduced and successfully marketed by Adidas, which was posing serious threats to hand stitched football industry of Sialkot.

Over 85 percent of total production of soccer ball of the world are produced in Sialkot, while all international brands are sourcing their supply of footballs from this city. The success story of Sialkot based industries can be attributed to unmatched skill of local workers and their craftsmanship.

However, it is regretting that the soccer ball manufacturers and exporters were facing serious hardships due to slow pace of the project and were of the opinion that if the situation remains unchanged then Pakistan will lose international market. Keeping in view the importance of the SIDC project, the government should release grant at earliest possible time for accomplishment of the project.

 

[Neo]

'Chinese public sector keen to enter into joint ventures'​

LAHORE (April 20 2009): Chairman, Yunnan Chamber of Commerce, China, Li Jiashou, leading high level Chinese delegation, on Sunday said that Chinese public sector is keen to enter into joint ventures with their counterparts in Pakistan to promote bilateral trade between the two countries.

Speaking at a dinner hosted by Vice President, Saarc Chamber of Commerce and Industry (Saarc CCI) and veteran trade leader, Iftikhar Ali Malik here on Saturday night at his residence, Li Jiashou said, 'We are in Pakistan to explore the avenues and study the scope of investment in different sectors and invite President Saarc CCI, Tariq Sayeed along with 15-member delegation as key speaker at the inaugural session of 3-day China South Asia Business Forum to be held in kuming China on June 05 under the aegis of China Council for Promotion of International Trade (CCIPT).' He said, 'it the earnest desire of the Chinese public sector to promote business and enter into joint ventures with Pakistan as both countries are time tested friends of each other in their hours of trial.'

He said that people of China love Pakistani as compared to all other countries across the globe. Ms Tan Yun said that there was vast scope for promoting tourism in Pakistan and Pakistani diplomats must provide necessary information and tour package regarding tourists spots to attract Chinese to Pakistan.

She said that majority of the Chinese are not aware of the world's best scenic valleys and spots in Pakistan especially in northern areas, including Gilgit, Hunza, Naran, Kaghan, Lahore, Multan, Harrapa and Murree etc.

Welcoming the Chinese delegation, Iftikhar Ali Malik said that China's Trade is about $600 billion in the region and its only $6 billion trade is with Pakistan. He said it is absolutely imbalance of trade and balance of payment is in favour of China. He urged the Chinese delegation for co-operation to get market access to China and asked them to invest in Pakistan.

Iftikhar Ali Malik said that they are already importing hybrid rice seeds from China which has increased their yield hundred percent. He said that time has come that China must transfer its technology to Pakistan.

The dinner was attended by Ms Tan Yun, Vice Secretary General CCPIT, Yunnan Sub-Council, Ms Fan Juanjuan, IR&MA, CCPIT, Yunnan Sub Council, Taimur Ali Malik, Dr Waqar Chaudhary, Anwwar A Sheikh and other elite of the town.

Earlier, the delegation met Sultan Chawla, President FPCCI and Mohibullah Shah, Chairman, Trade Development Authority Pakistan (TDAP). It is worth mentioning here that prominent business leader and President Saarc CCI,Tariq Sayeed has been invited for the second time.

 

[Neo]

Electricity from Central Asia​

EDITORIAL (April 20 2009): According to a Recorder Report the federal cabinet has refused to give post facto approval to a memorandum of understanding signed last year by the Ministry of Water and Power and representatives from Kyrgyzstan and Tajikistan for the import of 1000MW electricity from those countries.

The cabinet said that the decision to import electricity would be taken only after its tariff/import price was estimated, and its economic feasibility conclusively established in comparison with the existing sources, including rental plants, which makes eminent sense. There are some unstated reasons also for the delay. One, of course, is the lingering instability in Afghanistan, though it can be hoped that by the time the project actually gets off the ground, the current conflict would have come to some sort of a conclusion.

Notably, the US has been pushing the project, lining up the World Bank and the Asian Development Bank to support it. The US interest in the project was backed by two obvious motives. One was to keep Pakistan from forging closer co-operation with Iran, which had been offering to sell both electricity and gas to Pakistan. And the other, in the wake of Bush administration's decision to give a civilian nuclear programme to India, was to deflect Pakistan's own demand to be treated likewise to meet its growing energy requirements.

