Pakistan Economy - News & Updates - Archive

[Neo]

New five-year plan sees GDP growth at 6pc ​

Sunday, May 24, 2009

ISLAMABAD: The government has envisaged around six per cent GDP growth under the upcoming 10th Five Year Plan and its approach paper will be presented before the next National Economic Council (NEC) meeting with Prime Minister Syed Yousuf Raza Gilani in the chair on June 1.

The concept paper also talks about envisaging higher growth rate in the next five years in order to tackle rising trend in poverty and unemployment.

The government also wants to put in place monitoring and evaluation mechanism in each ministries/divisions in order to ensure effective utilization of multi billion rupees projects. The people centric policies will help in achieving the improvements in social sector.

The concept paper also states that since 2001 the economy has suffered around $35 billion loss due to outfall of the 9/11. Pakistan should be given market access to compensate its losses.

The concept paper also highlights policies being adopted by the government to uplift the social sector and envisage targets to remove regional disparities in the next five years.

The NEC, the sources say, will also consider approval for approach paper of 10th Five Year Plan (2010-15) in which priorities will be given to social sector as well as removing regional disparities among provinces and areas of the country.

The Planning Commission Chief Economist Dr Rashid Amjad is heading the task force working for preparation of the next Five Year Plan, which the government is going to tagged as Peoples Plan.

Dr Rashid Amjad told this scribe that the approach paper would basically outline priorities of the government for the next five years. “The main issue is sustained growth with human face,” he said and added that the social sector remained neglected in last few years but now the development strategy would be based upon bringing improvements in peoples’ lives.

The APCC in its meeting had recommended the size of Rs600 billion for the next Annual Development Plan (ADP) out of which the federal share was proposed at Rs400 billion while the provinces share stood at Rs200 billion for 2009-10. The NEC will accord its final approval in the meeting going to be held on June 1, 2009. The draft of the approach is ready which will be given final shape by the next week.

 

[Neo]

NEC may approve Rs 19.05 billion for Bhasha dam, two nuclear power plants ​

ISLAMABAD (May 24 2009): The National Economic Council (NEC) is likely to approve Rs 19.05 billion for the construction of Diamer Bhasha dam and two new nuclear power plants (Ch-3 Ch-4) at Chashma in the Public Sector Development Programme (PSDP) of next budget (2009-10). The Council is scheduled to meet on June 1.

The Annual Plan Co-ordination Committee (APPC) has allocated Rs 16 billion for Neelum Jhelum Hydropower Project in AJK. The NEC may also approve allocation of Rs 22.9 billion for 800 MW Guddu steam power project. The Finance Ministry Priorities Committee has made these allocations and Planning Commission Deputy Chairman Sardar Aseff Ahmed confirmed to Business Recorder that all the recommended allocations by priorities committee were endorsed by the APPC in its meeting held on Friday.

The NEC may also approve allocation of Rs 3.55 billion for Chashma Nuclear Power Project 3-4 and Rs 15.5 billion for the construction of Diamer Bhasha Dam project in the next budget. The Water and Power Ministry had sought the allocation of Rs 8 billion for the Bhasha dam project but the priorities committee recommended allocation of Rs 15.5 billion. Pakistan Atomic Energy Commission had sought allocation of Rs 23.9 billion for Ch-3 and Ch-4 but the priorities committee had recommended Rs 3.55 billion and the amount was approved by the APCC.

According to sources, the APCC also recommended the said amount to be allocated for these projects in the next budget. The APCC has also recommended Rs 8.6 billion for the ongoing Chashma nuclear power project -2 Mianwali. The APCC has also recommended Rs 366.58 million for other project namely MPS-3 Taunsa-2 Uranium Mining Project. Two projects relating to uranium exploration have been recommended that include Rs 176.3 million allocation for detailed exploration of uranium (phase-vii) DG Khan and Rs 231.7 million for detailed exploration of uranium resources in Bannu Basin and Kohat Plateau.

 

[Neo]

Pakistan hopeful of achieving $10 billion FDI target ​

LAHORE (May 24 2009): Federal Minister for Investment Senator Waqar Ahmad, while expressing his optimism about substantial increase in foreign direct investment (FDI) into Pakistan, has hoped that the country would achieve the target of 10 billion-dollar foreign investment during the current year.

