Pakistan Economy - News & Updates

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Recommendations finalised to improve finance bill​

Friday, June 19, 2009
ISLAMABAD: The Senate Standing Committee on Finance, continued its deliberations for the 3rd consecutive day and finalised various recommendations to bring further improvement in the finance bill 2009-2010.

The committee met under the Chairmanship of Senator Ahmed Ali. It was observed that the Independent Power Producers (IPPs) have failed to work as per the expectations of the people, adding that they should not be given free hand to fleece the people.

The committee recommended that a mechanism should be worked out to bring improvement in the performance of the IPPs and to provide quality service to the people.

The committee endorsed the imposition of 20 paisa tax on the Short Message Service (SMS) being provided by cellular companies.

In its deliberations the committee considered various recommendations and amendments proposed by a number of senators including senators Haroon Khan, Ilyas Bilour, Ishaq Dar, Jan Muhamamd Jamali and Mian Raza Rabbani.

The committee eulogised the services of the former senator Ch Muhammad Anwar Bhindar, who was especially invited to help finalise the amendments in the proposed finance bill.

Adviser to Prime Minister on Finance, Shaukat Tarin assured the committee that every effort would be made to seek guidance from the committee and to bring about further improvement in the finance bill in light of its recommendations.

He said that the committee is the highest forum of the parliament and the government would make sure to incorporate the amendments suggested by the honourable members of the upper house.

 

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Tanners want import of chemicals zero-rated​

Friday, June 19, 2009
By our correspondent

KARACHI: The government should immediately declare zero-rated the import of dyes and chemicals used in tanneries in order to enhance foreign exchange reserves of the country.

In a statement, Pakistan Tanners Association (South Zone) Chairman Shah Afzal Husain, while making the demand, explained that enhanced exports of leather goods would help raise foreign exchange reserves automatically. The proposed increase in the tax on import of raw material would, otherwise, surge the cost of doing business and discourage the industry from continuing its business.

In an SOS to the high-ups in Islamabad, Husain along with Gulzar Firoz, Chairman FPCCI Environment Committee, said that the government has totally turned a deaf ear to the leather sector in the budget for 2009-10 despite commitments during consultations with representatives of the industry.

There is nothing for the industry in the budget, they said and regretted that not a single incentive was given to the leather industry in particular, which has great potential to contribute foreign exchange earnings to the national exchequer.

He also fulminated against the government’s decision of declaring the one per cent tax deduction on export proceeds as the minimum level, which is used to be the full and final tax rate till today. “It will only expose exporters to harsh rigorous and vagaries of the income tax system,” he said.

He further said that the exporting industry was going through difficult time due to global recession like situation. In this tough time the government has, moreover, doubled the withholding tax to two per cent from one per cent previously on import on raw. This will make raw material more expensive, pushing up production cost and rendering exports incompetitive.

He demanded of the government to review above proposals, and ensure stable utility charges rates without frequent change to facilitate exporters to quote and negotiate firm rates with foreign buyers.

 

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Austria keen to invest in water, power sector​

Friday, June 19, 2009
ISLAMABAD: Austrian Ambassador Dr Michael Stigelbauer on Thursday called on the Minister for Water and Power Raja Pervez Ashraf, discussing various matters of mutual interest and possibilities of investment and technical cooperation in water and power sector.

The minister briefed the ambassador about the current energy situation and measures being taken to meet the future water and power requirements. He gave him details of the water and power sector projects being initiated by the present government.

He said that the government has planned to change its energy mix and is now focusing on hydel, coal, wind and solar generation to provide cheaper and reliable power to the consumers. He added the government will welcome Austrian investment and facilitate investors.

The ambassador said that Austrian companies are already working in Pakistan in the energy sector and are keen to expand their business while new ones are also interested.

In this connection, Austria will hold a conference in Vienna next July, which will further strengthen the cooperation with Pakistan in the field of energy.

He said that this moot will provide a good opportunity of exploring and discussing ways and means to further strengthen economic cooperation between Pakistan and Austria. He extended an official invitation in this regard to the minister on behalf of the Austrian minister for economy.

