Pakistan Economy - News & Updates - Archive

[Neo]

Four-year draft plan to expand IT industry discussed

ISLAMABAD (March 22 2007): Ministry of Information, Technology discussed a four-year draft plan to expand IT industry from $2 billion to $10 billion by 2010 here on Wednesday. Sources said that the Pakistan Software Export Board (PSEB) had proposed a four-year draft plan to increase the IT industry's size to $10 billion by 2010, suggested eight thrust areas and identified annual targets.

The PSE Board of Directors met with its chairman IT Minister Awais Ahmed Khan Leghari and discussed the thrust areas ie facilitation, human resource development, industry finance, marketing, office space provision, public policy, quality and telecom bandwidth provision, to achieve the target.

The meeting also called upon the minister to muster support of CDA, CBR, PTA SECP, SBP and HEC, as their facilitation was vital for IT promotion in the country.

PSEB MD said that the IT Ministry had set one billion dollar export target of IT-enabled service by 2010 and to construct IT parks each in Islamabad, Lahore and Karachi on Built Operate and Transfer (BOT) basis the government was negotiating with China and Malaysia.

IT exports, as reported by the State Bank of Pakistan (SBP), were $72.210 million during 2005-2006 which grew up to $48 million in the first half of 2006-07, he added. He said these parks would be built to accommodate about 200,000 IT graduates in next three to four years to meet the set export targets.

Meanwhile, a statement of IT Ministry said that the Minister has called for a massive marketing drive to showcase the strength and potential of Pakistan's IT industry at the global level.

He said Pakistan's IT sector was registering excellent growth figures but it had not been able to claim its rightful place as one of world's leading destinations for business and product development.

He was addressing the Board members of PSEB. IT secretary Farrakh Qayyum, PSEB managing director Yusuf Hussain, PASHA president Ashraf Kapadia and other members of the board were also present. The board meeting was called to discuss a strategic roadmap prepared by the Pakistan Software Export Board for the country's IT industry.

Presenting a picture of the IT industry, Yusuf Hussain highlighted the tremendous growth of 57 percent in the sector over the last one year. He added that Pakistan IT industry had grown to a size of $2 billion according to the standards used by WTO and applied by several countries, including India.

He said the PSEB had over 900 member companies, including some world class companies like MIXIT, Scrybe, NetSol, TPS, Pixsense, Systems, Folio3 and Si3. "Many of these companies have benefited from various PSEB initiatives which have helped them attract international clients and these companies have grown to a size which has enabled them to set up their offices in major capitals of the world," he said. Hussain said the PSEB had chalked out a comprehensive roadmap to promote the industry as many activities were already in full gear and the board had been able to help 125 local companies achieve ISO and CMMI certifications.

"The board has also launched apprenticeship and internship programmes for the development of human resource required by the industry and more than 2500 students have already benefited from the programme," he added.

He said that yet another area the board was aggressively working on was the setting up of IT parks in all major urban centres, including Islamabad, Lahore and Karachi. He said PSEB had acquired 13.6 acres (65,824 sq. yards) of land in the federal capital to develop a state-of-the-art IT park which would provide around 1.5 million sq. ft. of office space within a unique working environment equipped with modern hi-tech facilities and entertainment spots under one roof. The minister appreciated the performance of PSEB over the last one year and assured his support for ongoing PSEB programmes.

http://www.brecorder.com/index.php?id=541881&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

March 25, 2007
Kuwait, Qatar to invest $4 billion

By Ihtashamul Haque

ISLAMABAD, March 24: Qatar and Kuwait have decided to make $4 billion new investment in Pakistan's power, hotel, insurance and oil refinery sectors, said minister for privatisation and investment Zahid Hamid.

"While Qatar is finalising arrangements to make up to $3 billion investment in hotel, power and insurance sectors, Kuwait is all set to establish a new oil refinery for which it has been offered land at two different places", he told a news conference on Saturday.

Similarly, he said the United Arab Emirates (UAE) was in the process of establishing an oil refinery in Pakistan to help export refined petroleum products after meeting certain domestic demand.

"We have received a very encouraging response from all the three governments for the early setting of their projects", Zahid Hamid said.

"Pakistan is attracting highest level of Foreign Direct Investment (FDI) and this is due to our highly attractive investment policy," he said adding deregulation, liberalisation and privatisation together with transparency, good governance and continuity and consistency, have helped attract foreign investment in this part of the world.

