Pakistan Economy - News & Updates - Archive

[Neo]

Meet 70pc domestic needs; Pak medicines compete well Indian and China

KARACHI: Pharmaceutical industry is one the most potential sectors of Pakistan that the government considers being the fastest export-oriented as well as profitable for the country owing to a less competitive international market.

Vice Chairman Pakistan Pharmaceutical Manufacturers Association (PPMA) Zahid Saeed stated this while highlighting the developments and future prospects of the pharmaceutical industry in an exclusive interview to The News.

Zahid Saeed said exports of pharmaceutical sector had recorded tremendous growth, netting US$63 million during the year 2004-05. Earlier, the exports had remained frozen around $25 million in the previous four years.

“The pharmaceutical exports are rising rapidly at the rate of 20 per cent per annum and the sector is expected to attain 40 to 45 per cent growth in manufacturing and exports by 2010,” he anticipated.

“We (pharmaceutical industry) has set an export target of $1 billion by 2010, which is achievable.”

Briefing on the export process of medicines, he said the importing country sought 100 per cent guarantee and scrutiny of the manufacturing industry and its products, adding this procedure wasted a long time and cost extra to the exporters, eventually causing delay in exports.

The importer takes about two years to gather comprehensive information about a pharmaceutical company and its products and the expenses on registration, visits of importer’s representatives and other processes are borne by the exporting company.

The PPMA vice chairman admitted the pharmaceutical sector had more potential than other export-oriented industries, but he was not satisfied with policies of the government, which he said did not provide facilities for the sector.

“The government is not playing a proper role in boosting the growth of pharmaceutical sector, just like it is facilitating others such as textile,” he pointed out.

“The 10 per cent import duty on raw material should be minimised, which directly affects the prices and exports of pharmaceutical products.”

He suggested the government should give the pharmaceutical sector top most preference in Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs) with other countries. Besides, he added, the Trade Development Authority (TDP) should provide ample representation to this sector during visits to foreign countries.

Discussing the problems, Zahid Saeed said paucity of human resource was a major hurdle in the way of increasing the production and exports of medicines because “this sector is run purely by relevant experts.”

In spite of many universities and medical colleges generating enough skilled and qualified pharmaceutical graduates, the worldwide demand encourages a sizeable number of professionals to migrate to developed countries, creating shortage in the local industry.

According to the latest survey of PPMA, about 80,000 retailers were engaged in pharmacy business in the country, but only 6,000 had mandatory qualification of B Pharmacy, he mentioned.

Zahid Saeed was satisfied with the current prices of medicines and drugs, which he claimed had not been hiked for the last five years. However, he added, the prices of essential items, petroleum products and many others had been increased substantially in the same period.

“Flour, pulses and vegetables are daily-use items, but medicines are not, which depicts the demand of medicines. However, the progress of local medicine manufacturing companies is very satisfactory, fulfilling 70 per cent requirements of the masses,” he added. About 70 per cent medicines are manufactured by local companies in the country.

He believed the Middle Eastern, ASEAN and North African countries were lucrative and big markets for Pakistan’s pharmaceuticals because the products were recognised for their high standard.

“Our products have a good reputation in the world and the price level is also encouraging compared to our competitors. Importers prefer to buy Pakistani products and offer five to 10 per cent higher prices than Indian products,” he said.

Like other areas, Pakistan competes with India and China in pharmaceuticals and its products best quality has escalated demand in the world market, jacking up exports.

He said the local companies were preparing almost every medicine and drug, even for serious diseases like cancer and hepatitis, but there was a need to manufacture vaccines and biological drugs.

There are barely 10 manufacturers in the world, who prepare and export various vaccines and biological drugs for curing fatal diseases and epidemics.

Zahid Saeed said the country needed to manufacture vaccines of polio, anti-tetanus and other diseases, which were very crucial for the lives of people.

“We imported a huge quantity of costly anti-tetanus vaccine from India for the quake-stricken people,” he recalled and questioned “if any mishap occurs in the country and pharma companies cannot meet the demand then what will happen?”

Concluding, the PPMA vice chairman said the substantial growth of pharmaceutical sector was providing huge employment opportunities in fields like printing, packaging, sales and many others.

 

[Neo]

ISLAMABAD, Aug 30: A high-level meeting under President Gen Pervez Musharraf on Wednesday decided to facilitate increased liquefied natural gas (LNG) and liquefied petroleum gas (LPG) imports by the private sector.

It was also decided to ask the Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipeline Limited (SNGPL) to extend their pipeline network to cities and towns in order to overcome the energy shortages in the country.

Deputy Chairman Planning Commission Dr Akram Sheikh, who attended the meeting, told Dawn that a decision had also been taken that the government will construct new berths at Port Qasim, Karachi, to help store the imported liquefied natural gas and liquefied petroleum gas.

