Pakistan Economy - News & Updates - Archive

[Neo]

KARACHI, Aug 2: Cellphone operators in the country are investing nearly $100 million in order to meet the deadline of October 2006 given by the Pakistan Telecommunication Authority (PTA) for the implementation of mobile number portability (MNP), telecom sources said.

They said except for two newcomers that might not invest much because their system and technology had been updated and was MNP-compliant, the rest were investing heavily to upgrade their switches and exchanges.

The PTA last month asked all the cellphone operators and PTCL to speed up the process of upgrading their switches for the early implementation of MNP (a system which enables a mobile phone subscriber to carry the same number while changing the cellphone operator).

The PTA warned of stern legal and regulatory proceedings against those operators who failed to comply with the PTA deadlines and implement the MNP. The authority asked PTCL in particular to upgrade its switches by the end of September positively. Perhaps Pakistan will be the first country in the region to implement this system.

Dawn tried to find out investment plans of some cellphone operators and their efforts in meeting the deadline of October.

Telenor Pakistan chief executive officer Tore Johnson told Dawn from Islamabad that the company alone was roughly investing $7.5 million for implementing the MNP. “We are ready to meet the deadline.”

The mobile users will have ultimate choice with the implementation MNP. A customer will be free to decide which service he prefers and where he likes to be a customer.

When asked some leading cellphone operators and even PTCL have some reservations over the MNP, he said complex issues took time to resolve. At present the central database system is under implementation. This is a key step in the execution of MNP, as there is a need to upgrade all mobile operating systems and conduct technical and network enhancement to handle the MNP.

“That is where all mobile operators have to work together to deliver results in a timely manner. PTCL will not be ready with their final solution and a temporary solution will be set up,” Mr Johnson added.

In reply to a query that Telenor is behind in urging the government for the MNP, he said the introduction of the new system was defined in Pakistan’s telecom policy which was in place even before Telenor was in the picture.

According to the policy, the MNP should have been in place by January 1, 2006.

When asked the MNP is only popular in Hong Kong and Scandinavian countries as compared to the US, the UK and other European countries, the Telenor CEO said since the MNP was defined in the telecom policy, it was only a matter of following the policy. “The PTA understands that the new system is important in providing a level-playing field in the market and that it will eventually benefit the consumers. The introduction of MNP will set a good reputation for future investment and promotion of fair competition,” he added.

Meanwhile, telecom sector sources said Ufone was roughly investing $20 million to upgrade its system and equipments for the execution of MNP by October. They said the company had already placed orders for equipments and was urging its vendors to deliver them on time.

Omar Manzur, head of public relations, Mobilink, said the company was making all-out efforts to achieve the MNP implementation deadline. “Mobilink is investing a `sizeable amount’ for this purpose.” Furthermore, the company is contributing equally along with other mobile operators in funding Pakistan MNP Database (Guarantee) Ltd -- the company which owns the central MNP database, responsible for facilitating the porting process among cellular operators.

In reply to market reports that Mobilink was against the idea of MNP in Pakistan, he said the company was working towards the achievement of MNP implementation. “We are preparing for its implementation and the company has invested substantially into its systems to accommodate the new system,” he added.

When asked that the MNP does not exist in India and its success rate is not satisfactory in European countries, Mr Manzur said the Pakistani market was different from South Asian or western markets. “The success of MNP in Pakistan will depend on many factors, including customer behaviour and market trends.”

On technical problems, he said various processes and procedures added to the success of MNP implementation which included technical and operational readiness of all parties concerned. Furthermore, due to technical complexities involved, call connectivity and accurate charging of calls to ported numbers will also play a significant role in the success or failure of MNP in Pakistan.

At present there are some 33-34 million mobile phone users in Pakistan. The share of Mobilink is over 16 million. Ufone has 7.5 million customers, Warid Telecom 4.5 million, Telenor three million, Paktel over one million and Instaphone has 350,000 subscribers.

 

[Owais]

KS&EW sell-off plan shelved: revitalisation package approved

ISLAMABAD (August 04 2006): The federal government has shelved privatisation plan of Karachi Shipyard and Engineering Works (KS&EW) and instead approved a financial restructuring package worth billions of rupees for its revitalisation.

Besides, the administrative control of the KS&EW has been transferred from the defence ministry to the defence production ministry with new board of directors.

Official documents made available to Business Recorder suggest that Prime Minister Shaukat Aziz has endorsed the decision to stop privatisation of the KS&EW and its placement under the defence production ministry.

The financial restructuring plan had been deliberated at length at various forums after which the prime minister directed the defence and finance secretaries to work out a package for revitalisation of the KS&EW.

