Pakistan Economy - News & Updates - Archive

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KARACHI (April 15 2006): The foreign exchange reserves fell by $83 million to reach $12.401 billion in the week ended on April 8, the central bank said on Friday.

Reserves held by the State Bank of Pakistan (SBP) decreased to $10.124 billion from $10.218 billion a week earlier, however, those held by the commercial banks rose to $2.277 billion from $2.266 billion, the State Bank said in a statement. The central bank did not give any reason for the decline.

 

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ISLAMABAD (April 15 2006): During the past nine months of the current fiscal year, Pakistan posted an all-time record $8.62 billion foreign trade deficit, which is almost 8.2 percent of the country's Gross Domestic Product (GDP).

In July-March 2005-06, the country's total imports stood at $20.693 billion, depicting 18.56 percent growth, and exports at $12.073 billion, with 43.24 percent increase over corresponding period of last fiscal year, according to Federal Bureau of Statistics (FBS) on Friday.

The data shows that during the nine months, trade deficit increased by 102.19 percent as compared to $4.263 billion of corresponding period of last fiscal year.

Economists believe that the soaring trade deficit would depreciate the Pak rupee against dollar and other currencies. Local importers' demand for dollars in the coming months would increase to finance their surplus imports, they added.

A large trade deficit is potentially destabilising, as it tends to weaken the rupee as compared to other currencies, they said.

The rise in the trade gap has been attributed to high oil import bill, and rise in the prices of food items, machinery and automobiles.

It is worth mentioning that the government has projected exports at $17 billion and imports at $21 billion, depicting a trade deficit of $4 billion for the FY 2005-06. However, the figures show that trade deficit has surpassed the target by 115.5 percent, or $4.62 billion, in just nine months of the fiscal year.

Independent economic experts say that the trade deficit would cross $10 billion this year. A glance at the trade data shows that consistent rise in the country's imports is disturbing the trade officials, as gap between exports and imports would be much wider than the estimated deficit of $4 billion.

Pakistan's demand for heavy machinery and petroleum products drew in 43.24 percent more imports during these nine months against imports of $14.45 billion recorded during the same period of last fiscal year. However, the exports of Pakistani goods had shown an increase of 18.56 percent against $10.18 billion in the same period.

The burgeoning deficit has put downward pressure on the rupee, which may also contribute to inflationary pressure as Pakistan is paying more for imported goods. It suggests that the value of rupee may still fall to help in narrowing the gap.

The trade bulletin further depicts that during March 2006, exports were worth $1.52 billion, recording an increase of 12.94 percent against exports of $1.35 billion in the same month last year. Imports have been recorded at $2.68 billion during March 2006, which reflected a growth of 25.76 percent as compared to imports of $2.135 billion in March 2005.

The figures show that the trade deficit in March also has widened by $1.164 billion, showing an increase of 47.66 percent against $788.35 million during March 2005.

However, comparing exports of March 2006 with the previous year, the bulletin says it registered an increase of 19.33 percent, which stood at $1.27 billion. The imports during the same month were also up by 21.48 percent as compared to $2.21 billion in February 2005.

 

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ISLAMABAD, April 14: The Economic Coordination Committee of the cabinet on Friday decided to set up a $2-billion mega oil refinery at Khalifa Point in district Hub, Balochistan.

The ECC meeting was presided over by Prime Minister Shakuat Aziz.

The refinery, to be commissioned by 2010, would have a maximum refining capacity of 13 million tons of petroleum products — higher than the country’s total existing capacity of 12.8 million tons.

The ECC directed the ministry of petroleum and natural resources to award the contract through an international competitive bidding on build, own and operate (BOO) basis.

At present the country consumes 16 million tons of petroleum products, of which 82 per cent requirement is met through imports. Total refining capacity in Pakistan currently stands at 12.8 million tons.

TRUCKING INDUSTRY: The ECC approved, in principle, a proposal to rationalise import tariff for the trucking industry in order to overcome shortage of trucks. This would be announced in the next year’s budget.

AUTO INDUSTRY: The ECC also considered a policy of incentives for new entrants in the auto industry and constituted a committee to review this policy in details. The committee, led by the prime minister and comprising deputy chairman of the Planning Commission, commerce minister, secretary of the industries ministry, minister of state for investment and chairman of the Central Board of Revenue, would take a decision within a week.

EXTENSION OF LEASE PERIOD: The ECC allowed an extension of the lease period of mining, production and development of three major fields of Pakistan Petroleum Limited for their full life to get better price during the sale of 51 per cent of its shares.

IMPORT OF POWER: The ECC also approved about 67 per cent increase in power tariff for the import of 30mw of electricity from Iran for border areas of Taftan and Mashakhail. Wapda has been importing this electricity at three cents per unit under a three-year contract which has now been increased to five cents per unit.

INDUSTRY STATUS: The ECC rejected a proposal of the petroleum ministry for giving the CNG sector an industry status on the ground that the petroleum sector was already under a deregulated regime.