He said there was a record level of foreign investment in Pakistan during February 2007, totalling $1.15 billion. Out of this amount, FDI was $875 million and net portfolio investment was $274 million, he said.

He pointed out that the total foreign investment for the first eight months of the 2006-07 was $4.62 billion, comprising FDI amounting to $2.97 billion and net portfolio investment of $1.65 billion, including OGDCL's $731 million GDR receipts.

"Keeping in view the major privatisation transactions that have been planned for the remaining four months before the end of June 2007, including the sale of PSO and GDRs of UBL and Kapco, it is apparent that Pakistan will attain record new heights of foreign investment during 2006-07," he asserted.

Prime minister Shaukat Aziz, he said, believed that $5 billion foreign investment would be made during the current financial year. However, the minister said this FDI amount was going to be much higher eventually.

Answering a question, the minister for privatisation and investment said that the bulk of the FDI had gone into communications sector -- $1.28 billion (43 per cent). The financial business sector has received $573 million (19.3 per cent) and oil and gas exploration sector $353 million (11.9 per cent).

The US has invested $562 million (18.9 per cent) while the UK has made an investment of $547 million (18.4 per cent) and in both cases, "this is the highest level of investment ever. The UAE has invested $316 million or 10.6 per cent of the total."

"The perception about Pakistan is changing and that is why we are getting increased foreign investment," Zahid Hamid said.

He told a reporter that the government was not allowing privatisation of the country's strategic assets and the defence sector.

The minister clarified that although the there was a decision of the Council of Common Interests (CCI) taken in 1997 to also disinvest bigger state sector units, like Railways, PIA, etc, the government was not actively considering their privatisation.

Asked about the reasons of delays in the signing of a Bilateral Investment Treaty (BIT) with the US, Zahid Hamid said there involved certain legal issues which needed to be first sorted out between the two countries.

But he said talks between the two sides were continuing at a higher level to conclude the treaty soon.

He said that both the sides have decided to maintain "privacy and confidentially" about their talks over the issue of BIT.

The minister for privatisation and investment did not agree with a reporter that "inequality" was increasing in the Pakistan society. In this regard, Mr Hamid said poverty had reduced from 34 per cent to 24 per cent.

He said reforms have resulted in very impressive economic growth over the last seven years, with "dramatic improvement" in all major economic indicators which have completely transformed the economy and placed it on the path of rapid growth."

The minister said that the GDP growth rate has averaged more than 7.5 per cent during the last three years. Similarly, GDP per capita had doubled over the last seven years to $847 million and poverty has declined from 34 per cent in 2001 to under 24 per cent in 2006, he added.

He said that the government was making allout efforts to facilitate and encourage local and foreign investors and for this purpose it has formulated a liberal and attractive investment policy in consultation with businessmen, investors, chambers of commerce, trade associations, representatives of international companies and other stakeholders.

The minister said the government was providing a level-playing field to local and foreign investors and that all economic sectors were open to foreign investment. These foreign investors have been allowed up to 100 per cent foreign equity and no government permission is required.

He said attractive tax and tariff incentives packages have been offered to the foreign investors. "There is no restriction on remittances of capital, profit, royalties or fees."

A network of export processing zones and industrial estates has been made available to investors while statutory protection for foreign investment has been assured, apart from bilateral agreement, he said.

http://www.dawn.com/2007/03/25/ebr1.htm

 

[Neo]

March 25, 2007
Rs15.42bn disbursed in R&D support

KARACHI, March 24: The State Bank of Pakistan has so far disbursed over Rs15.42 billion as Research and Development (R&D) support against 163,000 claims to the exporters of garments, home textiles, fabrics and leather footwear.

Of this amount, Rs7.94 billion was released to exporters in Karachi, Rs3.57 billion in Lahore and Rs3.01 billion in Faisalabad and the remaining amount to exporters of other cities.

With a view to enhance the efficiency of the process, the State Bank from the start has streamlined its internal procedure for evaluating and settling claims regarding R&D support and remains constantly in touch with the officials of the concerned ministries.

In order to facilitate the exporters, the State Bank has set up Help Desks at its field offices. Besides this, awareness/training sessions have also been arranged for exporters at different cities to enable them to understand documentation requirements for claims.

It may, however, be pointed out that the claims being submitted by the exporters include those for ineligible commodities or countries or pertain to period which is ineligible for claims or claims based on false documents.

http://www.dawn.com/2007/03/25/ebr9.htm

 

[Neo]

Pakistan to raise hydel power by 8,000 MW

LAHORE: Pakistan is expected to increase hydel electricity generation by 8,000 MW by 2016 and atomic power generation by another 8,000 MW by 2020, which would bring stability in power rates.