Accordingly, two meetings were chaired by the PM's principal secretary and attended by defence and finance secretaries to finalise the monetary package. The documents also said that advances and loans owed by the KS&EW of Pakistan Navy and GoP are Rs 1.534 billion, of which Rs 717.380 million pertains to Navy which would be converted into PN equity while Rs 816.628 million of GoP loans would be converted into GoP equity. However, non-interest-bearing liabilities of Rs 612.474 million would remain on the books of the KS&EW.

According to the documents, interest-bearing loans are of Rs 963.763 million of which Rs 116.712 million is bank loans, to be picked by Pakistan Navy through CNSDA and its contribution towards KS&EW's revitalisation. The GoP would convert the interest on provident liability of Rs 847 million into equity whereas the KS&EW would clear principal liability.

The documents said the federal government would arrange a total of Rs 3.22 billion from the commercial banks over three years on its own guarantee. The amount would be raised annually on a need basis in line with the financial restructuring plan. The KS&EW would repay principal amount, while the interest on loans would be picked by the GoP. The payment of interest would be counted towards GoP equity. The KS&EW would also construct fourth F22P frigate with the cost of $8.8 million to be arranged by the GoP.

The Karachi Shipyard and Engineering Works would also announce Voluntary Separation Scheme (VSS) for the employees for which Rs 500 million would be arranged through the defence budget in two years, whereas Rs 320 million would also be picked through defence budget to construct accommodation for the Chinese engineer who would work on the frigate project. It would work on the pattern of Pakistan Aeronautical Complex, Kamra, and cater to Pakistan Navy's requirements on similar lines as PAC does for PAF.

The PN dockyard would not overlap the work being done at the KS&EW. Hence, the PN would transfer ship building design, construction facilities and machinery to the KS&EW, the document added.

All domestic maritime sector organisations like Pakistan Navy, MSA, PNSC, KPT, PQA, and GPA to right give of first refusal or price preference to the KS&EW, for all their requirements, induction in line with commerce ministry's SRO 827(1) 2001 and relevant ministries to ensure its compliance.

The implementation of financial package and the viability of the KS&EW would remain under regular review of the government. The defence production ministry would also attempt to arrange partnerships between the KS&EW and other international shipyards, the documents added.

 

[Owais]

Pakistani firms to be listed in UAE by year-end

DUBAI (August 04 2006): By the end of 2006, 10 Pakistani companies currently listed on Karachi Stock Exchange will be listed in the United Arab Emirates. Hanif Jakhura, chief executive of Pakistan's Central Depository Company, central securities depository, will be in Abu Dhabi on September 18.

To sign an Memorandum of Understanding (MoU) with officials from Abu Dhabi Securities Market, Bilal Khan Pasha, commercial secretary at Pakistani consulate in Dubai, said.

Jakhura will sign a similar MoU with Dubai Financial Market on September 20. "We expect listings to take place within two to three months of signing MoUs," Pasha said. Priority is being given to Pakistani companies in which UAE investors hold significant stakes.

So far, there are firm plans to list three companies-United Bank Limited, Pakistan Telecommunication Company Limited and Bank Al Falah Limited, Pasha said. Other seven companies will be finalised before MOUs are signed.

He said Enshaa, a joint venture between Al Futaim Group of UAE and Pakistani shareholders is in process of listing on Karachi Stock Exchange and could be among final 10.

Abu Dhabi Group owns Bank Al Falah and has 50 percent stake in United Bank Limited while Emirates Telecommunications Corporation, or Etisalat, recently acquired a 26 percent stake in PTCL with its management control.

"We have many companies that are interested in listing here. However, we are short-listing 10 from banking, telecom, service and real estate sectors," Pasha said.

Syed Qaiser Anis, president of Pakistan Business Council Abu Dhabi said Commercial section of Dubai Consulate and Pakistan Business Council played role of matchmaker between CDC and UAE financial markets. In addition to listing shares on UAE stock exchanges, Pakistan intends to listbonds, mutual funds, and open-and closed-ended funds in UAE.

Pakistan has now allowed companies dealing in funds to invest 30 percent of equity in non-Pakistani products, he said. This gives them chance to seek listing on UAE financial markets.

Anis said registering in Dubai International Financial Centre financial free-tradezone is also possibility. "If we register here, it will be a different ball game altogether. Companies would be able to list funds and bonds on other Gulf Co-operation Council markets, in addition to UAE exchanges." Pasha said UAE's large Pakistani population is largely untapped, and predicted listing of Pakistani companies here will change that. He said listings will be equally beneficial to UAE stock markets and Pakistani companies. "We have to tap surplus investment capital in UAE."

 

[Neo]

ISLAMABAD (August 04 2006): The Planning Commission has identified 10 major areas to cut down wastage through prudent use of natural resources and give a further boost to the economy. These were agriculture, water resources, industry, quality education, transportation, infrastructure (roads network), airports, ports and shipping facilities, railways, energy and social sector.