Speaking at Lahore Chamber of Commerce here on Saturday, the Federal Minister said that Pakistan was an attractive place for investment in construction sector due to shortfall of eight million houses in the country. The Pakistanis, who had invested 8.5 billion dollars in the United Arab Emirates (UAE) real estate business, could be the prospective investors in Pakistan, he said.

Besides, the UAE-based investors were also expected to think over investing in Pakistan to tap the existing potential in the housing sector, he added. He said the business carried a return of 40 percent on investment, and added the Federal government was planning to offer land as its equity to these investors, who had a capacity to construct 60 houses per day with an investment of four million dollars only. The construction of a million houses under the programme could generate a cash flow, amounting to 15 billion dollars, the minister added.

Taking about the measures taken to mitigate the power shortage issue, Waqar Ahmad Khan said the Qatar government had agreed to give liquefied natural gas (LNG) provided the government of Pakistan entered into a long-term agreement. Headed by the Federal Minister for Petroleum, a delegation would visit Qatar very soon to finalise details, he maintained.

The LNG, being an efficient fuel, would not only bridge gas shortage in the country, but would also help increase the efficiency of all power generation thermal units that would be generating an extra 1200 to 1300 Megawatts of electricity.

He said that on completion of all formalities with the Qatar government, the LNG could reach Pakistan within three months time. He said that the agreement would also help curtail existing import bill. Waqar further said that legal coverage would be provided through legislation to all agreements to be made with the investors so that these could not be scrapped in future. He said that despite all odds, a number of potential foreign investors were ready to make investment in Pakistan in various sectors.

He said that the Ministry of Investment had decided to set up a task force in collaboration with the private sector to attract foreign investment, and urged the LCCI to give the names of the businessmen so that they could be included in the task force.

Appreciating the Federal governments efforts aimed at promoting investment in the country, LCCI President Mian Muzaffar Ali said that there was a dire need for foreign investment in labour-intensive industries because every year four million new people were adding to the existing workforce.

He said that it could easily be done through active participation of commercial attaches, working in foreign countries, and private sector's collaboration with the chambers of commerce in other countries.

The LCCI President said that like 2008, the current was witnessing a terrible state of affairs, whether they existed in the shape of terrorism, higher energy prices, an exceptional surge in food inflation or in the form of a financial market crisis to match the great depression of 1930s. He said these developments had adverse consequences of differing degrees for economies in different parts of the world, including the US and UK.

He said these external developments had equally played an important role in stressing Pakistan's macroeconomic imbalances while unsettled domestic political conditions and an uncertain security environment had adversely affected the performance of the Pakistan economy.

As a result, the foreign investment was constantly shrinking, he said, adding that the overall foreign investment during the 2008 fiscal year had declined by 32.2 percent and stood at 3.6 billion dollars as against 5.3 billion dollars in the comparable period of the previous years. He said the worst of all, severe energy crisis had increased the cost of doing business in the country. The LCCI President said if present alarming situation continued, the wheel of industry, which had already slowed down, would get jammed due to the growing energy shortage in the country.

He said the LCCI had repeatedly requested the government to seriously focus on the increase in production on a sustainable basis, and to fully exploit renewable energy resources so that "we can promote our businesses on sustainable lines." He said the government also needed to develop a strong liaison with the business community and whatever the decisions it took must be on permanent basis and not on ad hoc basis.

 

[white_pawn]

Subsidy on electricity being removed, tariff to be raised ​

Monday, 25 May, 2009 | 10:46 PM PST |

ISLAMABAD: The government has decided to end subsidies on electricity from the next fiscal year and the first batch of tariff raises will be made in July, sources in the finance ministry said.

The government has decided to raise the power tariff by ten per cent in July while the next phase of tariff increases will be made in December 2009, to cover up the revenue losses faced by electricity distribution companies (Disco) in absence of the subsidy, sources in said.

Officials said that the government was currently subsidising 17.5 per cent of the electricity tariff as decided in recent meetings held between Pakistan Electric Power Company (Pepco), ministry of water and power and the finance ministry.

The decision made by finance ministry has been conveyed to Pepco and the ministry of water and power that the subsidies would have to go from next fiscal year.

Despite an agreement with the International Monetary Fund, the government would be subsidizing electricity worth more than Rs120 billion during the current fiscal year; almost double the amount allocated in the budget.

The government had allocated Rs65 billion for power subsidies in the budget 2008-09, besides Rs2billion in terms of reduced tariff to the agriculture tube wells and more than Rs4.5 for tube wells in Baluchistan.