The private sector, he said, would be provided necessary facilities to invest in energy related projects with a view to cut the growing energy shortages.

Dr Sheikh said that the meeting discussed various proposals to attract further foreign investment in the oil and gas sector. "And our new measures are expected to help attract more foreign investment in this sector," he said.

Responding to a question, he said that the government will provide land to the investors at the proposed new berths at Port Qasim so as to extensively facilitate them.

He said the president told the meeting that there should be public-private partnership for constructing new gas pipelines. However, in case the private sector could not manage to transport LNG to cities and towns, then the public sector should take the responsibility to deliver, the president said.

Gen Musharraf said that the private sector's participation in the oil and gas sector was essential to give much needed impetus for ensuring fuel for Pakistan's sustained high growth rate, employment generation and socio-economic development.

The participants of the meeting were briefed about various incentives being taken by the concerned government agencies for attracting foreign investment in this vital sector and progress on provision of gas to various parts of the country.

The president emphasised the need for greater private sector participation in oil and gas and expressed the hope that all the concerned government bodies would take necessary steps to facilitate the investors.

The meeting reviewed in detail the progress on the supply of natural gas across Pakistan. The meeting was also attended by Minister for Petroleum and Natural Resources Amanullah Khan Jadoon, Minister for Ports and Shipping Babar Khan Ghauri and other senior officials.

 

[Neo]

'Plea for large-scale olive cultivation: Potential seen for $3.5bn export - PakTribune';

Thursday August 31, 2006

PESHAWAR : A study conducted by the NWFP agriculture research centre says that the province can earn $3.5 billion annually from export of olive oil by bringing under olive cultivation the high rainfall areas of the province.

“Two million acres of cultivable wastelands and uncultivated forest area can be brought under olive cultivation in the high rainfall zone of the NWFP and if olive produced from there is exported at a minimum value of $2,000 per ton, exports can earn nearly $3.5 billion annually,” said a study of the NWFP underlying a strategic framework for the province to achieve economic growth through private investment.

According to the NWFP government’s record, the province already has over 30 million wild olive trees which could be converted into ones compatible with varieties of high oil contents.

Pointing out that the existing stock of olive trees in the NWFP are wild in nature and happen to be small in size and carry low oil contents, the study recommends that the existing stock of olive trees could be converted into high yielding European varieties through top working to increase fruit yield and oil content.

“The existing trees provide a ready base for producing huge quantities of olive oil in a short period by converting them into high quality plants through top working,” researchers said.

The province, according to the study, is house to large tracks of land falling under high rainfall zones suitable for olive plantation.

The government has been proposed to exploit the situation to its benefit as olive oil production not only offers tremendous opportunities as far as earning foreign exchange was concerned, all the more, the provincial economy could experience a major boost in view of the increasing edible oil consumption patterns in the country.

Pakistan heavily relies on edible oil imports to meet its consumption requirements every year, therefore, according to the study, bringing more area under olive oil cultivation together with converting the existing stock of trees into high quality European varieties could help open a new avenue to attain economic growth by effectively exploiting the NWFP’s agriculture sector potential.

However, in an effort to take benefit of its geographical location, the government has been cautioned to take appropriate measures to address a host of issues — identified by the study — needed to be taken care with before venturing into olive cultivation.

The study has been carried out to pinpoint hurdles hampering growth in different sub-sectors relating to industries and agriculture sectors and suggest ways and means to remove those impediments to achieve economic growth in addition to identifying avenues with untapped potential.

Other than olive cultivation, the study envisages that the provincial government should also focus on tea plantation as it could be helpful in achieving good results from the agriculture sector which employs about 47 per cent of the NWFP total labour force.

The study suggests that taking greater advantage of its agriculture sector’s potential by bringing the untapped potential of tea and olive oil production under utility the province could make progress in its main objective of addressing the issue of increasing poverty through job creation and increasing income generation opportunities.

It has been suggested that the provincial government should take advantage of the National Tea Research Institute at Shinkiari, in the Hazara region of the NWFP, and persuade local farmers to switch over to tea plantation for which they should be assisted in terms of finances they would require initially.

 

[Neo]

ISLAMABAD (August 30 2006): Telenor Pakistan will now be reaching 613 destinations, within less than 18 months of the company's launch. The list of newly added destinations include: Badomali, Karor, Kundian, Makhdoom Pur Nayar, Khan Garh, Qabal, Chak Dhara, Gambat, Padidan, bhalwal-Miana Gondal-Khatiala Sheikhan-Miani Road, Gujranwala-AliPur Road, Lahore Satoki, Muzaffargarh-Alipur Road, Pansera-Dijcot Road, Badin-Talhar, Gidani, and Sukker, panu Aqil Raod.