The minister thanked the Austrian ambassador and said that this initiative of the Austrian business community for Pakistan will render economic and bilateral relations stronger. He said Pakistan will participate in the Vienna conference and will benefit from Austrian expertise in hydropower generation.

 

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Zardari invites Belgian businessmen​

BRUSSELS (June 19 2009): President Asif Ali Zardari on Wednesday invited Belgian businessmen to come to Pakistan and explore a market that boasts of over 170 million people. Addressing leading Belgian businessmen at a dinner meeting, the President said just like Belgium, which is gateway to Europe, Pakistan was a gateway to the Central Asian states. "Lets take advantage of each other's markets," he added.

The President said on one side of Pakistan was the burgeoning market of China, having a population of over one billion while on the other side, there was India, which too had a market of over one billion people. He said Pakistan offered a cordial business atmosphere and with its strategic geographical location, businessmen from around the world could get closer to Chinese and Indian ports through Pakistan.

He said Pakistan, since its creation had been an ally of Europe and the US, but the business relations with them had not developed to the full potential. President Zardari said Pakistan had all the natural resources, which needed to be exploited.

Speaking about the security situation, he said it was in Pakistan's own interest to have peace and security. He said Islam was a religion of peace and love, but certain elements had misquoted some particular teachings of this great religion for their own vested interests.

He said Islam never spread through the use of force. It was the true message of love and peace that spread as far as the shores of Spain. President Zardari, who attended the first ever Pakistan-EU summit earlier in the morning, underlined the importance of democracy and dialogue for solving every problem. He said his Shaheed wife Benazir Bhutto travelled around the world, carrying the message of democracy and dialogue.

He said a dictator was removed in Pakistan through dialogue and it was the dialogue, which helped him secure his release from the prison. He expressed the hope that, with the support of the European Union, democracy would flourish in Pakistan.

 

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Seminar to analyse strengths and weaknesses of Budget 2009-10​

ISLAMABAD (June 19 2009): To analyse strengths and weaknesses of the federal budget 2009-10, a seminar titled "Challenging times and budget 2009-10" was organised by Sustainable Development Policy Institute (SDPI), Sungi Development Foundation and Action Aid-Pakistan, here on Thursday.

Former state minister for finance and revenue, Omar Ayub Khan, Dr Abid Qayyum Suleri, executive director of the SDPI and economic expert Dr Sajjad Akhtar analysed different aspects of the budget and expressed their views at the seminar.

Omar Ayub Khan, while giving a detailed presentation covering the sectoral aspects of the budget, lamented that the coalition government prepared the budget on harsh conditionalities of the International Monetary Fund (IMF) while slashing subsidies on power sector as well as ignoring the local context of the country regarding poor socio-economic conditions and worsening law and order situation.

He predicted that increase in electricity tariff and imposition of carbon surcharge would only fuel inflation while there were no incentives announced for agriculture, industry and services sectors. On increase of external loans during June 2008 to March 2009, he said only the IMF debt increased from $1.34 billion to $4.39 billion during this period which accounts 78 percent of the total debt increase adding that subsequent debt servicing will put a further strain on our budget.

Dr Abid Suleri said that a quick analysis of the federal budget reveals that the fiscal year ahead would be tough both for the people as well as the government. He said that the people would see increase in their economic sufferings, whereas the government, due to various external and internal constraints, was bound to take measures that would reduce its popularity.-PR

 

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Pakistan and China sign MoU for reconstruction of AJK cities​

RECORDER REPORT
ISLAMABAD (June 19 2009): Pakistan and China have signed a Memorandum of Understanding (MoU) for a $300 million project of reconstruction and rehabilitation of the three major cities of Azad Kashmir, destroyed in the October 2005 earthquake, under the AJK Urban Development Programme.

The Chinese Government, under this agreement, offered credit of $300 million to Pakistan to assist in the completion of the development work in the earthquake-affected areas of Azad Kashmir, including Muzaffarabad, Bagh and Rawalakot. While Pakistan contributed an additional $53 million to complete the various reconstruction projects under the AJK Urban Development Project, the spokesman of the Earthquake Rehabilitation and Reconstruction Authority (ERRA) said here on Thursday.