‘The country was not under the IMF obligations in June last when the budget for approved,’ said an official of the finance ministry adding that the there will not be any subsidy for electricity in the budget of current fiscal year.

However, the decision has yet to be taken over the subsidies for the life line consumers, who utilise up to 50 units electricity per month.

Officials of PEPCO said that the difference between the cost of electricity and the notified tariff is much higher than the allocated amount in the budget.

Besides the IMF the Asian Development Bank (ADB) has also asked the government to rectify the affairs of power sector.

‘The government has approached the ADB for support to clear the circular debt issues once and set the power sector on path of growth,’ said Tahir Basharat Cheema, the Managing Director of Pepco. However the final decisions over the outcome of the talks with ADB would be decided by the ministry of finance and the ministry of water and power.

After a series of meetings with stake holders the synchronised circular debt figures amount to Rs216 billion rupees out of which term finance certificates worth Rs80.11 have already been floated with the support of ten local and international banks.

Sources in the ministry of water and power said that the government wants to obtain soft loans from ADB of Rs136 to clear all the circular debt and then only Pepco would be under the debt.

However, before signing any loan the ADB wanted Pakistan to ensure that subsidies would end, and Discos would improve their recoveries besides reducing line losses.

DAWN.COM | Business | Subsidy on electricity being removed, tariff to be raised

 

[white_pawn]

Final deal on gas pipeline in three weeks: Iran ​

Tuesday, 26 May, 2009 | 05:07 AM PST

TEHRAN: There are no outstanding issues impeding the project for laying a gas pipeline between Pakistan and Iran and a final deal will be signed in three weeks, an Iranian official said on Monday.

‘The final contract will be signed between the National Iranian Gas Export Company and Interstate Gas System of Pakistan in three weeks,’ chief executive officer of the National Iranian Gas Company, Reza Kasaizadeh, told ISNA news agency.

Kasaizadeh said: ‘Issues of price, revision of price, the pricing formula and other questions have been finalised.’

Although a date for the completion of the multi-billion-dollar pipeline has not yet been announced, Kasaizadeh said that about 250 kilometres of pipeline remained to be built and that export to Pakistan could then start within four years.—AFP

DAWN.COM | Business | Final deal on gas pipeline in three weeks: Iran

 

[white_pawn]

Peace pipeline at last Dawn Editorial ​

Tuesday, 26 May, 2009 | 06:39 AM PST |

There is little good news these days, but perhaps we should not despair. Iran and Pakistan have signed a deal to construct a gas pipeline that had been on the cards since 1995, notwithstanding the numerous turns and twists in negotiations. The gas sales agreement should also be signed shortly.

We can then hope for work on the project to begin. This is a major breakthrough for Pakistan which will gain tremendously in the energy sector. When completed the 2100-kilometre pipeline will carry 750 million cubic feet of gas per day from Iran’s South Pars fields to Nawabshah in Sindh. This gas will be used only for energy generation and help produce 5000MW of electricity for this power-starved country. The price agreed upon for the moment i.e. 80 per cent of the oil price, may not be as low as initially bargained for. But in the absence of alternatives this appears to be the most feasible offer. With oil prices falling as they are these days, Pakistan should benefit.

There are, however, two aspects of this project that must be kept in mind. One is directly linked to Pakistan’s security concerns in Balochistan. Fears have been expressed that the turmoil in Balochistan will threaten the security of the pipeline since a great length of the 1,000 kilometres inside Pakistan passes through that province which borders Iran.

Islamabad could convert this factor to its advantage if it can ensure that in the construction of the pipeline indigenous labour is hired and the gains of the economic activity inevitably generated by projects of such magnitude are focused on Balochistan for the benefit of its poverty-stricken people. The peace pipeline will begin functioning in another five years. This period should be used by Islamabad to address the Balochistan problem in earnest to find a just solution that redresses the grievances of the province’s citizens.

The international implications of the Iran-Pakistan pipeline accord also have great significance. At one stage India had expressed serious interest in the project as it also stood to benefit from it. Had India not dropped out — as it did last year — the pipeline would have emerged as a powerful focal point in a region that is emerging as an important site on the world energy map. The two signatories have kept the door open for New Delhi that can still join the arrangement at some point. Plans to reduce the circumference of the pipeline should keep the prospects of India’s entry in view. Very importantly, Pakistan has displayed a measure of independence vis-à-vis Washington which has been a persistent opponent of the pipeline deal. With changes in the global equations in the offing and there being a possibility of a US-Iran dialogue, one can only say that Pakistan stands vindicated.