Medium Term Development Framework (MTDF) 2005-10 is serving as a catalyst for effective implementation of the strategy. MTDF, launched in July last year, mentioned that the national economy suffers $12 to 14 billion loss annually due to wastage in different key sectors. It clearly indicated that agriculture, manufacturing, water resources, transportation, education and health were some of the major loosing areas.

During a talk with Business Recorder on Thursday, a planning commission official said a multi-pronged strategy was being actively pursued for improvement in all identified areas by cutting down losses to the economy. Conservation of water resources is vital for quick economic growth and the strategy deals with the issue on emergency basis.

The official said to conserve water and reduce its losses, the government initiated a programme worth Rs 62 billion for lining of water courses and irrigation channels and canals were being streamlined to stop wastage of water.

Building up of five mega dams to stop water going into sea is also a major initiative and it will address the issue of water shortage on long-term basis.

To supplement these efforts, large number of small dams in NWFP and Balochistan were being funded by the federal government. These projects will save 16 million acre feet (MAF) water that is either simply going waste or running down into sea during the monsoon season. The official was of the view water conservation alone can give great boost to the national economy and its benefit to the people in terms of income could be around $5 billion.

Transport is another area where Pakistan is performing very poorly. The World Bank's study indicated poor transport system and dilapidated road network was causing huge loses to Pakistan's economy. The government has undertaken a programme at a cost of Rs 350 billion for improving national transport system.

Ports, highways, airports and railways modernisation are also important part of the strategy and the official are pretty confident that its effective implementation can reduce losses/cost of doing business considerably.

The industrial sector is also another area, which is a focal point of the strategy.

The official said industrial wastage are due to low productivity of labour and to address the issue, National Productivity Organisation (NPO) is taking various steps, including vocational training and skill development.

The investment in the higher education has been increased from Rs 0.9 billion in 2000-01 to Rs 16.3 billion for 2006-07. Policy-makers are stressing the need of quality education and knowledge-based economy and these objectives could only be achieved by investing in education.

MTDF speaks of its importance and shows the budget for higher education will go up to Rs 28 billion by 2010.

The strategy also indicates huge losses in the agriculture sector and gives top priority to cut down wastage in this area. The official said the planning commission's strategy is to reduce wastage in agriculture through better handling of crops, balanced use of fertiliser and certified seeds use. He said research findings have shown that balanced fertilisers can give additional benefit of Rs 125 billion in only four major crops (wheat, rice, maize, sugarcane).

A 25-year energy development plan has been launched to ensure supply of power to all consumers' categories and at the same time Wapda and KESC have initiated various programmes to reduce losses.

MTDF indicated the federal government will spend over Rs 600 billion on social sectors such as health and education to improve living standard of the people.

 

[Neo]

PESHAWAR (August 03 2006): The Pakistan Army is extensively engaged in well being of tribal people through the length and breadth of Fata. The development projects in Fata are aimed at improving the quality of life in tribal areas.

The emphasis on these development projects has been laid to improve existing communication infrastructure, health care, management and development of water resources, said a press release issued by ISPR.

In this regard, a comprehensive plan for Fata has been planned, while South and North Waziristan agencies have been accorded priority to bring them at par with other parts of Fata, it added.

The release said that Rs 3.1 billion has been allocated for development projects in seven Fata agencies, adding that 94.6 percent of the total allocation is for the communication infrastructure. The construction of road has been given top priority in the army development projects so far 1,650-km roads and tracks have been constructed out of the total planned 1,911-km roads in the tribal areas.

Recently, Corps Commander Lieutenant General Mohammad Hamid Khan has inaugurated Road Inzari-Kandao-Chota Frontier in Khyber Agency. To enhance literacy rate in the tribal area, 32 schools have been completed that include seven schools in Khyber, 4 in Kurram, 11 in Orakzai, 4 in North and 6 in South Waziristan agencies.

To encourage and boost education standards in Fata, 50 students are being imparted education in the Army Public School at Bannu Cantt, whereas 5 students have already joined the Chinar Army Public School, Murree.

President Musharraf has very graciously approved admission of 5 students from Fata to Military College, Jehlum. The admission of 4 Fata students have been arranged in Sargodhian Public School, and students will join the institution on August 14, 2006.

Another important aspect of these development and welfare projects is provision of the free health care and medical facilities at the doorstep of tribes men. Since 2001, the establishment of free medical camps, specialist's camp and eye camps have been the regular features of the Army Medical Corps (AMC). Some 144 medical specialists, 150 specialists and 8 free eye camps, including 22 permanent medical camps are working round the clock to provide quality medical care to the tribals at their doorsteps. A total of 450,728 patients have been treated during the said medical camps up to July 5, 2006, including about 90,000 female patients.

Moreover, financial assistance on account of medical treatment has also been provided to certain needy people of Fata. Medicines worth Rs 40 million have been provided free of cost to the patients visiting these camps.