He said that the umbrella contract for this mega project had already been signed between the Earthquake Rehabilitation and Reconstruction Authority (ERRA) and the two Chinese companies, including China International Water and Electric Corporation and China BEIXIN Construction and Engineering on February 14, 2009.

Under this project, 170 development project would be initiated in the three quake-hit districts of AJK, ERRA, the spokesman said. He said that an amount of $190.62 million had been allocated for the completion of the 90 projects of Muzaffarabad City, $123.55 million for the 50 projects in Bagh city and $38.83 million for the 30 projects in Rawalakot city.

He said that these projects would be completed in the next 4 and half years. The spokesman said that a Steering Committee was constituted under the Deputy Chairman ERRA Lieutenant General Sajjad Akram for the smooth and effective implementation of Muzaffarabad City Development Project (MCDP), under which Muzaffarabad, Bagh and Rawlakot Urban Development project would be executed.

The committee had the mandate to give policy directions for the Project Implementation and ensuring timely and effective co-ordination of all inputs regarding the reconstruction in AJK. The contract signing is in line with ERRA's Mission of "Build Back Better", he said, adding that the AJK Urban Development Programme aims at providing safe housing, improved city environment, modern physical and social infrastructures with the target to boosting economic and social growth in the earthquake-affected areas.

These projects would provide all modern day facilities, including the construction of Government buildings, roads, bridges, shopping centers, Satellite towns, play grounds, parks, education and health facilities, wholesale markets, slaughterhouses, transport terminals, neighbourhood centers, designing and the laying of infrastructure facilities like water supply, sewerage, underground electricity and telecom cables.

 

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World Bank Supports Pakistan’s Efforts to Strengthen Social Safety Nets, Eradicate Polio​

WASHINGTON, June 18, 2009 ─ The World Bank today approved two projects totaling US$135 million to help the Government of Pakistan strengthen social safety nets and eradicate polio.

The increases in global food and fuel prices and Pakistan’s ongoing energy crisis have raised the vulnerability of the country’s poor to an unprecedented level. Pakistan’s publicly financed social safety net programs are limited in their coverage, administration, targeting efficiency, and ability to respond to shocks.

The US$60 million Pakistan Social Safety Net Technical Assistance Project will enhance the operation and management of a nationwide, effective and transparent safety net system for the poor in Pakistan to cushion the negative effects of the food and economic crisis.

“The Government of Pakistan is committed to developing a modern social safety net system,” said Yusupha Crookes, World Bank Country Director for Pakistan. “This project will assist Pakistan in establishing an effective social safety net system that provides poor people with basic income support.”

The World Bank also approved US$74.68 million to support the Government’s efforts to eradicate polio. Pakistan has made progress in its efforts to eradicate Polio since 1997, with the number of confirmed Polio cases decreasing substantially from around 1,147 in 1997 to 32 in 2007. However, in 2008 there was an increase in virus transmission with 117 cases reported, spread across all four provinces.

The Third Partnership for Polio Eradication Project, which is part of the Global Polio Eradication Initiative (GPEI), will help Pakistan move towards eradicating the disease from its territory by ensuring timely supply and effective use of Oral Polio Vaccines (OPV), targeting children less than five years of age.

The credit for Polio Eradication is a performance-based credit with an option to be converted into a grant on successful achievement of project objectives. Once the objectives are achieved, the repayment of the credit will be undertaken by Buy-down partners, including Bill and Melinda Gates Foundation and United Nations Foundation

The credits from the International Development Association (IDA), the World Bank’s concessionary lending arm, carry a 0.75 percent service fee, a 10-year grace period, and a maturity of 35 years.

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KIT Over n Out

 

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$500 million AETP loan facility: ADB seeks policy action compliance status​

ZAFAR BHUTTA
ISLAMABAD (June 20 2009): The Asian Development Bank (ADB) has sought the status of policy action compliance, a prerequisite for approval of $500 million loan facility under the Accelerating Economic Transformation Programme (AETP) (Subprogram 2). The ADB board is scheduled to meet on June 25 to approve $500 million loan under AETP (Subprogram 2). Pakistan is urging ADB to release the amount before the end of the current financial year 2008-09.