DAWN.COM | Business | Peace pipeline at last

 

[white_pawn]

625m social security net on the cards By Amin Ahmed ​

Tuesday, 26 May, 2009 | 02:44 AM PST |

RAWALPINDI: The government is expected to launch a $625 million social safety net system during the financial year 2009-10 for which it has sought financing of 200 million dollars from the International Development Association (IDA), it has been learnt.

The board of World Bank Group is expected to approve the financing of the new programme in Washington next month before the government announces its budget 2009-10.

The remaining financing of 425 million would be arranged by the federal government from its own sources.

The IDA credit would be transferred to the federal government in accordance with the terms of the financing agreement between Pakistan and the World Bank Group.

The implementation and monitoring of the safety net reforms are currently being managed by Benazir Income Support Programme (BISP), while the ministry of finance coordinates the overall reform agenda with the assistance of the Planning Commission.

The new safety net system will provide the chronic and transient poor with both basic income support and access to opportunities for graduating out of poverty.

Specifically, the financing will support the establishment of an appropriate policy framework for an efficient national safety net system including the development of sound institutions for the effective implementation of the BISP, sources said.

At the same time, a World Bank report says, while potential benefits to the proposed operation are very significant, there are also substantial political, economic and implementation risks.

Explaining the political risks, the World Bank report says attaining a sharp reduction in the fiscal and current account deficits will require political leadership and cohesion.

The scale and speed of the required economic policy response to the macro-economic imbalances to improve economic growth and poverty reduction prospects in the long run could intensify social tensions in part of the population.

The sustainability of the programme could also be undermined by possible differences among the country’s main political parties on other issues including constitutional reforms and the security situation.

The development of a well-governed and targeted safety net could help mitigate the economic and social impact of necessary structural reforms on the poorest segments of the population, promoting social peace.

In addition, the involvement of parliamentarians in the initial beneficiary selection could also pose a major risk to its governance.

The development of effective institutions and strong monitoring and evaluation systems that can provide information on programme performance and gain the confidence of the public could mitigate this risk.

The consensus across the political spectrum on the need for a safety net programme will also ensure continuity of the programme though the name or institutional home may change.

On the external side, a renewed rise in international energy and commodity prices, a reduction in foreign remittances especially from the countries of the Middle East, and a further deterioration in the world economy and international financial markets could weaken the export sector, reduce household transfers, lower capital inflows, limit economic growth and reduce flexibility for policy reforms.

Owing to these reasons, the external imbalances may continue to widen despite the short-term measures taken.

On the internal side, the inability of government to restore fiscal and external balance as agreed could reduce business and consumer confidence.

This could cause a fundamental shift in market expectations and a loss of confidence at home and abroad, leading to a sudden reversal of financial assets held in Pakistan’s stock and bond markets.


DAWN.COM | Business | $625m social security net on the cards

 

[white_pawn]

Textile exporters find new markets ​

Tuesday, May 26, 2009
By Mansoor Ahmad

LAHORE: The country’s export profile of textiles reveals that the country has lost some of its most established markets but exporters have found new export avenues that were neglected in the past.

According to the data available, in cotton yarn Pakistan’s exports have increased by 10 per cent in China, Bangladesh, more than double in France, Singapore, Madagascar and Australia during the first seven months of this fiscal year.

The increase in exports to Singapore amounted to $588,000 against last year’s exports of $74,000. Djibouti, Yemen, Sudan, Qatar and Jordan were the new markets, with Djibouti accounting for the highest exports of $140,000.

Pakistan lost cotton yarn markets during the same period in over 32 countries. Major declines were recorded in Hong Kong $44.65 million, Portugal $13.99 million and Korea $41.25 million. These losses could be attributed to the slowdown in textile activities in these countries. Other major declines were in Turkey, Italy, Brazil, Poland, Vietnam, Indonesia and Iran.

Pakistan managed to increase its exports in cotton fabric, which is a value-added textile product, in 29 countries including Turkey, Bangladesh, Italy, Germany, USA, China, Korea, Brazil, Indonesia, UK and Singapore. The new market discovered was in Iraq, where exports were made worth $5,000.

It is interesting to note that fabric exports increased in many countries where Pakistan lost its yarn market. The country lost fabric markets in the US, Sri Lanka, Spain, Hong Kong, India, Vietnam and 15 other countries.