The ECC, however, approved a policy for the import of liquefied natural gas (LNG) which would be announced separately. Interestingly, the government has already issued a no-objection certificate to the Associated Group to begin LNG imports.

The ECC also reviewed the price situation, tax collection and import and exports during the first nine months of the current fiscal year and expressed the hope that the annual inflation target of eight per cent would be achieved.

It also decided to establish multiple vegetable markets in all major cities to break monopoly of the existing markets.

 

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HYDERABAD: The United States Department of Agriculture (USDA)’s Foreign Agricultural Service has forecast Pakistan will produce 21 million metric tonnes of wheat in the current season, slightly lower than last year’s record production of 21.6 million tonnes.
In a report titled ‘Pakistan Grain and Feed Annual Report 2006’ released in March, the USDA says dry spell during the early growing season and rise in temperature during February may push production slightly below last year.
Regardless of these factors, this year’s crop is forecast to be the second largest harvest on record. This is due to increased availability of irrigation water, good management practices and increased application of fertilisers and herbicides.
The forecast of 21 million metric tonnes production assumes no further deterioration in the condition of the crop before harvest scheduled for the second half of March.
The report says increase in fertiliser use is one important factor that will determine the final crop size as consumption of urea and DAP fertiliser will increase by 10 per cent and 4 per cent respectively over last year.
"Pakistan has emerged rapidly from the ravages of a six-year drought. Water available for irrigation this year is 33 per cent more than the corresponding period last year," it said.
Stored water for irrigation is held mainly in two large reservoirs - Tarbela and Mangla - for use during the summer or winter growing season.
About two-thirds of the country’s water for irrigation is sourced from snow and glacier melts, with the remainder derived from seasonal monsoon rains.
The report says since the irrigation system was completed in the 1970s, demand has increased by more than 50 per cent while storage capacity has decreased by one-third due to silting. This has left per capita availability at a fraction of its original level.
"As a result, chronic shortfalls in water available for irrigation are expected to impose an increasingly larger constraint on Pakistan’s agricultural advancement."
In Sindh province, the shortage of water is less severe than last year and, since the harvest began early, the crop is in good shape. Ground water in most areas is alkaline and not fit for tube well irrigation, necessitating a greater reliance on canal water, the report says.
In the Punjab province, where extensive tube well irrigation is utilised, it says the crop was generally considered to be in normal condition as of March 9, 2006.
The planting of crop in NWFP and AJK has been affected by the devastating earthquake in October 2005, but as the area hit by this calamity is not part of traditional grain basket the effect on overall production will not be significant, the report says.
The Ministry of Food, Agriculture and Livestock has estimated the country will produce 22 million metric tonnes of wheat in 2006-07 (next season).
Local officials note around 1,000 metric tonnes of wheat and wheat flour is moving across the border to Afghanistan from different points daily. Therefore, 2006-07 consumption estimates have been increased to absorb the cross-border trade with Afghanistan and Iran.

 

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ISLAMABAD, April 14: Pakistan’s import bill is likely to cross $27 billion by the end of the current fiscal year owing to a rise in oil prices in the international market, putting more pressure on foreign exchange reserves.

Official figures released by the Federal Bureau of Statistics here on Friday showed that the import bill reached $20.693 billion in just nine months of the fiscal year 2005-06 as against $14.446 billion in the same period last fiscal year, showing an increase of 43.24 per cent.

With this increase in the import bill, trade deficit soared to $8.620 billion during nine months of this fiscal year as against $4.263 billion in the same period last year, indicating an increase of 102.19 per cent.

Commerce ministry officials told Dawn that the trade deficit would easily cross the $10 billion mark by the end of the current fiscal year as against the projected figure of $4.16 billion announced in the Trade Policy 2005-06. This will be the highest-ever trade deficit in the history of Pakistan.

The import bill in April-June of the fiscal year 2004-05 was $6.27 billion. This means that with an average 30 per cent growth in imports this year over the last year, the import bill is expected to reach $8.151 billion during the April-June period of the current fiscal year. With this the import bill would easily reach $28 billion by the end of the current fiscal year, added the officials.

According to the FBS figure, the trade deficit in March 2006 reached $1.164 billion as against $0.788 billion in the same month last year, an increase of 47.66 per cent.

The trade deficit stood at $1.740 billion in the fiscal year 1999-2000, $1.527 billion in 2000-01, $1.211 billion in 2001-02, $1.2 billion in 2002-03, $3.27 billion in 2003-04 and over $4 billion in the fiscal year 2004-05.

The officials said the high import bill would have a negative impact on the country’s forex reserves. As country’s exports rose by 18.56 per cent to $12.072 billion in nine months of this fiscal year as against $10.182bn in the same period last fiscal year.

The officials said that balance of payment was likely to be in a better position, as Pakistan raised $800 million from the global debt market by launching a sovereign bond coupled with $500 million received as a part of payment for PTCL from Etisalat. The UAE-based company also made another payment of $640 million recently.

The officials said that despite huge inflows privatization proceeds and foreign direct and portfolio investment, Pakistan would face a current account deficit of over $6 billion because of soaring trade deficit.