ADB board had approved $500 million loan under AETP (Subprogram 1) on September 30, 2008, aimed at helping Pakistan to achieve and sustain higher economic growth in the medium term. According to sources, the ADB has disbursed $940 million to Pakistan so far, and the government wants ADB to release another $500 million under AETP (subprogram 2) by the end of the financial year 2008-09. Pakistan is expecting total disbursement of $1.5 billion from ADB by June 30, 2009, sources added.

They said that ADB has sought documentation about amendments to anti-money laundering (AML) legislation submitted to Parliament. Finance Ministry has been requested by ADB to provide a copy of the document submitted to Parliament.

According to sources, ADB is of view that AML would empower the Financial Monitoring Unit (FMU) of State Bank of Pakistan (SBP) to collect necessary record and information from any person relating to transaction for investigating suspicious currency transactions involved in financing of terrorism.

Finance Ministry has approved allocation for FMU in the 2009-10 budget. ADB has sought status of allocation for FMU in 2009-10 budget. If the budget is not approved before June 25, Finance Ministry would provide confirmation letter to ADB about allocation for FMU in 2009-10 budget.

The enhancement of FMU through hiring of new professional staff is part of policy action required by ADB, and the government of Pakistan has been asked to provide confirmation in this regard. Director-General (DG), FMU, has been asked to provide complete information about the number of recruited staff since October 2008 and current status of fresh recruitment which is under progress. The ADB has also requested for details of a time-bound action plan to improve implementation of underperforming ADB projects identified in a plan.

Following policy actions for disbursement of OCR loan, borrower shall allocate $219.45 million in its budget for financial year 2009-10 to meet land acquisition and resettlement costs relating to ADB projects. ADB has demanded confirmation about allocation in budget.

As a part of policy action, Economic Co-ordination Committee (ECC) of the Cabinet has endorsed implementation of a formula based system for approving wheat support price for 2009. ADB has sought information whether ECC has approved wheat support price taking into account the cost of production, regional prices, import and export parity prices, domestic and global market conditions and wheat issue price reflecting all related costs.

Pakistan is also required to submit details about the allocation for Benazir Income Support Programme (BISP) in 2009-10 budget as well as policy action required to enhance the allocation to provide income support for at least 5 million families during the next fiscal year 2009-10. BISP is supported by the IMF, and a survey is being conducted by the World Bank to ensure transparency of this major social safety initiative by the government. ADB role with regard to BISP has been nil.

ADB has sought information about the enhancement in budget allocation for the next financial year and details of BISP utilisation report from October 2008 to April 2009. As part of policy actions, Pakistan is to set up central and provincial offices of BISP and improve targeting system for beneficiaries. The government has increased budget allocation for BISP from Rs 34 billion in outgoing financial year to Rs 70 billion for fiscal year 2009-10.

 

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Access for Pakistani goods to EU markets: Zardari seeks Merkel's support​

BRUSSELS (June 20 2009): President Asif Ali Zardari on Friday told German Chancellor Angela Merkel that the fight against terrorism, which is threatening not only Pakistan but the whole world, can be won with international co-operation. At a breakfast meeting here at an upscale hotel in downtown Brussels, the two leaders discussed a host of issues including EU-Pakistan economic co-operation, fight against terrorism, situation in Afghanistan and Pakistan-India relations.

Foreign Minister Shah Mehmood Qureshi told APP after the meeting that the President also informed the German Chancellor of the situation in Swat and Malakand. The President told her that the military operation against terrorist elements has resulted in displacement of over 2 million people, Qureshi said.

Zardari said that Germany is a friend of Pakistan, one of the largest economies of the European Union, and sought German co-operation for access of Pakistan's goods to European markets. The President also told Angela that Pakistan wants improvement of trade and economic ties with Europe and asked for German support for a free trade agreement (FTA) with EU.

The German Chancellor, while supporting Pakistan on various issues, asked Zardari the areas in which her country could help Pakistan at the next Friends of Democratic Pakistan meeting in Istanbul. She also expressed her desire that Pakistan and India should resume their dialogue, to which President Zardari said that his country wants normalisation of relations with its neighbour in the interest not only of the two countries but of the whole region.