For provision of clean drinking water, the army engineers have constructed 25 water supplies schemes, installed 796 hand pumps, 18 tube-wells, 20 dug wells and 12 submersible pumps. In order to provide electricity facilities in Fata, the army has completed installation of 12 micro-hydel power stations in Khyber and North Waziristan agencies. These small stations produce enough electricity to meet the lighting requirement of adjacent houses.

A number of development projects in Fata, which include 1 tube-well, 2 dug-wells in Mohmand Agency, 1 micro hydel power station, 1 tube-well, 2 dug-wells in Khyber Agency, 1 water supply scheme, 1 dug-well in Kurram Agency, 2 water supply schemes in Orakzai Agency, 1 Girls Primary School, 1 tube-well, 1 dug-well in North Waziristan Agency, 1 dug-well, in South Waziristan Agency have been completed and people of the area are deriving maximum benefit from these projects.

Lieutenant General Mohammad Hamid Khan has instructed all concerned to complete welfare/development projects in shortest possible time, while ensuring quality of work

 

[Neo]

ISLAMABAD (August 04 2006): For the first time in Pakistan, manufacturing unit of solar energy converter panels has come into operation at Akhter Solar Limited (ASL), Hattar, with the production capacity of 3 MW per year, enough to give some relief to about 40,000 village houses in remote areas.

Addressing the inaugural ceremony at the venue, as chief guest, Chairman, Alternate Energy Development Board, Air Marshal Shahid Hamid (Retd) said that the timely intervention by the Akhter Solar Limited in the energy sector is of great value to the country and would give confidence to other investors to enter in this field, which is wide open.

A breakthrough in the solar energy sector has emerged with the enterprising efforts of the two brothers, Babar Mughal and Hamayun Mughal, who have entered in the manufacturing of solar panels with complete installation package of the solar energy system.

He said that there are 40,000 villages in Pakistan without electricity, which could benefit from this abundant source. Government is keen to utilise its entire means to exploit the available sources like hydel, solar, and wind to meet the ever-increasing energy requirements. These are environment-friendly, and in abundance, he added. Apart from this, work on bio-gas and bio-mass is also being carried out. The trend for the solar energy is developing globally, he maintained.

He was of the view that the solar energy could also be used in offices, which are open in the daylight, when the sun is at its peak.

Shahid said, our first target is 4000 villages, out of this 600 would be in Balochistan. Comparing with the wind energy, he said that this source of energy is more feasible as its availability is more reliable throughout the year.

Earlier, briefing the media, Managing Director, ASL, Babar Mughal, said, tendency of utilising solar energy in the world is on the rise as 30 percent of power demand is met through solar energy. Pakistan is lagging far behind in this sector. There is need to tap this natural source, which would also help the country to come out of the energy crisis, and accelerate development in rural areas, he added.

Giving some details of his plant, he said that they have acquired German technology and photo-voltaic cells from Italy. Presently, the panels are being assembled but soon they would start developing cells also.

He expected that due to high demand of solar energy plants, the cost of the units would further rise for some years globally as already there is shortage of these units world-wide, he added.

So far, they have invested 3 million dollar but hope to invest 30 million dollar more in two years to expand their activities by inducting other manufacturing facilities separately, he added.

While talking to the Business Recorder, Babar Mughal said that government would share the expense of solar energy units with the consumers and facilitate them with its major contribution.

In reply to a question, he said that the minimum life of the panel is 25 years, whereas dry battery lasts for 7 years. No major maintenance cost is involved, he said.

Others present at the ceremony were Director General, Hydrocarbon Development Institute, Hilal Ahmad Raza, pioneer in the field of solar energy and former Director of Institute of Silicon Technology, Dr Atiq Mufti, Director General, Pakistan Council of Renewable Energy Technologies, Dr Pervez Akhter.

 

[Neo]

New Delhi: Iran's Deputy Oil Minister Mohammad Hadi Nejad Hosseinian said India and Pakistan were offering to pay only half the amount for Iranian gas that Tehran was seeking as part of efforts to agree a pipeline deal.

"The price of the seller is about twice [that which] the buyer is asking for," he said. The gas would be delivered through a proposed $7 billion pipeline to run through Pakistan.

In India for a two-day meeting with officials from the South Asian neighbours and rivals, Nejad Hosseinian said Iran's price tag would benefit all.

Iran has the second-largest natural gas reserves in the world behind Russia about 940 trillion cubic feet while growing Asian economies, including India and Pakistan, are scrambling to find energy sources to feed industrial expansion.

 

[Neo]

ISLAMABAD, Aug 3: Springboard Research, a leading innovator in the IT market research industry, on Thursday announced that Pakistan PC/Server shipments grew 19.1 per cent in Q1 2006 to 128,729 compared to the same quarter of previous year.