 

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LAHORE, April 14: Pakistan has set a new record of kinno export this season by sending out over 150,000 tons so far, and the process still continues.

According to latest export figures by the Pakistan Horticulture Development & Export Board (PHDEB), the kinno exports had already broken the previous year’s record of 149,000 tons.

Shamoon Sadiq, an official at PHDEB, told Dawn that it had been done without Indonesia, which has been our traditional market and alone uses to consume some 40 per cent of Pakistan citrus exports. The Indonesian authorities had raised duty on Pakistani citrus by 20 per cent and drove it out of the local market. Had the Indonesian market still available, the exports could have easily touched 250,000 tons.

Pakistan, he said, still has two more weeks of international monopoly in citrus and should be able to increase the figure substantially.

The exporters, however, contested the official figures and claimed that citrus export in fact had crossed 200,000 tons mark. Export to Central Asian States and other neighbouring countries skip normal customs procedures and are not reflected in official figures.

“If those exports are also taken into account the export figure has already crossed the government’s target of 200,000 for the year. The PHDEB figures based on customs data, which are not comprehensive,” says an exporter.

According to official figures, Russia had been the biggest buyer of Pakistan citrus this season by importing over 31,000 tons till April 1. It was followed by the UAE with around 30,000 tons and the Philippines with 16,795 tons. Iran, which resumes kinno imports from Pakistan after 25 years, bought 18,637 tons and more deals were in process. Indonesia had imported only 6,495 tons and Saudi Arabia 11,792 tons.

The momentum for kinno export has now been set, claimed Shamoon Sadiq. “China has also recently cleared seven Pakistani companies for citrus export and so has been done by the Philippines. The government is also negotiating Early Harvest Programme with the Indonesian authorities and hopefully good news may be heard soon,” he added.

Citrus remains key in talks with Indonesia and from next year the Iranian market would expand further. All these trends show that citrus exports are well set on their way to grow, he said. If everything goes well, the country would be able to touch a figure of 250,000 tons next year, he added.

He further said that the board was now concentrating on mango, which has more issues to tackle if exports of fruit are to grow. “The main problem is that of shelf life, which is hardly of two weeks and exporters are unable to send mango by sea and air journey becomes too costly and render the fruit uncompetitive.”

The board was now fully concentrating on increasing shelf life of mango. “Experiments are being conducted in post-harvest handling and other possible areas. If scientists are able to increase the shelf life of mango by another week, it would be a big economic relief to exporters. Some of these experiments have succeeded and hopefully things would start improving in a while,” he concluded.

 

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Saturday, April 15, 2006

By Fida Hussain

ISLAMABAD: The inauguration of China-financed Gwadar Port has been planned in June this year.

The government is giving final touches to arrangements for inauguration of the port that will usher in a new era of economic prosperity for the country, Minister for Ports and Shipping Babar Khan Ghauri told the Daily Times.

“The Gwadar deep-sea port will be inaugurated most likely in June. The exact date will be fixed the next month or early June,” said the minister.

Before the inauguration, the government is also likely to finalize the leasing of Gwadar Port operations to the successful bidder. A senior government official, who asked not to be named, said that apart from other companies a well-known Dubai-based company is interested in getting the contract for ports operations at Gwadar.

According to the official, the government is also interested in engaging the Dubai-based firm in Gwadar operations for that is considered to be beneficial in a sense that the same company is equipped with better understanding of operating the world’s busy ports. The government and the Dubai-based company had some informal negotiations on the subject.

China, which is the major financial contributor in the construction of Gwadar Port, is keen that some Chinese company should have the rights of operating the new port, the official said.

However, Mr Ghauri denied that the government had held informal talks with any company on granting the operations’ contract. The company to be awarded the contract will definitely be a successful one among the bidders. Several companies have submitted their bids and they will be opened in free, fair and transparent manner. Media organizations will be invited for the same, he added.

The minister, however, admitted that some companies from the United Arab Emirates are taking part in bidding for the Gwadar port operations. But, at the same time, he also said that there are also a number of Chinese companies in the competition. The minister declined to give the exact number of companies, both local and foreign, which are aspiring to get the contract for the port’s operations.

The Gwadar Port inauguration had been delayed in the past due to deteriorating law and order in Balochistan. However, the government this time is serious about doing business, the official said. According to the official, President General Pervez Musharraf is keen to inaugurate the port by the time next general elections.

Pakistan identified Gwadar as a port site in 1964.

However, it was only in 2001 that significant steps towards making the proposal a reality were taken, when China agreed to participate in the construction and development of the deep-sea port. In March 2002, Chinese vice premier Wu Bangguo, with General Pervez Musharaf, laid the foundation for Gwadar Port.

The credit goes to General Pervez Musharraf for commencement of work on Gwadar Port. And that is why the government is keen to inaugurate the port, which will be a historical turnaround for the country’s economic progress, the official said.