The sharpest loss in terms of percentage was in Jamaica, where fabric exports declined from $87,000 in July-Jan 2007-08 to $6,000 during July-Jan 2008-09. Readymade garments’ exports increased in Europe, Australia, Singapore, China, India and Afghanistan along with Vietnam, which was a new market discovered with exports worth $8,000. The highest growth in exports of garments was in Afghanistan that increased from $7,000 in July-Jan last fiscal year to $137,000 during the same period this year.

Decline in exports of readymade garments were in major European and American markets. Exports to US were down by $66.81 million, UK $16.78 million, Spain $14.62 million. France, Netherland, Italy, USA and Canada were other countries where exports declined. Knitwear (hosiery) exports figures during the first seven moths of the current fiscal do not depict the actual trend as the massive decline in exports occurred from January onwards.

However, figures for July-Jan 2008-09 showed that exports increased nominally in the UK, Germany, US, Netherlands, Belgium and Sweden. Exports in Afghanistan grew from $7,000 last year to $446,000 in first seven months of this fiscal year. Similarly, exports from Jamaica increased from $27,000 to $305,000, Chile from $173,000 to $449,000, Kuwait from $265,000 to $506,000 and

Malaysia from $475,000 to $997,000. The trend in growth is similar in many recently explored export markets of different countries for knitwear.

The highest decline of $17.97 million in knitwear exports during first seven months of this fiscal was recorded in Italy. The country lost markets in the US, Spain Canada, France, Turkey and Ireland. Vietnam the new market discovered two years back was completely lost.

Exporters discovered new markets of bedwear in Iraq, Korea and Thailand. The bedwear market was lost in the US and European Union. Tents and canvas registered a decline of 17.86 per cent but its exporters explored new markets this year in Hong Kong, Sweden, Madagascar, Turkey, Japan, Poland Mexico, Canada, Thailand and Brazil.

Textile exporters find new markets

 

[white_pawn]

Halal food production technology to boost exports ​

Tuesday, May 26, 2009
By our correspondent

ISLAMABAD: The Ministry of Livestock and Dairy Development has introduced Halal food production technology and certification system to capture the Halal food market, which will help increase the country’s exports, especially to Muslim countries, said the ministry’s Secretary Mohammad Ali Afridi on Monday.

Briefing the National Assembly Standing Committee on Livestock and Dairy Development which met here, Afridi said the government has introduced a programme to support people living in rural areas under the public-private partnership programme. Under that, the government would provide subsidy of 60 per cent to cattle and fish farmers on establishing farms.

“About 30-35 million rural population is engaged in the livestock business, while one million people were connected with the fisheries,” he added.He informed the committee that the government has also launched a programme to extend livestock production and extension services at farmers’ doorsteps under the Prime Minister’s Special Initiative for Livestock.

In the first step, about seven districts in Balochistan are being covered, while a mass-scale vaccination and de-warming programme has been started in Khuzdar district. The secretary disclosed that his ministry has initiated 11 projects at a cost of Rs11.69 billion under the Public Sector Development Programme. Seven projects pertain to livestock development, while four are in the field of fisheries, he added.

He informed the committee that in order to enhance livestock production and its exports, the government is giving priority to improvement of infrastructure facilities for value added products. Planning, monitoring and evolution, and WTO wings are also being established in the ministry to improve the production of livestock, he added.

He said that 2000 veterinarians and veterinary assistants, along with more than 3500 livestock farmers including 500 women, were provided short term training in livestock farming, while 6 were provided high level training from European universities.

Committee members appreciated the efforts of the ministry and appreciated its efforts considering the short period of time. They stressed that the vaccination system should be improved further and services to farmers should be provided at their door steps to save livestock from diseases. The committee will meet again on June 5th to discuss the development of fisheries.

Halal food production technology to boost exports

 

[white_pawn]

President stresses improved trade corridor to enhance trade ​

Tuesday, May 26, 2009
ISLAMABAD: President Asif Ali Zardari on Monday said that Pakistan’s strategic location at the crossroads of Central Asian Republics was an asset and needs to be fully exploited for increased intra-regional trade through an improved trade corridor.

Chairing a meeting for the National Trade Corridor Improvement Programme (NTCIP) here at the President House, the President said the project must aim at revamping the physical infrastructure, trade logistics and services to make business more competitive.

The President advised the government to closely observe the development of inland water ways as a means for cost effective and pollution free bulk transportation particularly of goods in the country to relieve the burden on roads and railways. This is an area in which the public private partnership can play a pivotal role, he said.