 

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Economic crisis traps millions in poverty: ADB​

ISLAMABAD (June 20 2009): The global economic crisis is also a social crisis in Asia, with an estimated 60 million people remaining mired in poverty due to falling growth rates, an Asian Development Bank executive has said. "The social consequences of the economic crisis are very severe," said Rajat M. Nag, ADB Managing Director General. "That is our biggest concern", a private television channel reported.

Nag said the estimated three percent drop in gross domestic product (GDP) between 2008-9 in developing Asia - excluding Japan, Australia and New Zealand - meant 60 million would fail to emerge from poverty. An extra 10 million people would be undernourished and around 56,000 more children aged under five would die. "Asia will need to sell its products to itself more than it has," Nag said. Developing Asia at present exports 60 percent of its production to Japan, the Eurozone and the United States and "that cannot continue forever."

Asia must boost consumption - an important part of poverty reduction - by saving less and spending more, he said. He said the regional savings rate was very high, largely to compensate for the lack of welfare programmes. "People save for old age, people save for ill health, people save for education," Nag added. "Is it more efficient for people to save individually for what is essentially a social protection network, or is it more efficient to save collectively as a nation".

"If we want to increase consumption, we've got to decrease savings." Service industries should also be encouraged. At present, Nag said, services in Asia are difficult to access because of protectionist or other measures. "The development model for the last 50 years of export-oriented growth which has served Asia well, which we believe was the right one, now needs to be rethought."

Nag also called for greater Asian integration on environmental and infrastructure matters. "The centre of gravity of economic power is shifting to Asia. Asia needs to cooperate and integrate within itself," he said. "It does not mean tomorrow we will have an Asian common market or an Asian common currency but I think the trend is to have greater integration."

Average growth in developing Asia was 6.3 percent in 2008 and the ADB forecasts 3.4 percent this year, rising to six percent next year. "We think we have seen the worst of it," Nag said. But he cautioned that the biggest threat to recovery was "to think of green shoots as more than green shoots" and slowdown on reforms and stimulus measures. "The economic recovery is still very fragile," Nag said.

 

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Inflation to stay a major challenge amid rising oil prices: Hina​

RECORDER REPORT
ISLAMABAD (June 20 2009): Minister of State for Finance Hina Rabbani Khar on Friday said that inflation would continue to be a major challenge in the next fiscal year on the back of rising oil prices in the global market. Responding to the criticism of Senators, the Minister winding up speech on the budget debate said that rising prices of commodities and not the financial crisis was biggest threat to Pakistan.

However, she said inflation has been brought down to 14 percent from 25 percent in October last year and efforts would be made to reduce it to single digit. She said the government has fully endorsed the Senators' demand for making the parliament more effective in the budget-making process but their criticism that the government lacks economic vision was not based on facts.

"We are working on 9-point agenda of economic reforms with a view to achieving economic goals and bringing about economic stability first," she added. The minister did not agree to the criticism that the budget was based on assumptions and what the government would do if the pledges of Friends of Democratic Pakistan (FODP) did not materialise timely.

Giving details, she said that the government had asked money from FODP for poverty alleviation, education and health and they have pledged $5.2 billion for a period of two years. Of $5.2 billion, $2.6 billion are expected in the next fiscal year and on the basis of this social sector allocations in the budget were made.

"At least our intentions and assumption were right," she said, adding that in case of delay from the FODP the government has asked for International Monetary Fund (IMF) stand-by facility to have that money for meeting budgetary requirement, which she said would be returned to it on receiving pledges from the FODP.

The minister said that allocations for health and education would be increased to four percent of the GDP next year and some of the recommendations of the Pay and Pension Commission would also be implemented within the next financial year. She said the government is committed to raising allocations for education and health to six percent of the GDP in three years.

Referring to demands of the members about further increase in salaries of government employees, she said a Pay and Pension Commission headed by Dr Ishrat Hussain would submit suggestion in three months. She assured the Senate that the government would seriously look into the suggestions given by the two houses on budgetary proposals and said in this regard the Prime Minister has already announced withdrawal of carbon tax on CNG.