The government spending picked up again in the quarter after slowing down in Q4 2005 due to the October 8 earthquake.

The government PC shipments registered growth of 35.3 per cent as compared to Q4 2005 and continued to be the biggest buyer of computers with a 22.4 per cent share, says a press release.

 

[Neo]

KARACHI, Aug 3: Industrial activities in Karachi remained paralysed for the fifth consecutive day on Thursday, as the power supply to five major industrial areas remained cut off or was irregular that hampered the normal production activity. It has been so since last Sunday when rains started to lash the city.

All the industrial areas -– Site, Korangi, North Karachi, F.B. Area and Landhi, housing around 2,000 to 2,500 units each -- are involved in the production for exports. Power supply interruptions in particular affect such units, as they have deadlines to meet failing which they incur losses sometimes amounting to billions of rupees.

With each passing day industrial losses are rising, as most of the export-oriented industries are apprehending to lose their export contracts or cancellation of L/Cs. The situation will impact negatively on future prospects.

“We have already missed shipping schedules but are still trying to renegotiate with our foreign buyers for rescheduling our L/Cs timeframe,” asserted a leading textile exporter. He said Pakistan was facing a tough competition from exporters of Bangladesh, India and China and was losing markets owing to high input cost and this situation would further weaken the country’s position in the world market.

Capt A Moiz Khan, patron-in-chief of the North Karachi Association of Trade and Industry, lamented that due to unabated power failure since Sunday, the entire industrial area of North Karachi remained affected.

He said shipments were being delayed, thereby causing colossal financial losses to exporters and estimated that around Rs2.5 billion loss had been suffered during the last five days of power breakdown.

There are around 2,500 small and medium sized industrial units in the North Karachi industrial area and many are export oriented. Mr Khan said that 35 per cent units belonged to garment manufacturing where mostly female workers were engaged. However, since the power breakdown the production activity almost came to a halt in these units.

He was highly critical about the KESC management and said some reports suggested that preference had been given to residential and commercial consumers for rectifying faults developed after heavy downpour. Mr Khan said this was against the interest of the country because by halting industrial activity not only exports suffered but industrial workers also lost their daily wages. He appealed to Sindh Chief Minister Dr Arbab Rahim and Governor Dr Ishratul Ibad to take serious notice of the situation and put things right before it was too late.

A similar situation was observed in the Korangi industrial area where around 2,000 industrial units of large and medium sized are located, including two oil refineries. This area earns around Rs250 million per day in taxes for the country and provides jobs to millions of industrial workers.

Korangi Association of Trade and Industry chairman Gulzar Feroz told Dawn that there had been no power supply to the entire industrial area since last Sunday. The power supply was restored to some parts on Thursday but yet many areas are without power.

“Even today most of the industries are running at 50 per cent capacity and some are still using generators to which there is a limit,” he observed. Furthermore, he said even telephones were dead and roads were almost non-existence, as most of them swept under heavy rains.

“There are around 170 tannery units, 300 textiles and a number of pharmaceuticals and chemical industries and the area industries have suffered a production loss to the tune of Rs3 billion during the last five days,” he added.

Site Association chairman Ameen Bandukda said there was hardly any change in the situation on Thursday, as the power supply had not been restored so far. He said a meeting was held with high officials of KESC on Thursday afternoon and assurances were given to rectify the situation at the earliest.

Former Site Association chairman Majyd Aziz said the KESC distribution system was in a mess and could not bear even a little shower what to talk about four days continuous rains. He said his industrial units had been out of production since Sunday and KESC staff had been trying to restore the power supply.He said after finding fault in cables running between feeders, the utility staff was unable to find fault running between feeders and his industries. As a result of this situation, he said there was no water in the industry and telephones were also out of order.

In general almost all the industrial areas complain of non-existence of basic infrastructure, such as roads, sewerage, power and telephones. They feel that such factors add to their cost of production and also make their products of poor quality. They urged upon the authorities to work on war footings to provide these facilities if the country had to see progress and employment was to be created.

 

[Neo]

Friday, August 04, 2006

QUETTA: Balochistan Governor Owais Ahmed Ghani said on Thursday that the province had huge potential in the banking sector and he added that the government would encourage the private sector to make partnership with the government to exploit opportunities in the province.

He was speaking during the opening ceremony of the Islamic banking branch of Askari Commercial Bank in the provincial capital. Owais said the introduction of Islamic banking by the Askari Commercial Bank was an achievement. The people of Balochistan, especially farmers, will be the largest beneficiaries of the interest-free banking system.

“The establishment of a bank with Islamic banking system is the harbinger of a new era of stable economic system for the country,” according to the governor.

He said President General Pervez Musharraf had earlier decided to write off loans of Balochistan farmers. The farmers in the province would benefit greatly from interest-free banking facilities offered by the ACB.