Chairman Water and Power Development Authority (WAPDA) Tariq Hameed stated this while addressing the market representatives of Qaumi Tajir Itehad.

He said “Pakistan is currently producing 350 MW of electricity through atomic power stations,” while another 300 MW would be added with Chinese assistance very soon. Pakistan, however, needed much more than that.

He said China was earlier producing atomic generators of 300 MW capacity only, but “now it is producing 600 MW capacity reactors.” He said the Pakistan Atomic Energy Commission expected to increase atomic power generation to 8,000 MW by 2020.

He said Bhasha dam with 4,500 MW power generation capacity would be completed in 2016 while Kalabagh dam would take seven years after the start of its construction and it would produce 3,500 MW of electricity.

He said although go-ahead signal for Kalabagh dam had not yet been given, the government had allowed acquisition of land required for the dam.

Chairman WAPDA said the demand-supply gap between electricity production and consumption was widening, which in the short-term could only be managed through prudent utilisation, before projects in the pipeline came on stream.

Knowing fully well that increase in electricity rates encouraged power theft, he said the WAPDA kept the tariff frozen for more than three years, before increasing it by 10 per cent due to extraordinary rise in prices of important inputs, like furnace oil and gas.

He said electricity tariff was structured on the instructions of the rulers, who desired that the “consumers pay according to their capacity instead of lower rates on higher consumption.” This benefits 2.9 million households which pay electricity charge at the rate of Rs1.40 per unit.

On the other hand, commercial users would be paying Rs7.50 per unit after the recent increase.

He said the WAPDA added 3,000 MW of electricity to the system by buying 100 per cent production of independent power producers (IPPs) and utilising idle production of the authority’s thermal stations.

“Electricity demand is increasing by 1,000 MW every year,” he said, adding the WAPDA had no magic wand to raise production immediately.

However, he added, the crisis could be averted through judicial use of electricity.

He said Lahore and adjoining industrial cities, for instance, consumed 2,050-2,100 MW of electricity at peak hours.

He said the demand would increase by another 200 MW this summer and the industry had been requested to stagger their weekly holidays and evenly divide them over all seven days of the week.

“This request has been accepted by the industrialists,” which would help save 100 MW of electricity in Lahore, he added.

He said tube wells had been offered 25 per cent tariff discount if they operated between 10 pm and 6 am, adding the process had started, which would result in saving of 50 MW of electricity in and around Lahore.

He welcomed the traders’ offer of opening markets early and closing them early, which would help the WAPDA to better manage power distribution. He assured the traders that all their genuine problems would be solved.

http://www.thenews.com.pk/daily_detail.asp?id=48225

 

[Neo]

Sunday, March 25, 2007

Rising FDI to help increase exports: Zahid

ISLAMABAD: Zahid Hamid, Minister for Investment and Privatization, has said that foreign direct investment in oil refineries, China Special Economic Zones and dairy sector would help the country to increase its exports.

Keeping in view the major privatization transactions PSO, GDR of UBL and KAPCO it is apparent that Pakistan would attain record new heights of foreign direct investment over and above $5 billion target for the current fiscal year 2006-07.

Addressing media briefing here on Saturday, the minister said that many countries are planning to invest in Pakistan and are actively finalizing their investment modalities with government of Pakistan. Qatar to invest $3 billion in banking and insurance sectors, investors from Kuwait to invest $1 billion in hotel industry, Saudi investors are investing in setting up of five star hotels in Islamabad and Lahore, some 40 projects are being finalized for Pak-China Economic Zone, Canadian investors are planning to invest in oil and gas sector and British investors are interested in wing energy projects.

Out of the total FDI of $2.97 billion, 23% or 679 million is from China, 562 million or 18.9% from USA, and $547 million from United Kingdom. The bulk of FDI has gone into the Communications sector of $1.28 billion, financial business sector has received $573 million and oil and gas exploration sector has attracted $353 million by end February, the minister added.

He said that total foreign investment during July-February period of current fiscal year stood at $4.62 billion, comprising foreign direct invest of $2.97 billion, portfolio investment of $1.65 billion including OGDCL GDR receipt of $731 million. He said that foreign investment of $4.62 billion is 148% higher than the $1.87 billion in the corresponding period of last fiscal year. Foreign Direct Investment (FDI) of $2.93 billion is 95% higher than last years $1.52 billion. Net portfolio investment of $1.65 billion is 378% higher than last years $345 million.