 

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THE report about the discovery of huge gold and copper deposits in the Rekodiq area in Balochistan is a matter of joy mixed with political concern because of the current situation in the province. First discovered by the Geological Survey of Pakistan in collaboration with an Australian firm in the last decade, the deposits have been estimated at 20 million ounces of gold and two billion tons of copper. At current market rates, this amounts to $65 billion, which is more than half of Pakistan’s GDP. The project needs an initial investment of one billion dollars, but, when completed, it will produce 200,000 tons of copper and 400,000 ounces of gold annually, the yearly contribution to the economy coming to $1.25 billion. By any standards, this is a major discovery and makes the Rekodiq area one of the world’s top seven copper reserves.

Pakistan, especially Balochistan, is rich in minerals of all kinds, including oil and gas at a time this country’s energy requirements are growing fast. But unfortunately we have not succeeded in tapping even a small proportion of this hidden wealth. The problem is especially acute in Balochistan where its mineral resources have to be seen against the background of the political trouble in that province. The sabotage of gas pipelines is now a daily affair and goes to show how little some sections of our people care about the country’s natural wealth. Countries like Japan and Israel do not have any minerals at all but they have made use of their human resources to achieve a high level of affluence and prosperity. While we have not paid much attention to education, we show little regard for nature’s blessings and go about blowing up our natural resources. One hopes the project will get going by 2010 and that it is the Baloch who will be given preference for the thousands of jobs it will generate. This also calls for a sincere dialogue between the government and Baloch leaders to ensure that, while the Baloch people’s just grievances are addressed, no quarter is given to the terrorists who blow up gas pipelines or bomb railway tracks and power stations.

 

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ISLAMABAD (April 15 2006): The first meeting of the newly formed Pak-China Energy Forum will be held here from April 25 to 26 to devise out long-term energy co-operation between the two countries.

The official sources in the Petroleum and Natural Resources Ministry told Business Recorder here on Thursday that a Chinese delegation was expected in the third week of April. Petroleum and Natural Resources Secretary Ahmed Waqar will lead the Pakistani side during the meeting.

They would discuss at length all the avenues of co-operation, including nuclear, power, coal, mining, development, power generation, alternative sources and hydrocarbon exploration, they added.

They would deliberate upon constructing a strategic pipeline from Gwadar to its borders enabling it to import oil from Saudi Arabia, the official said.

Chinese expertise for constructing mega dams like Bhasha would also be discussed, the sources said.

In addition, the high profile officials from both the sides would also discuss co-operation in other sectors like agriculture and health, etc, they maintained.

China had shown interest in the privatisation of power distribution companies (Discos), the sources said, adding that besides power sector, they were also keen in the privatisation of energy entities like Sui Southern Gas Company Limited and Sui Northern Gas Pipelines.

President Musharraf in his recent visit to China had offered a "Trade Corridor" to get more access to the Central Asian States and he (President) is also scheduled to visit China again in June.

 

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ISLAMABAD (April 16 2006): President General Pervez Musharraf and Saudi Prince Sultan bin Abdul Aziz on Saturday held wide-ranging talks at Aiwan-e-Sadr here, focusing particularly on expanding bilateral economic and trade relations.

The two leaders also exchanged views on regional and international issues of common concern, including counter-terrorism, conflict resolution, situation in Afghanistan, Iraq, Palestinian question, Iranian nuclear issue, OIC reform and the Kashmir dispute.Welcoming the Saudi Prince, the President said that Pakistan and Saudi Arabia were bound in indelible bonds of friendship, rooted in religion, culture and history.

"These relations will continue to grow, and I am fully confident that the business communities of the two countries would be able to explore new avenues for commerce, joint ventures and investment to further cement the excellent and broad-based ties between the two countries," the President said.

Identifying energy, refinery, infrastructure, food processing as some of the most potential areas for Saudi investment in Pakistan, he said that the country would facilitate entrepreneurs from Saudi Arabia and offer level playing field to them.

The two leaders also discussed defence co-operation. Musharraf thanked the Saudi government and people for extending assistance to Pakistan in the aftermath of last October's earthquake catastrophe and expressed hope for continued commitment.

Saudi Arabia has pledged $573 million in assistance for Pakistan's relief, reconstruction and rehabilitation efforts in the quake zone. "We look forward to more economic opportunities for Pakistan's skilled workforce in Saudi Arabia, especially from the quake-hit areas," he said.

The President discussed Pakistan-India relations and efforts for an early and peaceful resolution of the Kashmir dispute. The Crown Prince appreciated Pakistan's efforts in this respect and hoped for a successful outcome of these endeavours.

The two leaders also exchanged views on reform of the Organisation of Islamic Conference with a view to enabling it to lead the Muslim world to durable socio-economic progress and pull it out of its current turmoil.

In this regard, Musharraf particularly underlined the importance of enhancing intra-OIC trade, and said that a sustained focus on the issue through a dedicated department at the organisation could be greatly helpful.

"Pakistan believes that the way forward lies in greater trade and economic co-operation. Blessed with natural resources, the OIC countries can certainly supplement and complement each other's economies for the collective wellbeing of their people."

The Saudi Prince said that Riyadh views President Musharraf's efforts and initiatives for reorganisation of the OIC with great admiration. He particularly praised the Pakistani leader's vision of enlightened moderation, aimed at wellbeing.