These locations will be launched on August 31, says a press release. Stressing Telenor Pakistan's fast pace of achievements for the benefit of the customers, Telenor Pakistan's CEO Tore Johnsen said, "Telenor Pakistan today is the fastest growing network in the country and we are committed to developing the telecom sector, raising market standards, and offering value-added services."

 

[Owais]

Fourth Quarter budget deficit widens to Rs 325.18 billion


ISLAMABAD (September 01 2006): Pakistan's budget deficit widened to Rs 325.18 billion (4.2 percent of GDP), up by 150 basis points, in the fourth quarter of 2005-06 as compared to Rs 201.35 billion (2.7 percent) in the corresponding period of last fiscal, while the gross domestic product (GDP) grew by Rs 248 billion or ($4.13billion) during last three months of the FY2005-06.

According to the latest data released by the ministry of finance on 'consolidated federal and provincial budgetary operations' for July-June 2005-06 on Thursday, government's total expenditures stood at Rs 1.40 trillion, including unidentified expenses of Rs 86.31 billion whereas its revenues totalled Rs1.076 trillion.

This big increase in the budget deficit in absolute and percentage terms would force the government to expand its external and domestic borrowing to bridge the deficit.

The data reveals an interesting feature that during the first three quarters of the FY2005-06, GDP remained constant at Rs 7465 billion while in the fourth quarter it suddenly leapt to Rs 7713 billion.

If these are correct estimates then in FY2005-06, Pakistan's GDP growth was lower than 6.6 percent as claimed by economic managers. Perhaps there is some discrepancy.

It is pertinent to note that out of the total expenses, the government spent only Rs 364.99 billion or 26 percent on the Public Sector Development Programme (PSDP). A huge sum of Rs 787.295 billion or more than 80 percent was consumed by current expenditures. The defence expenditures were Rs 241.98 billion (3.1 percent of GDP) during this period.

After analysing and comparing the fiscal data of three-quarters to that of a year-ago, two important things emerge. First, the budget deficit is higher than what it was- 4.2 percent against 3.31 percent of the GDP. Secondly, the amount of unidentified expenses is much larger than what it was - Rs 86.31 billion against Rs78.50 billion.

On the positive side, the expenditure on 12-month PSDP during the period of this fiscal is higher than the same period of the last fiscal. This indicates a change for better in government's policies but much depends on the actual utilisation of the PSDP allocations. The actual utilisation of the PSDP in the first ten months of this fiscal year was about only 78 percent.

CURRENT EXPENSES: Within the current expenses of Rs 1.121 trillion in July-June 2005-06, Rs 435.62 billion went to general public services of the federal government, including Rs 195 billion on domestic debt servicing and Rs 42.11 billion on foreign debt servicing.

The defence sector devoured Rs 241.98 billion, expenses on public order and safety affairs ate up Rs 22.23 billion, and economic affairs consumed Rs 59.53 billion. The government somehow managed to spend Rs 17.95 billion (0.23 percent of GDP) on education affairs and services, but the most vital health sector received only Rs 5.17 billion. Worse still, the government spent only Rs 1.858 billion on social protections (direct relief to the poor) and a negligible sum of Rs 163 million on environmental protection.

The spending of Rs 5.17 billion on the health sector means this sector's share in the overall current expenses was 0.46 percent (0.067 percent of GDP) in the whole fiscal year. Similarly, Rs 163 million spending on environmental protection comes to 0.145 percent of total current expenses.

According to the data, the federal revenue collection during the twelve months was Rs 1.076 trillion. Rs 752.99 billion were tax collection while Rs 50.75 billion collected in lieu of petroleum and gas surcharges that include Rs 24.49 billion as petroleum development surcharge and Rs 26.26 billion from gas development surcharge. The non-tax revenues stood at Rs 272.88 billion during the July-June period of FY 2005-06.

The data further says that the federal government has transferred Rs 300.69 billion to the four federating units (Punjab, Sindh, NWFP and Balochistan).

The provincial revenues of the government of Punjab amounted to Rs 221.82 billion against the expenditures of Rs 236.10 billion during the July-June period of the FY 2005-06. Punjab received Rs 148.54 billion as revenue share from federal taxes as NFC Award share during these four quarters of 2005-06.

The total revenue of the government of Sindh stood at Rs 129.80 billion and the total expenditures of the province remained at Rs 136.02 billion during the period. It received Rs 96.32 billion.

NWFP's total revenue amounted to Rs 68.27 billion and total expenditure of the province was at Rs 76.85 billion. The NWFP government received Rs 35.51 billion from the federal government during the said period.

The total revenue of the government of Balochistan stood at Rs 30.45 billion and the total expenditure of the province remained at Rs 47.62 billion during this period of the current fiscal year. The provincial government received a sum of Rs 20.32 billion from the federal government.