The minister said that there are mergers and acquisitions in the banking sector including Standard and Chartered and Union Bank, NIB and PICIC and ABN AMRO bank and Prime Bank.

He said that UAE and IPIC are setting up oil refinery at Khalifa point and this project is at advance stage. He said that all the sectors are open for foreign direct investment and privatization program of the country is also providing best investment opportunities both foreign as well as local investors.

He said that negotiations on Bilateral Investment Treaty (BIT) are at advance stage and legal experts from both the country are engaged in finalizing remaining issues. He informed that Pakistan and United States are keen to finalize BIT as soon as possible.

Executive Director Board of Investment while replying to a question said that although FDI in export oriented industries is low, however, he said existing refineries are meeting the national requirement and all new refineries which are being set up would be contributing in exports. He mentioned that there are 40 projects have been identified for Pak-China Economic Zone and production from this zone would be available for exports. He said that Pakistan and China have agreed to take bilateral trade to $15 billion by next five years. The minister also added that newly inaugurated Asia’s biggest milk plan would not only meet the local needs but would also contribute in exports of the country.

The minister said that from 1991 to 2007 the country has generated $7 billion through privatization of national assets and $61 billion were generated during 1999 to 2007 or 87% by privatizing national entities.

http://www.dailytimes.com.pk/default.asp?page=2007\03\25\story_25-3-2007_pg5_3

 

[Neo]

Sunday, March 25, 2007

Pakistan’s seafood exports to EU reach $43 million

KARACHI: Chairman Pakistan Seafood Industries Association M Hanif Khan said that Pakistan exported seafood worth $ 43 million to EU last year when the total seafood exports stood at $ 196 million.

In a statement he said, "we have exported 69,977 metric tons of seafood worth $121.335 million during July-February 2007.

Pakistan is likely to face an overall decline of $ 30 million in its seafood exports during the current fiscal year after EU ban, effective from April 12, 2007, exporters said.

This year, we will lose seafood export worth $ 15 million to EU alone. In addition, the overall value of Pakistani seafood export will go down by another $ 15 million due to EU ban, he added.

Khan said during April and May, Pakistan export cuttle fish, squid and large (pink) shrimp to EU at good prices. We will not be able to fetch half of the prices, if we will export these items to other markets, he noted.

Similarly, there is no market for small shrimps other than European Union. These shrimps are exported to EU between August to October every year and we sell these shrimps at 2 to 3 dollars per kilo while we will get half the price in other markets.

Meanwhile, Hanif Khan said that if EU ban continues next year, Pakistan will face a fall of at least $ 40 to 45 million during 2007-2008. “We will try to explore other markets like China and South Korea for our seafood exports, but these markets offer lesser values", he observed.

A leading seafood exporter Captain Akhlaq Husain said that some other factors will have a negative consequences on Pakistani exports. He said that EU had earlier imposed a ban on Pakistani seafood exports in 2005, but seafood country's exports did not sustain any negative impact. In fact, our seafood exports surged during that period, because deep sea tuna trawlers exported tuna worth $20 million during that period, he added.

However, this year, tuna export from deep sea trawlers was not available and therefore, overall seafood export will decline.

http://www.dailytimes.com.pk/default.asp?page=2007\03\25\story_25-3-2007_pg5_4

 

[Neo]

March 26, 2007
Upgrading insurance, pension and savings systems

By Ihtasham ul Haque

THE Asian Development Bank (ADB) is expected to offer $150-200 million "multi-tranche facility" to help improve financial management that includes the insurance, pension and savings systems.

The government has formally sought the ADB facility, for which initial discussions were held between Prime Minister Shaukat Aziz and bank's director-general Mr Juan Miranda when he visited Pakistan last month.

According to an ADB official working in the local office, the details of the loan are still to be worked out but the bank has agreed to offer funding for bringing improvements in the insurance, pension and savings systems.

The government anticipates that new tranche facility could be up to $200 million as the bank was ready to fund the programme preferably during 2007.

Initially the bank will provide $3 million technical assistance (TA) to fund a study.

According to the ADB, the “governance" issues in the pension, insurance and savings systems needed to be sorted out to make it efficient.