Discussing counter-terrorism co-operation, the two leaders vowed to work together for efforts aimed at resolution of political disputes affecting the Muslims and promotion of inter-faith harmony for lasting peace, development and security in the world.

While Speaking at a banquet hosted in honour of Sultan bin Abdul Aziz, the two leaders pledged to impart further depth and strength to Pakistan and Saudi Arabia's multi-faceted relationship.

Prime Minister Shaukat Aziz, members of federal cabinet, services chiefs, foreign diplomats, notable citizens and senior officials attended the banquet.

In his speech, the President said Pakistan is for further expanding its economic and political ties with Saudi Arabia by taking the trade and commerce ties to new heights.

Musharraf expressed the hope that visit of the Crown Prince, following the visit of King Abdullah bin Abdul Aziz, would further cement strong brotherly relations between the two countries.

"Pakistan greatly cherishes its brotherly ties with the Kingdom of Saudi Arabia and has great respect for the efforts of Saudi leadership for the emancipation of the Muslim Ummah and also towards bringing peace and stability in the region," the President said.

Pakistan, Musharraf said, fully stands with King Abdullah and is supportive and committed to his efforts towards bringing peace and harmony in the region.

The Crown Prince, in his speech, said the Kingdom wishes continued development of Pakistan and added that King Abdullah greatly appreciates the Pakistani leadership and people for their recent economic strides.

The Saudi leadership, he said, is determined to further promote ties with Pakistan in all spheres, including cultural, economic, commercial and political.

 

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ISLAMABAD (April 16 2006): A 10-member Mission of Official Development Assistance (ODA) from Japan led by Director Economic Co-operation Bureau of Foreign Office, Koichi Aiboshi held a meeting with Dr Salman Shah, Adviser to the Prime Minister on Finance and Economic Affairs, here on Saturday.

The Japanese mission is visiting Pakistan for consultation with the authorities and to speed up the process of project financing after the resumption of yen loan to Pakistan.

Appreciating the revival of yen loan and grant assistance for the relief and reconstruction efforts of earthquake-hit areas, Dr Salman gave an overview of improved macroeconomic indicators which the Adviser said were due to structural changes and policy reforms agenda of the government.

Dr Salman mentioned that ODA programme fits in Pakistan's development strategy.

The growth trajectory of the country's economy has shown significant progress despite tremendous international and domestic challenges, he said, adding the FDI has gained momentum, GDP growth is maintaining robust upward trends, budget deficit is reduced, tax collection is increasing, domestic and external debt is declining, exports are on the increase and services sector has improved.

Referring to the long-term strategy, the Adviser said that in order to achieve sustainable higher growth and to improve productivity we have increased the investment for human resource development, higher education, technical and vocational training and are focusing to build infrastructure, water reservoirs, highways, communications network and supply chain etc. Referring to the privatisation programme, the Adviser stated that there are 10 to 15 billion dollars of assets that will be privatised in the next five years.

The Japanese delegation remarked that they were happy to note that Pakistan's economy was booming and assured availability of yen loan to Pakistan for viable projects in key sectors like roads, water, power generation and distribution etc.

 

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HYDERABAD: The United States Department of Agriculture (USDA) - Foreign Agricultural Service - foresees the rice production for 2006-07 at 5.2 million metric tonnes (MMT) based on expected improvement in yields and expanded sowing of Irri rice.In 2005-06, Basmati production totalled 2.55 MMT, (up 2,000 tonnes over the previous year) and Irri production totalled 2.9 MMT (up 199,000 tonnes over the previous year).
In a report titled ‘Pakistan Grain and Feed Annual Report 2006’, available with The News, said that during 2005-06 a record production was achieved, as during the year water availability was 46 per cent more as compared to the last year.
Water availability during the critical March-May period will depend on the amount of precipitation in the catchment areas. If a cut in water distribution during this period occurs, the effect would be more pronounced on the IRRI rice acreage than the Basmati. The IRRI rice generally is grown in areas that rely heavily on canal irrigation, while Basmati is grown in areas employing large-scale tubewell irrigation.
Based on the source of the water input and current water availability situation, both types of rice are expected to be sown on time.
Since 2000, the government discontinued setting a procurement price for paddy and milled rice, and abandoned rice procurement through state trading enterprises.
Rice consumption is increasing slowly as compared to that for wheat. About 50 per cent of the crop is destined for local consumption while the remaining is exported.
The government does not maintain official grade standards for rice. Annually an estimated 150,000 metric tonnes, 40-100 per cent broken is used in poultry feed.
Pakistan is a major exporter of rice and 2006-07 export volume is projected at 2.4 MMT, consisting 0.8 MMT of Basmati and 1.6 MMT of IRRI rice varieties. All trade is conducted by the private sector, as the state owned Rice Export Corporation was abolished in early 90’s.
Today, another state trading agency, the Trading Corporation of Pakistan (TCP), plays a limited role in the rice trade by facilitating government-to-government exports through the private sector.
The GOP, in consultation with the Rice Exporters Association of Pakistan (REAP), established a quality review committee to certify the quality of Pakistani rice prior to shipment in an effort to boost the image of Pakistani rice, especially that of Basmati rice.
Based on preliminary figures, in 2005 Pakistan exported 814,857 MT (812,507 MT in 2004) of Basmati rice and 207,639,6 MT of IRRI rice. The increase in rice trade (mainly in coarse rice) is 58 per cent as compared to the last year. This increase is mainly due to increase in production and favorable market conditions.
During 2005-06 ending stocks are projected to marginally decrease due to increase in exports and all stocks are held by the private sector and are in small lots.
It said that there is no restriction on rice exports and for rice imports there is 10 per cent import duty and 15 per cent sales tax.