Askari Commercial Bank Chief Executive Sheryar Ahmed said the bank would open more branches across Balochistan in order to promote Islamic banking.

 

[Neo]

WASHINGTON (AFP) - Pakistan's commerce minister pressed for talks on a free trade agreement (FTA) with the United States, billing such a pact as a "powerful tool" in the battle against extremism.

Humayun Akhtar Khan said that he hoped for progress towards talks on an FTA in the near future, framing Pakistan's drive for a deal in the context of its role in Washington's anti-terror war.

"We do not have a nod right now, we expect in the very near future we will have something positive," said Khan when asked by reporters whether he had been given a date when Washington was willing to open FTA talks.

"I expect in the very near future we will have something positive."

But Stephen Norton, a spokesman for US Trade Representative Susan Schwab, played down expectations of speedy talks with Pakistan on an FTA.

President George W. Bush's room for flexibility on trade deals looks set to be curtailed as his Trade Promotion Authority -- which lets the administration submit deals to a 'yes or no' vote in Congress -- expires next June.

"I would say there is probably not sufficient time to enter into and complete negotiations on an FTA before that time, given the number of free trade agreements that are already in the works," Norton said.

But he added: "We're in talks on a business and investment treaty. We're making some progress there and certainly the components of a business and investment treaty would be the basis for an FTA."

Khan said that a free trade pact with Washington could be crucial in easing dire poverty in Pakistan, and persuading people to turn away from extremism through the hope of new jobs and economic growth.

"An FTA between Pakistan and the United States would send a very good signal," said Khan, who has met Schwab and US Commerce Secretary Carlos Gutierrez on his trip to Washington.

"We are very grateful for the economic assistance that the United States has provided for us, (but) it is trade and not aid that is the long-term solution," he said.

"It is the way to help us in the fight against extremism that we have ... it is a powerful tool."

Just a one billion dollar rise in Pakistani textile exports to the United States, which currently reach about three billion dollars, would create 200,000 jobs in Pakistan, said Khan.

But any attempt to increase the amount of textiles imports would be sure to raise the ire of the politically powerful US textiles lobby, which guards its dwindling sector jealously.

Norton said Washington was broadly sympathetic to Pakistan's arguments regarding trade as an anti-terror tool.

"With new economic opportunities often comes political reform and greater respect for the rule of law," he said.

"The 9/11 commission report specifically recommended that trade be a component of our long-term policy in the Middle East, for precisely that reason, that trade and political freedom can go hand in hand."

According to Commerce Department figures, US trade with Pakistan last year totalled a meagre 4.5 billion dollars. Pakistan had a surplus of 2.0 billion.

 

[Neo]

NEW DELHI (AFP) - India, Iran and Pakistan agreed to appoint a consultant to try to resolve a row over the price of Iranian gas to be sold to the South Asian nations through a multi-billion-dollar pipeline.

After two days of intense negotiations, Iran stuck to its demand for a price linked to crude oil, while the buyers jointly sought a price band with a floor and ceiling, the Press Trust of India reported on Friday.

"The three nations will jointly appoint an international consultant to study the pricing issue," India's Petroleum Secretary M S Srinivasan told reporters in the Indian capital.

Iranian deputy oil minister M.H. Nejad Hossenian said all sides were unanimous on the importance of the seven-billion-dollar project but "the buyers (India and Pakistan) were offering a price which was half the price the seller (Iran) wanted".

India's Petroleum Minister Murli Deora said the consultant would submit its report in four-to-five weeks after which the officials of the three countries would meet against in Tehran.

"This is the last time we are trying to revive the project," an unidentified official said, according to the news agency.

Pakistan Oil Secretary Ahmed Waqar said Pakistan and India were united on the cost issue and were looking at a price affordable and reasonable to their domestic markets.

"We are pursuing a bilateral (Iran-Pakistan) pipeline and a trilateral (Iran-Pakistan-India or IPI) pipeline parallely. If for any reason, India does not join the IPI project, Pakistan would go ahead with the bilateral project subject to the price being affordable," he said.

The Iranian minister said Iran and India had alternative markets for sale and sources of supply. While Iran can sell gas to European markets, India has possible gas sources in Turkmenistan and Qatar.

"Decisions (by) each side will be taken in their own national interest," he said.

Deora said India remained committed to the pipeline project.

Sources said an international consultant was needed because there were substantial differences between buyers and sellers on transportation and gas processing costs.

A tripartite expert committee, formed Thursday to look into the pricing issue, failed to resolve differences, with Iran insisting on a transmission cost of 1.2 dollars per million British thermal unit (mBtu), while India and Pakistan suggested one-fourth of this cost.

On gas processing, Iran said 0.4 dollars per mBtu would be charged, but the buyers felt 0.2 dollars was a more reasonable price, sources said.