However, she said that the country has to decide whether it wanted to use CNG for industrial growth or wanted to burn it on roads. The minister also assured the House that the government would subsidise gas and electricity for the industrial sector, which at present was being used for other sectors. We wanted to do away with this bias, she added.

She said it was because of the agriculture friendly policies of the government that this year about Rs 270 billion went to the rural economy. She said that an allocation of Rs 37 billion has been made in the next budget for ensuring storage facilities in every district. One hundred union councils would have model farming to promote agriculture.

She said Rs 40 billion have been kept in the budget for export promotion and to remove major flaw in banking sectors which was not catering for loan to borrowers. A credit guarantee fund of Rs 2.5 billion would be set up as a buffer between bank and borrowers in agriculture and SME sectors.

She said an integrated energy plan would be implemented in 5 to 10 years in which reliance on furnace oil would be replaced with hydro, coal and solar resources. Hina said Rs 70 billion will be spent under Benazir Income Support Programme and Rs 35 billion under Peoples Works Programme would help alleviate poverty and address the challenge of unemployment.

 

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Budgetary measures to provide much-needed relief to public: Gilani​

ISLAMABAD (June 20 2009): Prime Minister, Syed Yousuf Raza Gilani, has expressed the confidence that the steps taken in the budget 2009-2010 will provide much-needed relief to the people. He stated this while talking to a delegation of the Muttahida Qaumi Movement (MQM), which led by Minister for Overseas Pakistanis, Dr Farooq Sattar, called on the Prime Minister at his Parliament House Chamber here on Friday.

The Prime Minister said the economic revival of the country was the government's top priority. He asked parliamentarians to give maximum suggestions during budget debate. Talking to the delegation, the Prime Minister said the government was taking steps for meeting energy needs of the country by setting up new power plants as well as by encouraging conservation. The delegation informed the Prime Minister that public at large particularly the trading community had hailed the announcement made by the Prime Minister regarding abolition of proposed carbon tax on CNG.

They also told the Prime Minister about matters relating to the KESC as well as the development programmes in their constituencies. Adviser to Prime Minister on Finance, Shaukat Tarin, and Minister of State for Finance and Economic Affairs, Hina Rabbani Khar, were also present.

Other members of the delegation included MNAs Salahuddin, Khawaja Sohail Mansoor, Abdul Qadir Khanzada, Abdul Wasim, Sheikh Salahuddin, Sufwan Yusuf, Dr Nadeem Ehsan, Syed Haider Abbas Rizvi, Dr Muhammad Ayub Sheikh, Iqbal Muhammad Ali Khan, Syed Tayyab Hussain and Abdul Rashid.-PR

 

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Stronger global trade ties will help reduce poverty: minister​

RECORDER REPORT
ISLAMABAD (June 20 2009): Minister of State and chairman Board of Investment Salim Mandviwala has said that enhancement of trade ties with outer world will help Pakistan eliminate poverty, unemployment and other problems.

"The government is making efforts to attract foreign investment in Pakistan and efforts will only start bearing fruits when we put our own house in order first", the minister said while addressing a dinner hosted by Rawalpindi Chamber of Commerce and Industry (RCCI) in honour of foreign ambassadors in Pakistan.

The minister stressed the need of efforts on the part of both government and business community to improve Pakistan's image internationally. He appreciated the gesture given by RCCI to bring together all the foreign diplomats to improve country's image. This shows the commitment of the business community towards the progress of the country, he added.

The state minister also cut the cake on the golden jubilee of RCCI. Earlier in his welcome address President RCCI Asad Mashadi said that time is pressing demand of prevailing circumstances to develop good image of the country globally and for this purpose cordial and healthy interaction with the international community is very imperative.

He said that the purpose of the event was to make a liaison with the representatives of international community to let know them the real picture about the country and also tell them that except some parts, Pakistan is a safe country. He said that the western media has been portraying the wrong image of Pakistan that affects the whole nation particularly the business community.

"RCCI has always tried to make efforts to enhance trade related activities and to promote industry by attracting foreign investors but this all is only possible if the perception of the country will be respectable in the world.

Ambassadors and Diplomats of many countries, Presidents of Chambers and former Presidents of RCCI, high government officials and large number of businessmen were also present on the occasion. The event provided the participants a good chance to interact with each other and discuss current international scenarios freely.