 

[Owais]

July-August tax collection stands at Rs 93.1 billion


ISLAMABAD (September 01 2006): The Central Board of Revenue (CBR) has collected Rs 93.1 billion during July-August (2006-2007) against the target of Rs 91.5 billion, reflecting an increase of Rs 1.6 billion. Sources told Business Recorder on Thursday, the revenue collection target for July 2006 was Rs 39.5 billion, while the target for August was Rs 52 billion.

The provisional collection of Rs 93.1 billion during July-August 2006-07 was Rs 83.1 billion less against the target of Rs 176.2 billion set for the first quarter (July-September) of the current fiscal year.

According to provisional figures, the net revenue collection was Rs 93.1 billion during the first two months of current fiscal year against Rs 79.5 billion in the same period last year, showing an increase of 17.1 percent. This collection is expected to further increase in coming days.

Tax-wise break-up in July-August 2006-07 reveals collection of direct taxes was Rs 19.9 billion against Rs 16.6 billion, depicting an increase of 19.7 percent.

Sales tax collection has reached Rs 47.5 billion against Rs 38.5 billion, indicating a growth of 23.3 percent. Sales tax collection at the import stage was Rs 29.13 billion against Rs 24.66 billion, showing a growth of 18.1 percent, while sales tax collection on domestic consumption was Rs 18.35 billion against Rs 13.85 billion, showing an improvement of 32.6 percent.

Collection of the federal excise duty (FED) was Rs 9 billion against Rs 6.9 billion in the corresponding period last fiscal year, showing an increase of 29.5 percent.

The board has amassed Rs 16.72 billion as customs duty during July-August 2006-07 against Rs 17.45 billion in the corresponding period last fiscal, reflecting a decrease of 4.2 percent. This decline in customs duty is due to disruptions caused by rains in rail traffic between Karachi and rest of the country.

The provisional collection of federal taxes for August 2006 is Rs 46.9 billion against the monthly target of Rs 52 billion, showing a shortfall of Rs 5.1 billion.

Monthly breakup shows collection of direct taxes was Rs 9.8 billion; sales tax, Rs 23.5 billion; federal excise, Rs 5.0 billion; and collection of customs duty was Rs 8.6 billion during August 2006.

 

[Owais]

'Pakistan to maintained growth momentum'


LONDON (September 01 2006): Prime Minister's Adviser on finance Dr Salman Shah has said that Pakistan would maintain its growth momentum as its 54 percent population which is still below 19 years of age would maintain the demand buoyancy.

He was speaking at the three-day Pakistan Investment Forum, organised by Merrill Lynch in collaboration with the Khadim Ali Shah Bukhari Securities Pakistan Limited entitled "Pakistan Equity Investor Forum" which began here in London at the Merrill Lynch Financial Centre on Wednesday.

Salman Shah said that the increasing middle class in Pakistan which holds 51.6 percent share of the household income distribution has affected growth in select consumer markets led by cellular subscribers which have grown by 93.87 percent per annum.

He said that the growth momentum should continue going forward, considering Pakistan's demographic dynamics where 54 percent of the population is still below 19 years of age. "Going forward, these 'baby boomers' of Pakistan should maintain the demand buoyancy."

The adviser highlighted the vast pool of labour Pakistan possesses as this segment of the population enters the productive workforce aided by the huge investment Pakistan is making to develop its human resources. Shah said Pakistan GDP was better than many other countries in the region and Far Eastern countries. He named Vietnam, Egypt and Malaysia as examples.

He said that Pakistan's location advantage should not be underestimated as Pakistan is right at the hub of Asian growth due its logistical proximity with China, India, Central Asian countries and the capital and energy surplus Middle East region.

He briefed the investors of the policies and reforms that Pakistan had initiated to encourage foreign direct investments and foreign portfolio investments.

While highlighting the role of Pakistan's government in encouraging both the economic and the corporate governance turnaround witnessed over the past few years, Shah spoke of Pakistan's economic growth, sustainability and opportunities, economic turnaround and the way Pakistan became the fastest growing global economies over the past couple of years.

The adviser will have one-to-one meeting with global fund managers during his stay there. The forum is targeted as showcasing Pakistan's corporate sector and putting Pakistan on the foreign investor map.

 

[Neo]

KARACHI, Aug 31: Desperate to show that their main stakes are in the setting up of a new steel project at an investment of $350 million rather than in the controversial privatisation of Pakistan Steel, the sponsors of Tuwairqi Steel Mills are in the process of lodging a letter of credit to import $85 million worth of equipment and machines.

“We want our steel project to be commissioned by August 14, 2008,” Zaigham Adil Rizvi, project director of Tuwairqi Steel Mills, told Dawn on Thursday. After completing all the formalities Mr Zaigham and his team of officials are waiting anxiously for a call from the bank they have lodged the letter of credit.