 

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Sunday, April 16, 2006javascript:;
By Arshad Hussain

KARACHI: Industrial production and exports of the country suffered a huge loss of more than Rs seven billion because of the three-day shutdown in Karachi, industry experts said.

They said such incidents prove disastrous for the country’s exports. “Pakistan’s industry is already finding it difficult to get orders from foreign buyers owing to the law and order situation in Karachi,” said Khalid Ferooz Arfeen, president of the Karachi Chamber of Commerce and Industry (KCCI). “If these kinds of incidents were not stopped in future, no foreign buyers would sign contract with this country.”

After the bomb blast on Tuesday night, in which 47 people were killed and another 50 were seriously injured, Karachi faced a shutdown on three consecutive days on April 12,13,14. Both commercial and industrial activity suffered badly in these three days.

This time the main reason behind the losses suffered by the industrial and exports sector was the closure of petrol pumps, market experts said.

“We have seen the closure of all the petrol pump first time in Karachi during disturbances,” said Gulzar Feroz, chairman of the Korangi Association of Trade and Industrial.

More than 200,000 workers work in over 2,000 units in KATI area, where 30-40 per cent are export-oriented units.

He said on the three days only 25 percent workers could turn up for work. Most workers and other employees said they could not come as public transport was unavailable and those who had their own conveyance said fuel was not available as petrol stations were closed.

According to sources, the Sindh government had issued a direction to the petrol pump association in Karachi to keep their pumps closed till normality was restored. The order was issued on Tuesday’s night when around three petrol pumps were set on fire on M A Jinnah Road.

Industrialists said they were not able even to shift the manufactured goods to the ports because of unavailability of petrol. Export shipments could not be executed in the absence of transport.

There were hardly any production and it can be considered a complete shutdown of industrial activity in the area, said a Khalid Arfeen. “ After this incident, we have gone back around one year in business and trade, he added.

In the local industries, above 400,000 workers are on daily wages, who are the real affectees of this incident. They get wages on a daily basis who sit on the sidelines of the main roads, also lost their earnings due to complete shutdown. “Per day industrial losses in terms of taxes and duties and other charges are around Rs 2 billion in Karachi, the KCCI president said. Almost 65 percent industries are located in the SITE area.

Exporters suffered losses for not meeting timely shipments due to unavailability of trucks and containers.

A businessman told the Daily Times that the banks were not opening letters of credit, as they had no sufficient staff. In the three days, the banks opened, but they also faced shortage of employees.

An official of the SITE Association of Industry said almost 95 percent of its industries remained closed from Wednesday to Friday. It means that there was no production in the industrial area.

Industrialists demanded of the government not to order closure of petrol pumps after such incidents in future as almost 75 percent workers used their own transports to travel to factories.

 