 

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Auto sector demands stimulus package​

Saturday, June 20, 2009
By Mansoor Ahmad

LAHORE: Auto parts manufacturers have urged the government to offer a stimulus package to the producers of small cars using large number of local components, which will revive the ailing automobile industry that is entertaining high-end consumers only.

They point out that even a five per cent cut in capital value tax (CVT) on completely knocked down (CKD) kits will benefit cars above 850cc as smaller cars are already exempted from the tax. They express surprise that producers of big cars have been facilitated in the budget as their production has not declined despite a huge fall in overall car production in the country. In fact, they say, production of some expensive cars has increased.

“Auto parts vendors are more interested in revival of sales of smaller cars which have dropped drastically in the past two years due to various factors,” said Syed Nabeel Hashmi, former chairman Pakistan Association of Auto Parts and Accessories Manufacturers (PAAPAM). He said small cars had reached deletion level of up to 70 per cent and provided a lot of jobs in the auto vendor industry of the country.

He said production of small cars used by the lower middle class had dropped by 70 per cent in the past 15 months. “This has caused a loss of 50,000 jobs provided by PAAPAM members.”

He said the federal government had lost billions in sales tax and other levies, adding provincial revenues had also dropped sharply due to low registration of new vehicles. Last but not the least, the auto parts manufacturing industry had virtually stopped developing new technologies, he said and urged the government to announce a five-year auto stimulus package to boost small car sales.

PAAPAM Vice Chairman Tariq Nazeer said under the package the government should ensure availability of low mark-up finance for cars having the highest percentage of local components. The government, he suggested, should pick up the mark-up differential up to 5 per cent based on the level of deletion.

He said increased car sales would provide more revenue to the government than the subsidy on bank mark-up, adding that would increase employment in the auto vendor industry and encourage them to upgrade their technologies and develop new components.

He said the Engineering Development Board and the Ministry of Industries and Production should monitor the scheme.

Leading auto vendor Usman Malik said stimulus packages were being provided to the automobile sector around the world after the recession struck global economies. China, he said, had introduced a package which included cut in auto sales tax, easy access to auto loans, subsidised new purchases replacing old cars, high rebate for auto parts export and others.

He said in the wake of an eight per cent slump in car sales in October 2008, German authorities announced in early November suspension of state road tax on new cars purchased in the following 12 months to revive the auto market. Costing 1.4 billion euros a year, the tax cut could be extended for another year if new car sales remain sluggish.

Usman said Taiwan cabinet had approved a proposal which allowed car owners to apply for a T$30,000 subsidy to replace 10-year-old cars. The measure, effective from the beginning of 2009, supports the official policy to boost the sagging domestic auto market and reduce carbon emissions.

 

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Pakistan looks abroad to boost energy capacity​

Saturday, June 20, 2009
HONG KONG: Pakistan needs to increase its energy capacity by 10,000 megawatts by 2015 and is hoping foreign investors can help it halt damaging power cuts, the country’s investment minister has said.

Waqar Ahmed Khan said on Friday Pakistan was looking to foreign firms to help it deal with its energy shortfall, which has seen regular outages that have prompted riots in Karachi.

Khan added that Chinese companies had expressed a clear desire to invest in the energy sector, particularly in the provision of hydropower.

“Chinese companies are extremely interested in building dams in Pakistan,” he told reporters in Hong Kong, after a visit to Shanghai and Beijing.

He said the government would boost capacity by 3,000 megawatts by the end of the year, but demand would remain high. Industry, including the crucial textile sector, has suffered from the inconsistent supply.

Khan is on a foreign tour to try to attract investment into Pakistan, and will also visit Qatar and the United Arab Emirates. He said there were also opportunities for investment in the agriculture, housing, natural resources, IT and infrastructure sectors.

The minister said the vast majority of the country remained safe, despite a seven-week military offensive against the Taliban in the Swat valley. The offensive is in response to suicide attacks in Islamabad since the middle of 2007, which have targeted the Marriott Hotel, the Danish embassy and police checkpoints. “Let me assure you that the security situation is much better,” he said.