The Americans kept telling Islamabad publicly that they would help it overcome its energy needs through the import of electricity from Central Asia and exploitation of its coal reserves for energy production. The US was one of the participants in stakeholders meeting held last July 31-August 2. The meeting came up with a detailed proposal under which Kyrgyzstan and Tajikistan together were to firmly commit 5 TWh (the former 2 TWh and the latter 3TWh) average line flow per year, to be delivered during the summer months, through the operating period of the concession agreement (25-30 years).

It was further decided that the exporting countries would make investments to cover the load growth, and in doing so they could maintain the summer surplus. All of this looks fine on paper. But it is also a case of there being many a slip between the cup and the lip.

As it transpires Kyrgyzstan and Tajikistan may actually not be in a position to generate the surplus electricity which was supposed to be exported to this country. The two countries have long wanted to construct hydropower project over their two rivers, Syr Darya and Amu Darya. But the neighbouring Uzbekistan, being downstream, does not like the idea, nor does Kazakhstan.

Reports emanating from those countries as recently as the current month show the Uzbek government in particular remains strongly opposed to the project for fear it would reduce water flows across its borders. As things stand, one can only hope the project will materialise. But we should also keep exploring all other options, taking timely steps to grab opportunities in accordance with our needs and interests.

 

[Neo]

A great new beginning: wind power production​

EDITORIAL (April 18 2009): Federal Minister for Water and Power Raja Pervez Ashraf told a press conference on Wednesday that the country's first ever windmill project in Jhimpir, Sindh, will become functional on April 19. This would mark an important beginning towards power production from alternative sources of energy. Built by a Turkish company, the project is part of a 50mw wind farm.

Its successful completion raises the hope that the government will pursue, with greater vigour, more projects, especially in the Gharo-Keti Bandar wind corridor, which, according to the minister, could generate some 50,000mw electricity.

He also said that the likely existence of other wind corridors is being studied, and that the country possesses a theoretical wind energy potential of 346,000mw - an incredible volume, indeed. We also have enormous possibilities to generate hydel as well as solar power. Going by the preceding estimates, harnessing of wind power alone can help us not only to overcome the present crisis, but also to attain huge surpluses in the foreseeable future.

It goes without saying that wind being a clean and renewable source of energy like solar power, deserves to be harnessed on a priority basis. Hydel power, of course, is equally good and, as Raja Ashraf claimed, we have the ability to produce 50,000MW hydroelectricity. But it entails some serious problems such as inter-provincial disputes over dam construction and the spectre of reduced water flows in our river system.

Hydel projects also have a quite long gestation period. Windmills, on the other hand, do not take a long time to be set up; the negative factor in the case of both wind and solar power projects, though, is an initial high cost of construction. Still, as compared to some other conventional sources like thermal plants, electricity from windmills is low-priced, and with the passage of time gets progressively cheaper.

Except for maintenance work, no recurring expenditure is involved. In the present instance, the tariff, as determined by the Electric Power Regulatory Authority, is 12.1057 cents per KWH, which is lower than the thermal power rate, and after a 10-year period, it is to come down to 4.5 cents only. Like in so many other areas of national endeavour we have wasted too much time to develop alternative sources of energy.

While we never forget to draw comparisons with India, our policy planners make no special efforts to match the national ambition to do better, or at least equally good. Turning to that inevitable comparison we learn that India has moved far ahead of us in both wind and solar power production, manufacturing indigenous machinery and equipment for the purpose.

In the case of the present project, even after the Alternative Energy Development Board (AEDB) had completed its feasibility work for the setting up of windmills in Sindh to produce 1200mw electricity, the project ran into unnecessary delays over tariff and some other issues for nearly two years.

At one point the Turkish company, along with several competitors, pulled out of the bidding, reluctantly returning later to reapply. Now that an example has been set, it should not be difficult for AEDB to attract the interest of other potential investors as well in the remaining projects. It must act quickly to ensure that this happens sooner rather than later.