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Technology in general, and Information Technology (IT) in particular, has over the last few decades changed the world unalterably. It has changed people's behaviour and thought patterns. It has changed the way people work, live their daily lives and deal with each other. Some of these technologies did not even exist a few years ago, but today we cannot imagine a life without the gadgets that have become an inseparable part of our daily existence.
One of the key areas that Information Technology has deeply impacted is business. It has totally transformed the business world - both in form and substance. IT is being employed in business in two ways. One, IT is being used to support and improve existing systems. Two, IT itself is now being developed and practiced as a core business. In this article, I will focus on the latter.
Information Technology has totally transformed the business landscape. It has introduced new business models, modified the business environment and even changed the nature of competition. It has converted our society into information or a knowledge-based one. The overall impact of IT business on a nation's economy is tremendous.
The capital needed to start up an IT company is not very large as compared to that for setting up conventional industries. Take the examples of Yahoo, Google, eBay, etc. They started small but soon made it big thanks to their innovative and dynamic approach to meeting their clients' needs. It is actually the intellectual capital that matters in the IT world. IT helps streamline and improve business processes, production and marketing techniques. There is no end to innovation, for the moment you cease to be creative, you are left behind.
Information Technology has helped evolve new business strategies. One of the new strategies in the internet world is to create a product and make it available for free, gradually building up a big loyal users base, and then use advertisements or premium services for earning revenues.
Information Technology is a great challenge as well as an opportunity for the developing economies to move forward faster to make up for the lost time. IT can be used as a bridge to narrow the gap between the developing economies and developed economies. IT can help businesses to streamline, modernise and innovate and thus reduce the cost of production and marketing to earn more profits. But first we have to understand how a developing economy can take advantage of this unique and ever evolving technology. To illustrate the point I will take up the case of Pakistan.
How can we harness Information Technology to quicken the pace of development in Pakistan? Three most important areas demanding urgent attention in this connection are: quality of education, IT policies framed by the government and the country's international image.
Lack of a strong national education base is the biggest hurdle to the growth of the IT industry in Pakistan. Leaving aside a few expensive schools catering to the needs of the urban rich, Pakistan's outdated and decadent education system is not producing the kind of quality manpower needed for a knowledge-based discipline like IT.
Most of our universities fail to meet the minimum quality standards and churn out, year after year, half-educated and semi-skilled graduates and post-graduates most of whom are unable to fill any slot in the job market. By comparison, those countries, which are doing well in the IT sector, have a highly developed educational infrastructure. If we want our IT industry to thrive we must create an enabling environment in the educational sector, and the sooner we do it the better for the country.
The abysmal state of affairs in the education sector is reflected in the stunted growth of the IT industry in Pakistan. According to Pakistan Software Export Board (PSEB), the number of IT professionals in Pakistan during 2004-05 was 75,000. The number of IT graduates produced in Pakistan every year is 5500, out of whom hardly 10 per cent measure up to international quality requirements. By contrast, about 120,000 high quality IT professionals graduate from Indian universities every year, while the number of IT software and services professionals is close to a million. During FY 2004-05 the IT industry in India generated total revenue of $ 28 billion out of which exports were worth $ 17.9 billion. On the other hand, IT enabled services export from Pakistan during 2004-05 was a paltry $ 48.5 million.
The example of India and China proves that an enabling environment, which includes a strong education base and the right mix of policies, can play a key role in advancing the cause of the IT industry. In the case of IT industry not only did Pakistan made a late, halting start, but subsequent policy making too has suffered from lack of consistency and a strategic vision.
As in other departments of life, here too a policy of ad-hocism has reigned supreme. Plans have been patchy and implementation of IT policies hesitant and sketchy. No wonder, results have fallen far short of the targets. Institutional weaknesses notwithstanding, there is no dearth of computing talent in the country. Pakistanis in their individual capacities have done exceedingly well in the IT field in USA and Europe. What we urgently need is a coherent policy framework which takes into account both the strengths and weaknesses of our present situation and chalks out a realistic path for our IT professionals to follow and prove themselves both at the national and international levels.
Last but not the least is the problem of our image abroad. I know from personal experience how foreign clients, alarmed by Pakistan's law and order situation, hesitate to award contracts to our IT companies which otherwise offer highly competitive bids. And if a contract is awarded, they remain fearful about the delivery of work on schedule. It cannot be emphasized too much that no amount of education and policy reforms can produce the desired results unless this aspect of the situation is taken care of on war footing.
Information Technology is a huge opportunity for a developing country like Pakistan to overcome the economic backlog of previous decades. We should not let it go waste. It is not yet too late to plan ahead with an eye to our long term goal of building a modern and enlightened society in Pakistan.
The writer is an IT professional.

 

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ISLAMABAD (April 17 2006): Prime Minister Shaukat Aziz on Sunday said Pakistan and Saudi Arabia are strategic partners and the visit of Prince Sultan Bin Abdul Aziz Al-Saud will further consolidate the unique relationship and bolster collaboration in all areas including economy, trade and investment, defence, security and education.

He was talking to the Saudi Crown Prince at the Prime Minister House.

The two leaders held a one on one meeting for thirty minutes and were later joined by members of Saudi and Pakistani delegations, comprising federal ministers and senior officials.

The two leaders discussed the avenues available for the expansion of bilateral ties. They also exchanged views on regional and global developments and issues concerning Ummah.

Shaukat Aziz said, "Pakistan and Saudi Arabia are bound in religious, emotional, historical and cultural ties."

The visit of Prince Sultan will impart further depth to the strategic relationship enjoyed by the two countries, he added.

The Prime Minister emphasised the need to promote interfaith, inter-civilisation dialogue to ensure better understanding between the Muslim World and the West.

Observing that Islam is a religion of peace, brotherhood and compassion and teaches moderation and tolerance, he said it is misunderstood in many parts of the world.

Shaukat Aziz said Muslims need to work harder to project Islam in its true perspective.

The Prime Minister said Muslims should forge more unity in their ranks. He said the Organisation of Islamic Conference should be strengthened to respond to the challenges faced by the Ummah.

Briefing the Crown Prince about the economic recovery achieved by Pakistan during the last six years, the Prime Minister said that the reform agenda of the government was broad-based and multifaceted.

Shaukat Aziz said the success of economic reforms, consistency of policies, an investment-friendly environment and transparency in policies and procedures have restored the confidence of investors, and investment today is all times high.

The Prime Minister said it is heartening to note the keen interest taken by Saudi investors in privatisation programme and more Saudi businessmen are looking for opportunities to invest in Pakistan.