Tehran has remained adamant on its crude oil price-linked formula, which at 60 dollars a barrel Brent crude price, translates into a price of 7.2 dollars per mBtu -- 60 per cent more than what India was willing to pay.

Sources quoted by PTI said Iran wanted a price equivalent to 10 per cent of the Brent crude oil price, plus a fixed cost of 1.2 dollars per mBtu. Added to this would be the cost of transporting the gas through Pakistan.

New Delhi, however, was willing to pay no more than 4.25 dollars per mBtu for gas delivered through the 2,100-km line at its border, they said.

 

[Neo]

EDITORIAL (August 03 2006): Despite the transparency and fiscal discipline the government claims it has introduced, the country continues to sustain a crippling annual loss of $12-14 billion on account of waste of precious resources through improper utilisation.

The Deputy Chairman of the Planning Commission, Dr Akram Sheikh has made this sad disclosure in his briefing to the Public Accounts Committee of Parliament. The break-up of the colossal annual loss provided by him includes $5 billion in water sector, $3 to 4 billion due to poor transportation, $3 billion on account of industrial waste and almost $1.5 billion due to unscientific use of fertiliser, as well as waste of perishable commodities.

A Recorder Report has quoted him as saying that only by curtailing this huge loss can Pakistan develop its economy. According to Dr Sheikh, the government is trying to increase PSDP allocation from 4 percent to 7 percent of GDP in the coming years, while about 67 percent of the current PSDP allocation of $7 billion will be utilised for developing infrastructure in the power and energy sector.

The Planning Commission could only monitor 400 to 500 out of a total of 1900 projects, which means that the aggregate annual loss to the economy could add up to a much higher figure. The Planning Commission chief has also disclosed that there is no disparity in the execution of PSDP projects in the four provinces, which is a healthy trend that needs to be kept up in the larger interest of inter-provincial harmony.

The PAC has, meanwhile, advised the Planning Commission to increase PSDP allocation for education and health, which continue to be low priority areas despite statements by government high-ups.

The problem of misuse or misallocation of national resources in Pakistan has arisen essentially from a lack of transparency in public sector planning, budgeting and allocation of funds. The development expenditure that includes infrastructure improvement, instead of increasing over the years, has actually declined in real terms.

For instance, according to available data, it decreased from Rs 65.3 billion in FY 1991 to Rs 47.6 billion in FY 2001. And the trend can be extrapolated to have a reasonably accurate measure of its current quantum. The bureaucracy's culture of compulsive secrecy has shielded the policymakers' shenanigans over the decades.

Incidentally, the development priorities in Pakistan are often determined not by the potential beneficiaries or the elected representatives of the people, but by a stand-offish bureaucracy and a ruling elite that is often not in touch with the needs and problems of the taxpayers. Secondly, the absence of a culture of public debate on resource allocation has resulted in numerous budgetary distortions that continue to warp governance in Pakistan.

As the data provided by the Deputy Chairman of the Planning Commission showed, the mismanagement in water sector accounts for the highest quantum of loss to the national economy annually, followed by transportation, which continues to be in an equally poor shape. Being essentially an agricultural country, our failure to build additional water reservoirs over the decades has had a highly adverse impact on the country's economy. Similarly, although substantial strides have been made in improving the transportation sector, things remain far from satisfactory.

Unscientific use of fertiliser, which has been adversely impacting the quality of soil, has also affected the crop yields. The waste in perishable commodities too has been a big drain on the economy, as is apparent from the figures provided by Dr Akram Sheikh. Developing air-conditioned storage capacity can reduce the quantum of waste in perishable commodities, and the expenditure incurred on it can be recovered through export of high quality agricultural produce and fruit.

Lack of sufficient storage capacity in the country has, in fact, impeded the growth of agriculture sector to its full potential. It is obvious, though, that investment made in such infrastructure projects will yield incremental benefit for the country.

Viewed at a larger plane, non-transparency in the management of public accounts has resulted in serious governance deficiencies that need to be expeditiously rectified. The tendency to safeguard the interests of specific groups at the expense of the larger public interest has also done great harm to the country by generating income disparities. The examples include the government's reluctance to impose agricultural income tax, and its tendency to grant concessions and exemptions in taxes and tariffs, which often benefit only powerful pressure groups.

Increased debt servicing and defence allocations (because of the worsening security situation) have resulted in a growing fiscal squeeze, the negative effects of which have been passed on to the lower social strata. A policy of equitable sharing of national resources will be the best guarantee for inter-provincial harmony and national security. The government should see to it that there is a judicious allocation of national resources, and that no waste of any kind takes place in any sector.

 

[Owais]

USDA forecasts another bumper cotton crop

KARACHI (August 05 2006): The United States Department of Agriculture (USDA) has forecast that Pakistan would get another bumper cotton crop of 13.8 million bales during 2006-07, despite uneven weather conditions, it is learnt.