“The import and delivery of machines and equipment for the plant in Karachi will demonstrate our seriousness and stake in the project,” he remarked without making any direct reference to business circle gossips that the Saudi group was here to acquire Pakistan Steel with about 5,000 acres of land with excellent infrastructure facilities.

“Our initial plan was dovetailing state-of-the-art technology of the new plant with that of Pakistan Steel and to maximise the exploitation of infrastructure facilities,” Mr Zaigham made it clear, but added hastily that “now we are on our own and we are investing heavily in developing infrastructure facilities that include power generation, transmission and other facilities.”

On completion, the steel mill project in Karachi will be the ninth member of the Saudi Arabia-based Al Tuwairqi Group of companies in Dammam that now boasts of three-fold increase in annual turnover to 1,500 million Saudi riyals in 2005 from 450 million riyals in 2001. The group owns and operates six steel mills in Saudi Arab, one in the UK and one in Sharjah. The group has also acquired a steel project in Korea.

“We are exploring the

Pakistani market for our products where at present the steel market is for five million tons that is likely to increase to 7 million tons by 2010,” Mr Zaigham disclosed and pointed out that marketing of his project’s products in the local market would be with the approval of the Pakistan government and payment of duty so that it could be on a par with Pakistan Steel.

Claiming that quite a substantial civil work has been completed for the upcoming steel project on a 220-acre plot at Bin Qasim in immediate vicinity of Pakistan Steel, the project director was confident of pushing up the installation of plant and machinery at a fast speed to complete the first phase in the next 18 to 24 months at a cost of $130 million.

It is a one-million-ton capacity plant that will produce more than half a million tons of steel billets mainly used in making rebars, wire rods, heavy structures, seamless pipes and other construction materials. The production capacity of the plant will be expanded from one million tons to 1.5 million tons in the future.

The project is based on state-of-the-art technology MIDREX -- a direct reduction process which uses natural gas to convert iron ore into direct reduce iron ore (DRI). A company brochure claims that 60 per cent of the current world production is based on this DRI technology.

The Saudi group has signed an agreement with Sui Southern Gas Company for the supply of 40mmcf of gas per day that will be used as fuel as well as input. The project needs 180 megawatt electricity for which KESC and Wapda have expressed inability to do it right now. A generation station of 35 megawatt is being set up. For long-term arrangement, the project has entered into an arrangement with Wapda for installing a 70km long 220kv transmission line. Four plants of reverse osmosis are being set up to convert the underground water into usable water.

“The average production cost of Pakistan Steel is $30 a ton as against international standard of $10 a ton,” Mr Zaigham remarked while trying to explain that his project will focus on the core job -— steel making -— and will outsource all other responsibilities.

The project plans to set up two centers of technology -- one at Karachi and the other in Lahore -- where engineers in different disciplines will be given on-job training facilities to develop expertise and then they will be posted in various units of the company to acquaint them with fast changing technologies.

Mr Zaigham said project engineers were examining iron ores from Chiniot and other places for raw material consumption in the production. But the decision will be taken on the basis of analytical reports.

 

[Owais]

Pakistan and Iran yet to improve trade relations graph: consul general


KARACHI (September 01 2006): The consul general of Iran, Syed Musa Hosseini, has said that Pakistan and Iran have yet to improve their 'trade relation graph' so that it could reflect the potential of the two countries and succeed in achieving one billion dollars bilateral trade target.

He was speaking on "Pakistan-Iran Relations: New Developments and Importance", held under the auspices of the Pakistan Press Foundation at the PPF Vickey Zeitlin Media Library, Press Center, on Thursday.

He said, however, it was encouraging that the trade was growing; though the pace is slow. "The enhancement in the bilateral trade target from $389 million to $1 billion is a good sign and shows that it is achievable through concerted efforts made by both the countries." He said that Iran-Pakistan-India gas pipeline strategic project, popularly known as "Peace Pipeline project" would be in the greater interest of the people of this region.

The consul general said: "The project would take off despite foreign resistance, obstacles and pressure. The officials of Iran and Pakistan through their sagacity and resolution to overcome problems would be able to implement the project. I have no doubt about it."

He said that Iran was pursuing nuclear technology for peaceful purposes and for the betterment of its people. Musa Hosseini said: "Iran considers acquisition of nuclear technology as its right which is in conformity with international laws and agreements. Iran has always avoided disagreements and conflicts on this issue. Iran keeping itself within the IAEA confines has offered dialogue to find out solution to apprehensions. This seems to be the only civilised manner to address such issues and it should be realised."

He disagreed with Ambassador Najmus Saquib Ali Khan that Iran's nuclear issue is a dispute and needed "honourable settlement." Hosseini said that it was Iran's right to have nuclear technology and it should be recognised. "Iran thinks it is not a dispute. It is a matter of its right."

In his remarks, Saquib had said|: "We are opposed to force and coercive methods for the solution to Iran's nuclear issue. We (Pakistan) seek honourable settlement of the issue."