The country’s pension system is "fragmented" and without a central framework for regulation or supervision, to encourage retirement savings and protection for beneficiaries. It is, therefore felt appropriate to support development of a programme that will encourage retirement savings through appropriate regulation and incentives.

The proposed study will examine the constraints on the National Savings Scheme (NSS) and the merits and feasibility of moving towards a funded scheme managed with a well-conceived investment policy in government securities. The ADB will also support streamlining, modernisation and computerisation of operations already initiated by Central Directorate of National Savings (CDNS).

The objective is to assess key issues in managing pension and saving liabilities, recommend solutions to improve sustainability, and strengthen key public sector institutions involved in pensions, insurance and savings mobilisation.

The study will focus on setting up of an overall policy framework for pension provision, financial assessment of civil and military pension schemes, institutional reform and strengthening of Employee's Old-age Benefits Institution (EOBI), capacity building for investment management of State Life Insurance Corporation (SLIC),institutional reform and strengthening of the Central Directorate of National Savings (CDNS).

The ADB maintains that the country/sector strategy and well as the government's development agenda has accorded high priority to poverty reduction through private sector-led pro-poor economic growth, social sector development and improved governance.

Within this framework, the bank believes, the financial sector has an important role to play to increase resource mobilization, improve efficiency of allocation, enhance access to financial products and services, contribute to the sustainability of social safety nets and safeguard economic stability.

Given the critical importance of SECP for capital and non-bank financial markets, it is important that it has adequate capacity — skills, systems, and procedures — to effectively discharge its functions. The ADB helped SECP put in place the basic strategic, management, and administrative foundations. It also helped to raise prudential standards of key market participants and develop a national clearing and settlement system.

Despite these positive developments, the bank believes, the regulatory framework and institutional structure require flexibility to adapt rapidly to changing circumstances and emerging challenges. Given the fast changing nature and increasing complexity of modern financial markets, there is a need to further support the industry regulator and market participants by upgrading its skill base.

The objective is to support the sound and sustainable development of non-bank financial markets, application of proper risk management practices and protection of investors and policyholders.

The study will include a review and update of the legal and regulatory framework as required, and building capacity within SECP for effective regulation though advice and training for on site and off-site surveillance, including Non-Bank Financial Institutions (NBFIs), supervision of the reformed and new exchanges, insurance and pension industry and the derivatives market.

In addition, there is also bank's assistance available to SECP and the stock exchanges in developing and implementing a plan for demutualisation of the exchanges, and support measures to upgrade skills of market participants.

The programme comprises four components: Upgrading of the legal and regulatory framework, capacity building of SECP with particular attention to its enlarged mandate for regulation and supervision of non-bank financial institutions, insurance and pensions, support for restructuring of stock exchanges; and establishment of sustainable mechanisms for skills development and training.

http://www.dawn.com/2007/03/26/ebr14.htm

 

[Neo]

Pakistan PM Forecasts More Foreign Investment In Telecoms

ISLAMABAD -(Dow Jones)- Pakistan's telecom sector is likely to attract $4 billion in foreign direct investment over the next few years, Prime Minister Shaukat Aziz forecast Saturday, although mobile phone operators said lowering the tax on activating new subscribers was key to further increasing phone usage.

"The telecom sector, which was getting negligible investment only a few years back, has attracted $9 billion foreign investment in the last three years and expects to get another $4 billion during the next 3-4 years," Aziz told a delegation of local mobile phone operators.

Among recent investments, China Mobile Communications Corp. bought 88.86% of Paktel Ltd.'s shares for $284 million. Other deals have involved China's Huawei Technologies Co., Germany's Siemens AG and Finland's Nokia Corp.

Penetration of fixed and mobile telephony combined increased from 4.5% two years ago to about 40% of Pakistan's population of 160 million.

The authorities believe the country has the potential to add 30 million users in the next three years, but telecoms companies say the government needs to do more to encourage the use of mobile phones.

The GSMA Association, representing more than 700 GSM mobile phone operators across 217 countries, and five local telecoms companies are pressing the government to eliminate an activation tax of PKR500 (US$8.3) per connection in the June budget.

"The mobile industry can connect the unconnected in Pakistan, but lowering the cost of entry is essential to do that. The activation tax is significant barrier for people looking to own a mobile phone," said Rob Conway, chief executive officer of the GSMA Association. "Pakistan is a leader in mobile usage in South Asia. The next step is to build on that achievement and how to connect the next 50 million people."