An extensive satellite survey carried out by USDA last week (July 28) assessed the crop conditions of the world's biggest cotton producers--Pakistan, India, United States, Brazil and China--and forecast that these countries would have bumper cotton crops this year despite unfavourable weather conditions.

"The USDA has anticipated that Pakistan's cotton output this year would be 1.1 million bales higher than last year's crop of 12.7 million bales, after calculating the entire sowing area and the growth of the crop," sources said.

The US Department of Agriculture (USDA) has also mentioned in its survey report that India's cotton crop would get smarter gains than last year's figures, with an increase of 2.6 million bales, to 24.4 million bales this year.

According to the official statistics of China Cotton Association, declared by USDA, China's cotton output could fall by 1.1 million tons to 6 million tons, compared to 7.1 million tons of last year.

Similarly, cotton crop estimates for United States are also calculated to be 4.463 million tons, 1.037 million tons less than last year's crop of 5.5 million tons.

Elaborating the USDA estimates, President of Lubbock Cotton Exchange, Texas USA, Richard L. Drachenberg said, "Texas is the largest cotton producer of United States. However, we are anticipating reduction in current cotton crop by 39 percent this year." Regarding Brazilian crop, the USDA quoted the Brazil's official crop assessment agency - CONAB, saying that the crop figures for this year would be inched up by 0.174 million tons to reach 1.197 million tons.

"Actually the recent rains in the cultivation areas across the country showed little pauses and wind kept on blowing even during the rains, therefore, the recent heavy rains did not leave any adverse affect on the crop," said Ghulam Rabbani, Chief Executive of Drachenberg Trading Company, Texas (USA).

He said that if there had been suffocation and sharp sunlight during the showers, the crop might have been destroyed because the saplings can not survive.

Rabbani said that USDA conducts such a comprehensive survey that it separately counts the entire sowing area, plants and flowers sown on each acre.

Senior cotton brokers were of the view that out of the total sowing area, the share of Punjab would be the biggest with 70 percent, followed by Sindh with 26 percent and 4 percent of Balochistan and NWFP. Provisional figures shows that cotton crop was sown on 3.29 million hectares this year as compared to 3.21 million hectares last year.

 

[Owais]

$80 million exports loss due to six-day power failure

KARACHI (August 05 2006): The country sustained around $80 million exports losses in the past six days owing to industrial production activity remaining paralysed as power supply of five major industrial estates of the city remained cut off.

On Sunday, July 30, 2006 at 2 pm, power supply to Site, Korangi, North Karachi, Federal 'B' Area, and Landhi industrial estates was cut off on the plea of heavy rains. However, the utility company failed to resume normal power supply in many areas till Friday.

According to estimates, Site area alone suffered around 8.2 million dollars daily whereas the North Karachi industrial estate losses come to around $1 million a day. Korangi industrial estate lost 50 percent of its production of Rs 250 million daily.

Site Association of Industry (SAI) Chairman Amin Bandukda said that a day's closure of industrial units in Site area causes production losses of Rs 2 billion, and export losses of $8.2 million.

He said that around 80 percent of units in Site remained closed for five days owing to power failure. Only those units were in production which have their own power generating units, he added.

He said that on Thursday officials of Karachi Electric Supply Corporation (KESC) had assured that power would be fully restored by Friday morning but the promise remained unfruitful.

He said that on the sixth day on Friday power was restore in some parts of Site, but it again failed. He said that still around 60 percent units were closed in the area.

Korangi Association of Trade and Industry (KATI) Chairman Gulzar Firoz said that daily production in Korangi industrial area is estimated at Rs 250 million, out of which 50 percent is exported.

He said that on Friday power supply to some parts of Korangi Industrial area was restored and industries resumed production activity. However, the KESC staff was still working to normalise power supply in the remaining areas. He said that the condition of roads is still in very bad, which is creating problems in goods movement.

He urged the city administration to depute some staff to repair the roads in the industrial area and arrange water pumping to clear stagnant water from roads

Captain Moiz Khan, Pattern-in-chief of North Karachi Association of Trade and Industry (NKTI), said that a day's industrial production in the industrial estate comes to around Rs 200 million and exports to around $1 million.

He said that after five days power was restored but it again went off after some time. The industrial estate is in very bad condition. Around 80 percent of telephones are out of order and roads are presenting the look of a water pool. He said that there are around 2500 industrial medium size industrial units in this industrial and majority of them produce goods for export. He urged the government to take appropriate measure to restore power supply in the area, clear stagnant water and restore telephones.

Vice Chairman, Pakistan Chemicals and Dyes Merchant Association (PCDMA) Shaukat Riaz said that Jodia Bazar is without power for past 150 hours. Roads are ruined creating problems in movement, car driving and parking. He said that those who have generators are also facing problems due to continuous running. HE urged the KESC and city government to take measures to restore power supply in the area and clear the roads.