Coming back to bilateral trade relations, Hosseini said that seriousness of the two governments toward improvement in bilateral trade could be gauged from the fact that meetings of the joint trade commission that were being presided over by the respective ministers would henceforth be presided over by the respective prime ministers.

Hosseini said that after a gap of four years in June 2005 the joint trade commission had met and agreements were reached at issues related to customs, transport, Sarawan-Panjgoor joint border market, Iran-Pakistan joint investment company, grant of visas to Pakistani businessmen and facilitation in import and export of goods. Preferential tariffs for bilateral trades were also agreed upon.

Recounting some more agreements, Hosseini said that to achieve objectives of bilateral trade Iran had thought it appropriate to connect Kirman with Zahidan with railway lines, construct Chahbahar Road and set up Iranian trade office in Karachi. It has increased the number of weekly flights from one in a week to four.

He said that there was no dearth of agreements and resolutions between the two countries, but they were buried in cold storage. The will to implement them needed resuscitation, he added.

The consul general talked about the wearing off of centuries-old cultural ties between the people of Iran and Pakistan and said that these ties should be strengthened and preserved as common heritage of the two peoples.

He said that there should be frequent exchange of visits of students, literary figures and cultural groups. "It would be necessary for our children to know about each other," he added.

Musa Hosseini brushed aside all reports that Iran was supporting insurgency in the neighbouring Balochistan and wanted the Gwadar Port to become dysfunctional and said that on the contrary Iran was supportive of Pakistan in its developmental efforts.

Ambassador Najmus Saquib, Dr Mukhtar Shaikh, professor, Department of International Affairs, University of Karachi and Fatehyab Ali Khan, chairman, Institute of International Affairs, said in their brief remarks that Iran and Pakistan were tested and trusted friends. The relationship needs further strengthening through mutual trust, frequent exchange of views and safeguarding of mutual interest.

The insurgency-like situation in Balochistan was attributed to general sense of deprivation and economic disparity. There is general sense of disinheritance of land and a feeling of alienation from the mainstream social and economic development.

 

[Neo]

Friday, September 01, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\01\story_1-9-2006_pg5_1

ISLAMABAD: The government is considering approving a proposal for the setting up of a China Industrial Park (CIP), where Chinese industries will be given incentives to establish their units.

This will be the first park specified for any foreign country, a senior government official told the Daily Times on Thursday.

The ministry of industries, production and special initiatives (MOIP&SI) has sent a proposal to the Prime Minister's Secretariat and the secretariat has sent the proposal to all other ministries and bodies concerned for their comments, the official said.

The official said that CIP will be established under the aegis of Pakistan Industrial Parks Development Company (PIPDC), which has the authority to establish industrial parks across the country. The official said the CIP could be established in Karachi. There is sufficient land available with the PIPDC near Pakistan Steel, as some of the non-core land of the mills is owned by the industries ministry.

The government rejected a demand of the Sindh government, which had demanded the ownership of non-core land as the same land was provided by the provincial government free of cost. The non-core land is thus owned by the federal government and, through the federal government, the industries ministry.

The official clarified that the first priority will be given to Karachi for setting up the first industrial park, which will be developed for the establishment of industrial units by a foreign country.

However, at the same time he disclosed there are other considerations, too. Some government experts are of the opinion that the CIP should be established in Balochistan near the under-construction Gwadar Port, he added.

The official said Balochistan is the most backward province. The province should have an industrial base for there will be nothing exportable from Gwadar Port if the industrial base remain non-existent. Industries in Punjab and Karachi are not expected to opt for import and export through Gwadar for their products will be charged additional transportation fee. Keeping this in view, some experts suggest that the CIP be established in Balochistan near Gwadar.

In the past, Pakistan offered the establishment of industrial units in Export Processing Zones. However, this offer was not largely welcomed, the official said.

The PIPDC was established so that the government could pursue a vigorous policy for improving the country's industrial base and increase its exports.

The official said the Chinese industrial sector will be given incentives so that other countries should also be encouraged to come and invest in the manufacturing sector. Most foreign investment is coming in communications, oil and gas exploration and telecommunication sectors.

There is hardly any investment in the industrial sector. Through the establishment of CIP, the government expects industrial sector of other countries will also come forward to invest in Pakistan.

The official said the proposal is under the consideration of the PM's secretariat. The industries ministry will formally submit a summary to the Economic Coordination Committee of the cabinet once the ministry obtains comments from all the stakeholders concerned.

 

[Neo]

Friday, September 01, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\01\story_1-9-2006_pg5_2

* PIA misses revenue target by Rs 75m in Q2 of this year due to rise in fuel prices
* PIA's fuel expense rose to Rs 8.405b in Q2 against the target of Rs 6.113b


ISLAMABAD: The Pakistan Steel Mills Corporation has earned a net profit of Rs 705 million against the target of Rs 2,125 million set for the whole financial year 2005-06.