Development and use of inland water ways transportation will also make our trade more competitive in the region, the President observed.He also called for a separate briefing on inland water ways to give some shape to the proposal. The meeting was attended by federal ministers Amin Fahim, Babar Khan Ghouri, Ghulam Ahmad Biloor, Deputy Chairman, Planning Commission Sardar Assef Ahmad Ali, SAPM Kamal Majidullah, Secretary General Salman Faruqui and others.

The meeting was informed that NTCIP will modernise and streamline trade and transport logistics, practices and customs services, improve port efficiency, reduce the costs for port users and enhance port management accountability. The corridor also aims at sustaining the delivery of an efficient, safe and reliable National Highways system; promote and ensure safe and efficient civil aviation operations, enhance the export of perishable commodities by establishing a cool chain system.

President stresses improved trade corridor to enhance trade

 

[Neo]

50pc women are unpaid family workers in Pakistan: survey ​

Tuesday, May 26, 2009

ISLAMABAD: Urban men in the country, in contrast to urban women, spend five times more on economic activities such as house maintenance, care for children, sick, and community services.

However, rural women spend more time on economic activities as compared to rural men. Urban men and women spend more time on socio-cultural activities compared to men and women of rural areas. These are the findings of a recently-concluded ‘Time Use Survey 2007’.

The survey is supported by the United Nations Development Programme and is the first-ever nationwide survey of its kind. This survey was conducted in collaboration with the Ministry of Finance and the Federal Bureau of Statistics to report on how people spend their time. The recently-held launch was attended by government officials, development partners, researchers and civil society representatives.

Rana Assad Amin, National Project Director, UNDP Deputy Country Director, Mikiko Tanaka and Asif Bajwa, Additional Finance Secretary spoke on the occasion. They appreciated that through an exhaustive stock of household activities, the survey has generated wealth of data to provide empirical perspective for research on various social, economic and cultural issues. The information on unremunerated work has made it possible to quantify the relative contribution of men and women through unpaid work in formulating and implementing socio-economic development plans with a gender equality dimension.

These findings will facilitate policy making which will help to address the issues being faced by women by bringing them to the attention of the policy makers. The report reveals that 50 per cent women in Pakistan are unpaid family workers and only 13 per cent belong to white collar jobs, 69pc brown collar (service, agriculture and trade workers).

Rural women spend more time in economic activities compared to men. More than half (56pc) of employed respondents were in brown collar jobs. About one-fourth (24pc) of males are white collar workers compared to about one-eight (13pc) of females. The survey states that 50pc females compared to 14pc males are unpaid family workers.

 

[Neo]

President stresses improved trade corridor to enhance trade​

ISLAMABAD: President Asif Ali Zardari Monday said Pakistan's strategic location at the crossroads of Central Asian Republics was an asset and needs to be fully exploited for increased intra-regional trade through an improved trade corridor.

Chairing a meeting for the National Trade Corridor Improvement Programme (NTCIP) here at the President House, the President said the project must aim at revamping the physical infrastructure, trade logistics and services to make business more competitive.

The President advised the government to closely look at the development of inland water ways as a means for cost effective and pollution free bulk transportation particularly of goods in the country to relieve the burden on roads and railways.

This is an area in which the public private partnership can play a pivotal role, he said.

Development and use of inland waterways transportation will also make our trade more competitive in the region, the President observed.

President Asif Ali Zardari also called for a separate briefing on inland waterways to give some shape to the proposal.

The meeting was attended by federal ministers Makhdoom Amin Fahim, Babar Khan Ghouri, Ghulam Ahmad Biloor, Deputy Chairman, Planning Commission Sardar Assef Ahmad Ali, SAPM Kamal Majidullah, Secretary General Salman Faruqui and Secretaries of relevant ministries and entrepreneurs and representatives from the private sector.

The meeting was informed that NTCIP will modernise and streamline trade and transport logistics, practices and customs services, improve port efficiency, reduce the costs for port users and enhance port management accountability.

The corridor also aims at sustaining delivery of an efficient, safe and reliable National Highways system; promote and ensure safe and efficient civil aviation operations, enhance export of perishable commodities like fruits, vegetables and livestock by establishing an efficient and viable cool chain supply system.

The President was informed that the National Trade Corridor Task Force (NTC Task Force) headed by Deputy Chairman Planning Commission with Federal Secretaries of Communications, Railways, Ports and Shipping, Defence, Petroleum and Industries, Chairman FBR as its members were working along with two task forces headed by the private sector experts on maritime industry, private sector development and inland waterways.