He particularly mentioned investment by Al-Tuwairiqi Group to set up a steel mill in Karachi and Jamaih Holding's participation in the KESC sell-off.

Shaukat Aziz while talking of investment, opportunities, mentioned Pakistan's plans to set up a coastal oil refinery near Karachi and Gwadar as one of the potential areas for Saudi investment.

Briefing the Saudi Crown Prince about peace and stability in the region, the Prime Minister said Pakistan is a peace-loving country and is acting as an anchor of peace in the region.

He said, "It is pursuing a policy of peace with its neighbours" adding that only peace will bring progress and prosperity in the region.

He thanked Saudi Arabia for the interest shown by King Abdullah Bin Aziz for the resolution of Kashmir issue.

The Prime Minister said Pakistan is committed to the process of composite dialogue with India.

He said, "Sustainable peace will be possible only after the resolution of all outstanding issues between India and Pakistan including solution of the core issue of Kashmir, acceptable to Pakistan, India and the people of Kashmir.

Regarding Afghanistan, he said Pakistan desires to see peace, stability and prosperity in Afghanistan, which is also in the interest of Pakistan.

The Prime Minister expressed gratitude to the people and government of Saudi Arabia for their prompt and generous financial and medical support in the aftermath of October 8, earthquake.

Prince Sultan during the talks said Saudi Arabia considers Pakistan a very special friend and an important country of Muslim world.

He said the relationship is rare among the two nations and is based on firm basis of common faith and similarity of views on all important international issues.

He fully agreed with the Prime Minister on the need of promoting interfaith dialogue to create a better understanding of Islam in the world.

The Crown Prince appreciated the economic progress made by Pakistan and said Pakistan's policies have generated interest in Saudi investors and more companies are interested in starting joint ventures with Pakistani companies.

He invited Shaukat Aziz to visit Saudi Arabia to meet investors and said that they should take advantage of Pakistan's growing economy particularly by investing in real estate, IT & telecom, tourism, banking, agriculture and the services sector.

The Crown Prince said Saudi Arabia wants to see development and prosperity in Palestine.

Referring to the success of Hamas in elections, he said, the international community should respect the verdict given by Palestinians in favour of Hamas.

The two leaders also discussed the situation in Iraq and hoped for peace there. Exchanging views on Iran they hoped for a diplomatic solution of Iranian nuclear issue.

The meeting was attended among others by Senior Minister for Defence, Minister for Foreign Affairs, Minister for Interior, Minister for Labour & Manpower Minister for Defence Production, Pakistan's ambassador in Saudi Arabia, Saudi Ambassador in Pakistan, members of the Saudi delegation and senior officials.

Pakistan and Saudi Arabia while reaffirming their commitment to continue fight against terrorism termed it a threat to all faiths and societies and urged addressing the root-causes to achieve a lasting solution.

The unanimity of views was expressed by the Prime Minister Shaukat Aziz and the Saudi Crown Prince at a luncheon later hosted at the PM House.

The two leaders strongly condemned all forms of terrorism and extremism and vowed to continue their struggle against the menaces.

Moreover, according to a statement issued following the visit of the Crown Prince both the countries agreed on the need to foster better understanding and harmony among diverse faith through interfaith and inter-civilisation dialogue.

Prince Sultan Bin Abdul Aziz Al-Saud paid a two-day visit to Pakistan at the invitation extended by the Prime Minister Shaukat Aziz.

President General Pervez Musharraf and Prime Minister Shaukat Aziz conveyed the gratitude of the government and people of Pakistan for the generous relief assistance provided by the Kingdom to the earthquake victims. It included a continuous supply of relief goods and a financial pledge of $573 million for the reconstruction and rehabilitation operation.

Pakistani leadership held comprehensive and wide-ranging discussions with the Crown Prince.

At the official talks, views were exchanged between the two sides on a broad spectrum of bilateral as well as regional and international issues.

They agreed to further intensify their bilateral relations, specifically in the economic, commercial, investment and defence areas.

On the Middle East peace process, the two sides emphasised the need for the creation of an independent Palestinian state in accordance with the wishes of the Palestinians.

They expressed their concern and anguish over the deteriorating security situation in Iraq and the sufferings of the Iraqi people.

On Iran's nuclear issue, the two sides expressed the hope that the matter would be resolved through peaceful negotiations.

The Pakistan leadership briefed the Crown Prince on the process of confidence building between Pakistan and India.

They underlined Pakistan government's resolve to settle all outstanding disputes between the two countries including the long-standing issue of Jammu and Kashmir through peaceful means.

It was also explained to Prince Sultan that a secure and stable Afghanistan on Pakistan's western borders was of its vital interest.

The two sides expressed the hope that the visit of the Crown Prince would further strengthen the brotherly relations between the two countries.

Later, Prince Sultan Bin Abdul Aziz Al-Saud left here for Saudi Arabia in the evening.

He was given a warm send-off at Islamabad International Airport and was seen off by Prime Minister Shaukat Aziz. Defence Minister Rao Sikandar Iqbal, services chiefs and other senior officials were also present on the occasion.