The Pakistan International Airlines Corporation's (PIAC) fuel expense rose to Rs 8.405 billion against the target of Rs 6.113 billion in the April-June period of the current fiscal year.

According to the Financial Improvement Plan report of the state corporations, the revenue target of the PIAC during April-June 2006 could not be achieved by just Rs 75 million in the second quarter April-June 2006 by PIAC mainly due to increase in fuel prices. However, efforts are being made by PIA to meet the target in the rest of the year.

Expenditures incurred by PIA was Rs 19, 666 million against the target of Rs 16,968 million. An increase of 2.71% was observed. The increase in expenditure is mainly due to the increasing trend in fuel prices. Fuel expense rose to Rs 8.405 billion against the target of Rs 6.113 billion. Fuel prices continued to rock the entire airline industry as these bedeviled the budget and projections of most airlines.

The Pakistan Steel had set a target of 90% for capacity utilization of steel production during the fourth quarter of FY 2005-06, and it attained 87% of capacity utilization, during the quarter under reference.

As regards the capacity utilization for production of steel during whole of the year 2005-06, it remained at 62%, against its target of 90%. The Pakistan Steel has been facing serious operational problems since May 2005 due to the delay in undertaking their capital repair, which restricted the capacity utilization of steel-making at low level during the last three Quarters. However, the Pakistan Steel completed its indigenous capital repair of coke oven batteries by end-June 2006. Consequently, the capacity utilization for production of steel has started increasing.

A target of Rs 8,264 million was fixed for sales and other incomes during the fourth quarter, April to June 2006. The Corporation earned net sales of Rs 7816 million, which are Rs 448 million less than its target. Moreover, its total net sales during the whole FY 2005-06 stood at Rs 23,858 million, ie, 72% of the projected value of sale for the year under reference.

The Pakistan Steel earned a net profit of Rs 1503 million against its target of Rs 531 million during the fourth quarter of FY 2005-06. However, the profit earned by the Corporation stood at Rs 705 million against the target of Rs 2125 million set for the whole FY 2005-06.

The Corporation was carrying surplus cash of Rs 10,445 million at the end of June 2006 against the target of Rs 11,014 million, which is lower than its target.

In view of capital repair of coke oven batteries, although the PSM could not achieve the desired capacity utilization level of 90%, its utilization at 87% in the fourth quarter shows a positive sign from only 34% utilization in the first quarter with an overall picture of 62% for the current FY 2006-07. If the increasing trend in capacity utilization is maintained, it is highly probable that the anticipated targets for next FY 2006-07 will be achieved in terms of capacity utilization.

Further, the enhanced capacity utilization has also entailed positive trend on the sales for the fourth quarter, which depicts that the targeted capacity utilization will also enhance the sales volume as well which in turn will facilitate in achieving further targets.

For the quarter under review, the total cost factor (Rs 6,305 million) has also shown a decreasing trend compared with the projected cost (Rs 7,446 million). The increase in cost factor, in third and forth quarters, transpires the effect of repair work (completed in June 2006) which increase the input cost for further production.

 

[Neo]

Friday, September 01, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\01\story_1-9-2006_pg5_5

PESHAWAR: NWFP Chief Minister Akram Khan Durrani said on Thursday that the NWFP had all the prerequisites for economic growth.

He was speaking to representatives of Tullow, an international investment company, at the Frontier House on Thursday.

The management of the company briefed the participants about the company's activity in the exploration and exploitation of natural resources particularly in the field of oil and gas.

Tullow is planning to invest $26 million in investment in Kohat and almost $30 million in Bannu and its adjoining tribal areas where spots have been identified as potential prospects for oil and gas discoveries.

 

[Neo]

Friday, September 01, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\01\story_1-9-2006_pg11_4

ISLAMABAD: The Centaurus, Pakistan’s first seven-star hotel project, was inaugurated on Thursday. The $350 million complex is planned to have a 37-storey deluxe hotel, with two 21-storey residential towers, a 25-storey corporate office complex, and a 5-storey shopping mall. The complex will have a parking lot that would accommodate over 2,000 vehicles. The project will be completed in three years.

The Pak Gulf Construction Private Limited company (PGCL) and Messrs Atkins engineering company – the constructors of Dubai’s renowned Burj Al Arab – are executing the project. Saudi Arabian Al-Tamimi Group and the Sardar Group of Companies are making the investment.

PGCL Chief Executive Officer Sardar Tanveer Ilyas said that the structure complies with the building codes of the Capital Development Authority and can easily sustain an earthquake of 9.5 Richter scale. Ilyas appreciated Pakistan government’s policies, which he said, had encouraged him to make the investment. He said the project would provide employment to thousands.