 

[Neo]

Pakistan should diversify its export base: ADB​

ISLAMABAD: Pakistan should diversify its export base by moving up the value addition chain and shift its focus on exporting manufactured goods, which earn more foreign exchange as compared to its traditional exports, this is concluded by Asian Development Bank’s study on “Is Pakistan’s Growth Rate Balance-of-Payments Constrained? Policies and Implications for Development and Growth”.

The more recent slowdown was primarily associated with Pakistan’s domestic and international political tensions. But the question is whether or not there are other factors that could prevent any attempt to achieve a sustained faster rate of growth. Recent developments in Pakistan’s economic conditions suggest that the main limitation

is likely to come from an underperformance in growth of exports and the consequent

balance-of-payments (BOP) problems. While it is necessary to be cautious about drawing conclusions concerning Pakistan’s long-term prospects from its performance over only the last couple of years, nevertheless this gives cause for concern. Although Pakistan has achieved a reasonably fast growth of output and output per capita since the downturns in 1997 and 1999, there are indications that growth in fiscal year 2009 is likely to be fragile and the reasons point to deep-seated weaknesses in Pakistan’s economy.

In its conclusions, the paper has looked at the various options facing Pakistan’s economic development. Of particular importance is the BOP-constrained growth rate. It has been argued that this is the major problem facing Pakistan’s development. Attention needs to focus on supply-side improvements that will raise the growth of sophisticated exports. In other words, Pakistan needs to move out of its traditional export areas and shift the structure of its trade toward the export of manufactured goods with higher sophistication, given the country’s capability set. In a growth context, static comparative advantage is not a good guide to a development strategy for Pakistan.

The paper has highlighted that there are a number of problems common to all developing countries. These include the need to increase capital accumulation, both physical and human. The former includes not only investment in domestic private firms, but the efficient investment in public utilities and transport infrastructure. The investment in human capital includes the provision of appropriate education at particularly the primary and secondary levels. Other targets are the eradication of malnutrition and provision of public health. Wider aims should be the abolition of rent seeking, reduction of red tape, elimination of corruption, and encouragement of FDI.

The BOP-constrained growth model shows that while these “economy wide policies” may increase the growth of exports as well as domestic output, if the former is not fast enough, the economy will run into a BOP crisis. Growth can only be domestically led to some degree. Thus, the BOP-constrained growth model demonstrates the importance of measures to improve the performance of exports. This includes identifying, for example, supply bottlenecks in the production of exports, poor transport facilities including ports, and excessive bureaucracy and red tape in the import and export of goods. The last also includes the multiplicity of tariffs and claw-back arrangements with their high resource allocation and administrative costs.

If the BOP constraint is binding, it can be seen that one way of relaxing it is by restricting imports through quotas and tariffs. This will reduce the domestic income elasticity of demand for imports.. The introduction of tariffs may well lead to an increase in the price of essential imports necessary for exporting. Moreover, to the extent that this reduces competitive pressures on domestic firms, this could reduce their efficiency, which in turn could be detrimental to export growth. A long period of import restriction, especially without a sunset clause as to when it will end, can lead to rent seeking and more concern with the distribution of a given level of output rather than with incentives to increase output. Given the prevalence of increasing returns, the infant industry argument shows that for a country to break into the production of high value-added exports an element of protection is required, at least in the early stages, the paper added.

 

[Neo]

PHDEB fixes mango export target at 100,000 tonnes for ’09​

KARACHI: The Pakistan Horticulture Development and Export Board (PHDEB) have fixed the mango export target at 100,000 tonnes for the year 2009.

During the year 2007-08, the export was 110,000 tonnes but the board in consultation with the exporters reduced the export target for the current year due to low production in Sindh and global economic conditions.

Chief Executive Officer (CEO) PHDEB, Shamoon Sadiq said despite severe global economic recession, Pakistan would be able to retain its export volumes due to various interventions in the pre and post production areas and entering into new international markets. “The board expects to fetch around $43 million from the export of 100,000 tonnes,” he added.

According to the Mango Development Strategy devised by PHDEB for the current year, they plan to target new markets such as China, Jordan, Germany and USA. The USA market would depend upon the approval by FDA-USA of the newly established irradiation facility in Lahore. Sadiq appreciated the efforts being taken by the government to convince the Japan government to facilitate import of mangoes from Pakistan.