Aziz said the government was working to enhance rural phone usage and to provide basic telecom services to areas where it is lacking.

http://www.nasdaq.com/aspxcontent/N...CQDJON200703260104DOWJONESDJONLINE000011.htm&

 

[Janbaz]

Debt repayments to resume after 5 years

By Mehtab Haider

ISLAMABAD: Pakistan will soon face serious pressure of foreign loan repayments as the post-9/11 period of Paris Club rescheduling is going to end by May this year.

“The country’s fiscal space because of Paris Club debt rescheduling is going to end by May this year, as Islamabad will have to resume loan repayments worth millions of dollars to the creditors after a gap of five years,” official sources confided to The News here on Monday.

The Paris Club had rescheduled $12.5 billion loan of Islamabad in December 2001 in the aftermath of 9/11 when Musharraf decided to side with the Bush administration in the so-called war on terror.

The Paris Club loans are in the shape of two components — Official Development Assistance (ODA) and Non-Official Development Assistance. Pakistan’s debt rescheduling in the form of non-ODA stands at around $4.4 billion and its installments worth $230 million for 2007 will be resumed from May this year, said the sources.

The major chunk of Paris Club loan is in the shape of ODA, which stands at two-thirds of the total outstanding amount, added the sources. Islamabad has estimated debt servicing to hover around Rs295.8 billion during the current fiscal year as against the revised amount of Rs304.8 billion in last financial year.

“The Paris Club loan repayments on account of non-ODA will not affect us and we can manage it easily,” added the official sources. Pakistan, the sources said, will have to start repayments of non-ODA from the current fiscal year. However, the rescheduling of ODA loan agreement allows Islamabad to keep enjoying the available fiscal space over the coming years, which consists of a major chunk of the total Paris Club loan obtained by Pakistan, largely on concessionary terms.

When a high-level official in the Economic Affairs Division was contacted for comments, he told this reporter on condition of anonymity that Pakistan has not contacted the Paris Club for seeking any extension in loan repayments as there is no need to do that mainly because Pakistan can easily repay any due loans.

“There is no need for seeking any extension in loan repayments,” the official added. Asked for his comments over stagnant reserves position despite piling up of external loans over the last three to four years, the official said there was no need to see external debt in totality but it should be analyzed in terms of external debt to GDP ratio, which was showing a declining trend over the last few years.

Pakistan’s foreign currency reserves were in the range of over $11 billion in March 2004, which now hover around the same range. However, on the other side, the country’s external debt reached the level of $38 billion in 2007 against $33 billion a few years back.

While commenting on stagnant reserves and growing external debt, the official said Pakistan’s economy absorbed two shocks i.e. the earthquake and skyrocketing oil prices. “These two factors should be kept in mind when analyzing Pakistan’s economy,” the official added.

Efforts to get EAD’s official comment did not meet with success, despite several attempts. The Paris Club is an informal group of official creditors, mostly industrial countries, that seeks solutions for debtor nations facing payment difficulties. The Club creditors agree to reschedule debts due to them. Although the Paris Club has no legal basis, its members agree to a set of rules and principles designed to reach a coordinated agreement on debt rescheduling quickly and efficiently.

This voluntary gathering dates back to 1956, when Argentina agreed to meet its public creditors in Paris. Since then, the Paris Club, and related ad hoc groups, has reached over 400 agreements covering 84 debtor countries. The Paris Club and the IMF have extensive contact, since the Club normally requires countries to have an active Fund-supported program in order to qualify for a rescheduling agreement.

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=48499

 

[Janbaz]

Telecom attracts record investment

ISLAMABAD: President General Pervez Musharraf on Monday said owing to the government’s prudent economic policies over the last seven years the telecom sector had achieved unprecedented growth and attracted record investment.

He was talking to Chief Executive Officer of GSMA Association Robert G Conway, who called on him here at the Aiwan-e-Sadr. Minister for IT and Telecom Awais Ahmad Leghari and Chairman PTA were also present in the meeting.

The president said Pakistan had become a hub of activity for international and local telecom companies and unprecedented amount of foreign investment flowed into the sector due to well-thought-out telecom policy, which was prepared after intensive discussions and debates involving all stakeholders.

He said Pakistan offered a conducive investment environment and the telecom sector was attracting huge foreign direct investment. The president said he desired to see more development and growth in the telecom sector, which had become one of the most attractive investment sectors during the last few years.