President General Pervez Musharraf on Thursday said it was “the right time to invest in Pakistan” because of the country’s positive economic policies of de-regulation, liberalisation and privatisation coupled with a liberal foreign exchange regimen.

“We have opened all sectors of the economy for investment and the scourge of red-tapism and bureaucratic delays are being done away with,” said the president at the foundation-laying ceremony of The Centaurus.

Musharraf said that greater investment was also helping the country fight extremism and terrorism as both evils stemmed from poverty, illiteracy and the lack of economic opportunities. He said that all the government’s policies were in the best interests of the nation. “Whether it is relations with a country, diplomatic ties or our attitude towards investment, it is being done in Pakistan’s national interest.”

Interior Minister Aftab Ahmad Sherpao, President AJK Sardar Zulqarnain, Population and Welfare Minister Chaudhary Shahbaz Hussain and Chairman CDA Kamran Lashari attended the ceremony.

 

[Neo]

KARACHI (updated on: September 01, 2006, 18:36 PST): The government aims to build its first high-speed railway line at a cost of about $1 billion, and work on the project in Punjab province is expected to start next year, the country's railways minister said on Friday.

The service will run between the cities of Lahore and Rawalpindi, said the Pakistan Railways (PR) minister, Sheikh Rasheed Ahmed.

"The 270-km (170-mile) long double-track project will take two years to complete and will cost a billion dollars," Ahmed told Reuters.

"We have already received $300 million from the Asian Development Bank for the project, which we want to inaugurate before the elections," he said.

The country's next general elections are due late next year.

"We have invited international companies to participate in this project, and once completed, it will help us modernise our railways system," he said.

"Normally our passenger trains run at a maximum speed of 105 kph (65 mph), but the new train will have a top speed of 250 kph (155 mph)," Ahmed said.

Aziz Ahmed, chief engineer of PR, said about 70 million people used the system of 11,515 km (7,000 miles) of track a year.

Islamabad has also awarded a contract to a German company to do a feasibility study for a 900-km (560-mile) rail link between Pakistan and China.

 

[Owais]

Joint venture with Italian firm to set up sleeper plant




ISLAMABAD (September 02 2006): A joint venture of a Pakistani firm, 'HIS', and an Italian company, 'PLAN', will set up a sleeper manufacturing plant, adjacent to the existing infrastructure of concrete sleeper factory in Kotri (Sindh), sources in Railways Ministry told Business Recorder.

The Economic Co-ordination Committee (ECC) of the Cabinet in its last meeting had cleared the proposal to lease out one of the concrete sleeper factories of Pakistan Railways to the joint venture. Sources said that the joint venture, lowest successful bidder, had refused to take the existing concrete sleeper factory at Kotri, saying that the plant and manufacturing techniques followed by Railways were old and obsolescent.

However, after discussion with Railways officials, it was willing to take over the manufacture of twin-block sleepers in the factory, in addition to setting up a new plant at rates at which Railways is currently producing sleepers, sources added.

Under the proposed agreement, HIS would undertake the following:

i) Provide mono-block concrete sleepers to Pakistan Railways at Rs 1900 per sleeper, against Railways own cost of Rs 1845, and long ties at Rs 1700 per meter, not manufactured locally in the past. The sleepers provided by the lessee would, however, involve the use of low relaxation high tensile steel, rapid hardening cement and admixture during the grouting process to add strength and durability to the sleepers, which Pakistan Railways is not using at present. The cost includes a return of 10 percent, and 3.5 percent income tax payable by the lessee.

ii) Pay Rs 3.60 million annually as lease amount to Pakistan Railways for the property leased.

iii) Manufacture and supply of twin-block sleepers at Rs 1525 per sleepers, against Railways own cost of Rs 1537, through an agreement till such time as the existing plant and equipment remain functional.

iv) Improve the quality of sleepers by using low relaxation high tensile steel and adding admixture etc which are presently not being used by Railways.

v) Meet the Pakistan Railways annual requirement of a minimum of 200,000 concrete sleepers and other allied concrete sleeper products with the permission to manufacture any other products for the private sector. Additional orders may be provided through mutual consultation.

vi) Allow escalation in prices at 6.5 percent per annum on base price.

vii) In case of any dispute with the contractor, the matter would be referred to the arbitrator as per arbitration clause to be inserted in the agreement.

viii) The contractor will deposit bank guarantee for 2 percent of total cost as earnest money.

ix) The quality of sleepers would be tested by outside agencies.

Sources said that since Pakistan Railways is experimenting by offering concrete sleeper factory to private sector for the first time, the Ministry considered it appropriate to evaluate the performance of the product of one sleeper factory, at Kotri, for the time being.

Based upon performance, other concrete sleeper factory at Kohat would be leased in two years with HIS Industries being given the first right of refusal, sources added.