Besides, the development programme would ensure improving the cosmetic appearance and increase shelf life of mango through de-sapping and heat removal techniques and better handling methods including packaging and transportation through reefer, etc.

Experimentation efforts are also being made to transport mangoes to EU through sea transportation, which would decrease the cost, making our product more competitive in the international market.

In the long-term, PHDEB has set itself a mango export target of $80 million by the year 2011-12. Although there is a huge potential to capitalise the high-end markets but this would only be possible if we can comply with their quarantine requirements, which means adapting quality standards throughout the supply chain. An important component is to establish required infrastructure such as packing houses with hot water dip facilities and cold storages at production areas.

PHDEB plans to establish two mango pack-houses through public-private partnership, equipped with hot water treatment facility, one each in Sindh and Punjab. Also, two ethylene ripening chambers for mangoes (combo type field heat removal and ripening chambers) will also be installed in the mango production areas. It is expected that 3,000 acres of mango orchards will be GlobalGAP certified in Punjab, while, 2,000 in Sindh awareness seminars, one in Sindh and 2 in Punjab. The adoption of GlobalGAP standards has indicated that the possibilities for development of indigenous commodity specific standards for either local or export marketing should be initiated. Initially the PakGAP standards will be developed in consultations with relevant organisations and certification bodies, Sadiq concluded.

 

[Neo]

Tenth five-year plan (2010-15): Paper suggests changes in development paradigm of economy​

ISLAMABAD: There should be fundamental changes in the development paradigm of the economy for improving economic situation and putting the country on sustained socio-economic growth, the Approach Paper for the Tenth Five Year Plan (2010-15) suggests.

The plan suggests for redirecting resources to accelerate growth in Balochistan, NWFP, FATA and under-developed areas in other provinces and regions so that disparities in human development and social indicators in these areas with the national average.

The Approach Paper obtained by Daily Times on Monday revealed that in order to meet these immediate economic challenges and to ensure that all the people of the country have a strong stake in the development process for nation building, there was a need to provide a new direction.

For overcoming the social deficit, the five year plan suggested for setting-up a comprehensive social protection system and providing significantly better quality education and health services, to fulfill on the government’s promise of being responsive, efficient and caring for the people.

Embedding poverty reduction into the growth process by ensuring that growth results in the creation of decent and productive employment and engulfs those sectors where the poor live and work.

The paper also suggested for designing public policy for achieving a better distribution of income and wealth and to ensure that incremental incomes were more evenly distributed than has been the case in the past.

It also asked for building state-of-the-art technical training institutes that produce world-class graduates and diploma holders based on internationally recognised certification. It would help in overcoming the widening skill gap responsible for low productivity and lack of competitiveness in the country.

The proposed 5-year plan also suggested for reinventing the role of government at all levels by dispassionately analysing what works and could not work to accelerate economic development and provide better quality services.

The Approach Paper further suggested that agriculture and agro-business to serve as a leading sector for economic development and stressed for its development.

It also recommended for developing the Pakistani firm as part of a global value chain by increasing their competitiveness and reducing the cost of doing business.

The paper claimed that the country’s past strategies had delivered spurts of high economic growth but unfortunately these had not been sustainable leading to boom-bust cycles. In most cases these spurts have been ignited by favourable international developments and increases in foreign assistance. Once these flows had slowed down so has the momentum of economic growth. This was because growth has been consumption-led and import-dependent and not driven by increasing investment and exports.

More importantly, the growth has not met peoples’ expectations and there was increasing disillusionment with the development process. Progress in human and social indicators had been disappointing. Poverty levels remained high, job opportunities that meet aspirations lacking and glaring income inequalities appearing in recent years.

Socio-economic tensions have heightened due to increasing disparities between Provinces. Within provinces significant areas feel deprived of the gains that should have resulted from economic growth.

The paper said that given this scenario it was not surprising that Pakistan was described as a case of economic growth without real economic development.

This situation needs to be urgently rectified. The Tenth Five Year Plan (2010-15) must play a pivotal role in bringing about a fundamental change in the development paradigm. In the new paradigm ordinary people, especially those in less developed provinces and regions must be at the center of the development process and have a strong stake and ownership in the economic development of the country.

The preparatory process for the Tenth Plan (2010-15) with active involvement of all stakeholders should send a strong message that Pakistan was looking beyond its immediate economic crisis and preparing itself to fight its multifaceted economic challenges in a concerted and integrated manner.