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=48516

 

[Janbaz]

Unprecedented growth in last 7 years, says PM

ISLAMABAD (APP) - Prime Minister Shaukat Aziz has said the country has witnessed unprecedented growth and development in the last seven years, as a result of the reform agenda implemented by the government that will also ensure continuity of policies to maintain the momentum of growth.
He said this while talking to a delegation led by FPCCI President Tanvir Ahmad Sheikh who called on him here.
The prime minister said the consistency and continuity of the development-oriented policies of the government had changed the economic landscape of the country.
There is vibrancy in economy, liquidity in the markets; we have come out of the low growth, low investment syndrome and the positive trends in the economy will be further consolidated, he said.
He said the size of the economy and per capita income doubled during the last seven years. The 7.5 per cent average growth achieved during the last three years has positioned Pakistan among the fastest growing economies of Asia and provided a solid foundation for continued growth and prosperity of the people, he added. Aziz pointed out that the middle class was growing and demand was increasing both in urban and rural areas as the investment-friendly policies have increased the scope and potential for investment.
This year higher than targeted growth is expected, as all economic indicators are robust, he said.
Shaukat Aziz said that the government was making efforts to build Pakistan brand and increase competitiveness and productivity of our products. He said the government was taking every step to facilitate the private sector to grow.
It believes in consultation with all the stakeholders on major policy matters and will continue to pursue this policy, he added.
He said the industrialists and businessmen expressed full confidence in the policies and leadership of President Pervez Musharraf, adding that the reforms undertaken by the government had created unprecedented opportunities for the growth of private sector.
The delegation said peace and stability were important for the private sector to grow and the consistency and continuity of policies had given a confidence to plan for future.
The meeting was attended among others by Commerce Minister Humayun Akhtar Khan, Minister for Law and Justice Muhammad Wasi Zafar and senior officials.

The Nation.
http://www.nation.com.pk/daily/mar-2007/27/bnews2.php

 

[Owais]

Pakistan to award mandate for sovereign bond of $1 billion


KARACHI (updated on: March 27, 2007, 18:53 PST): Pakistan will issue a sovereign offshore bond this fiscal year ending on June 30 and a mandate to manage the transaction will be awarded this week, a senior government official said on Tuesday.

'We have already shortlisted six investment banks and a final decision on the mandate will be made this week,' said Ashfaque Hasan Khan, director general of the Finance Ministry's debt office.

Khan declined to give any names but said the six were shortlisted out of 13 banks that had made presentations for managing the transaction over the past couple of months.

The planned issue will be the country's fourth foray into the international debt market since 2004, when it returned to the arena for the first time since economic sanctions were imposed for conducting nuclear tests in 1998.

Last year Pakistan sold $800 million in a dual-tranche sovereign bond, comprising $500 million in a 10-year issue and $300 million in 30-year paper.

Khan did not give any detail about the type and size of the transaction, saying it would be decided after consultation with the lead managers.

But banking sources said the government was likely to opt for 144A-type paper -- a clause that makes the securities eligible for purchase and trade by institutional US investors -- while the size was likely to be between $800 million and $1 billion.

They said the government was expected to select at least two investment banks to manage the transaction.

The government is also likely to test a different point in the yield curve this time, and thus it may go for a 15- or 20-year issue, analysts and bankers said.

In 2004 Pakistan issued a $500 million, five-year eurobond, while in 2005 it floated a $600 million Islamic bond, also for a five-year term.

brecorder.com

 

[Owais]

Banks' foreign exchange dealings limit raised by $100 million

KARACHI (March 27 2007): The State Bank of Pakistan has enhanced the banking sector's existing foreign exchange dealing capacity by $100 million in order to ultimately permit oil import payments to be met from this forex inflow, instead of SBP's own forex reserves.

In a circular issued on Monday, the SBP said it had enhanced the capacity of the banks to manage increased volume of forex market transactions with the growth in trade volume from 10 to 15 percent of the paid-up capital of each bank.

The existing cap of one billion rupees on banks with higher paid-up capital has been revised to Rs 1.5 billion. This capping is necessary in order to avoid distortions in the Net Open Position (NOP) until the paid-up capital in all the banks is aligned at Rs 8 billion by 2007.

In 1999, the International Monetary Fund (IMF) had recommended fixation of the aggregate forex exposure limit at 20 percent of the paid-up capital. But the SBP had fixed it at 10 percent, with a capping at one billion rupees.

One billion Pak rupees cap at that point permitted the banks to undertake both-way transactions of around $10 million. Later, it was enhanced to $15 million, but the foreign banks were restricted to within $8 million.

Volume enhancement forex dealings will now allow individual bank to meet chunky payments without huge movements in daily rupee-dollar parity. Presently, volatility is checked through SBP intervention. According to informed sources, the current aggregate of NOP's is around $190 million. The enhancement by SBP raises the NOP aggregate to about $290 to $300 million.

Banks such as Standard Charter and the ABN Amro merged with Prime Bank have very large paid-up capital. Without capping at Rs 1.5 billion, their NOP could be 25 percent of the total aggregate. In order to avoid a dominant position to a single player, the capping was considered essential by the central bank.

The following circular was issued by SBP: "Please refer to PE Circular No 12 dated May 29, 1999 in terms of which aggregate Foreign Exchange Exposure Unit of scheduled banks was set as 01% of their Paid-up Capital under which they were asked to conduct their foreign exchange operations.

"To further enhance the capacity of Authorised Dealers in order to manage increased volume of FX Market and to match future demand in the wake of growth in trade volumes, it has been decided to revise the Foreign Exchange Exposure Limit from April 02, 2007. Accordingly, new aggregate Foreign Exchange Exposure Limit of scheduled banks would now be calculated as 15% of their Paid-up Capital with a maximum cap of PKR 1,500 million. The assigned capital required to be maintained by branches of foreign banks in Pakistan under section 13 (3) of Banking Companies Ordinance, 1962 shall be deemed paid up capital for the purpose of this circulation, in the case of banks incorporated in Pakistan the limit would cover all the branches including overseas branches if any. "The guidelines for calculating the exposure limit as conveyed in Para 4 of the aforesaid circular would remain unchanged.

"In case of increase in paid-up capital of a bank it may apply for the enhancement of its exposure limit to the State Bank of Pakistan. "New exposure limits would be advised to each bank individually through separate letters."
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[Owais]

Bank Alfalah deposit reaches Rs.239.5 billion
KARACHI: Bank Alfalah Limited has posted a gross profit of Rs 3.264 billion during the 2006.

According to an announcement here Tuesday, bank's deposit on December 31, 2006 grew by 7.7 percent to Rs 239.5 billion compared to Rs 222.3 billion.

The annual general meeting of the bank which was under the chairmanship Abdullah Khalil Al Mutawa in the absence of H. E. Sheikh Hamdan Bin Mubarak Al-Nahayan, noted that the foreign trade figures stood at Rs 119.9 billion for imports and Rs 70.8 billion for export.

Similarly, the gross advances accumulated to Rs. 152.2 billion during the period under review.

The AGM maintained that the bank will continue to invest further in modern banking, which included Islamic banking, SME, home loans and other areas of product development to provide higher levels of services and value to its customers.
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[Neo]

Pakistan set for 7.0 percent growth rate: Asian Development Bank

ISLAMABAD: March 27, 2007: Pakistan's economy is projected to post a growth rate of about 6.5 percent to 7.0 percent in 2007 and 2008, reflecting some strengthening in agriculture and manufacturing sectors, the Asian Development Bank (ADB) said on Tuesday.

The Pakistani economy is expected to pick up slightly in financial year 2007, the ADB said in its annual 'Asian Development Outlook 2007' report which reviews the recent economic performance of 43 developing countries.

The report noted "strengthening in agriculture and manufacturing" sectors and said that inflation was set to moderate after further tightening of monetary policy.

"The medium-term outlook for the Pakistani economy remains positive, but macro-economic stability has to be maintained and structural issues addressed," it said.

"Pakistan is projected to post a growth rate of about 6.5 percent to 7.0 percent in 2007 and 2008," it said.

Buoyant growth, improved macro-economic fundamentals and strengthened international credit ratings had been the "hallmarks" of Pakistan's economy in recent years, the report said.

However the report noted that the South Asian country's growth rate slowed in 2006 to a "still brisk" 6.6 percent from an average 8.0 percent in the preceding two years, due to bad weather affecting agriculture.

"The robust expansion of the services sector failed to offset the sluggish performance of the agriculture and manufacturing sector," it said.

The report said that the economies of South Asian region grew by 8.7 percent, supported by growth in consumption and investment.

"The region has averaged more than 7.5 percent growth since 2003, allowing it to reduce poverty levels in India, Pakistan and Bangladesh. Every economy in the region posted growth of more than 6.0 percent in 2006, except Nepal, which suffered in the wake of political unrest," it said.

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