Pakistan Economy - News & Updates - Archive

[Neo]

By Naween A. Mangi

Sept. 15 (Bloomberg) -- Siemens Pakistan Engineering Co., a unit of Europe's biggest engineering company, said it aims to increase exports to the Middle East by 25 percent this financial year, taking advantage of an oil-driven infrastructure boom.
Sales of electrical transformers and industrial automation equipment to the Gulf countries will expand to 10 billion rupees ($165 million) in the 12 months to Sept. 30, 2007, from 8 billion rupees a year earlier, Chief Executive Officer Sohail Wajahat Siddiqui said in a Sept. 11 interview at the Karachi headquarters of the 136-year-old company. Exports may double by 2012, he said.
Oil prices, which tripled since 2002, have fueled an infrastructure boom in nations such as the United Arab Emirates and Saudi Arabia. The United Arab Emirates will boost its electricity generating capacity 52 percent to 19,400 megawatts by 2010 to meet demand that's rising as much as 7 percent a year, the government's 2006 yearbook said.
``Siemens Pakistan always pays good dividends and has a wide range of businesses,'' said Manzoor Ahmed Shaikh, head of research at the Pakistan government-owned National Investment Trust that manages 80 billion rupees and owned 25 percent of Siemens Pakistan as on Sept. 30, 2005. ``It's one of the best multinational companies in Pakistan, which is why we have held its shares since they were at about 200 rupees.''
Siemens Pakistan shares, which have risen 11 percent this year, fell 2.5 percent to 975 rupees on Sept. 8, the last time the stock traded.
Biggest Customers
Siemens Pakistan, which started exports when Siddiqui took the helm seven years ago, sells to 12 Asian countries. United Arab Emirates and Saudi Arabia are the biggest customers, buying powergrid stations, transformers, technology for cement plants and industrial automation equipment.
``We broke into markets like the Middle East where the `Made in Pakistan' label is far more acceptable than elsewhere,'' said Siddiqui, who has been with the company for 25 years in several countries, including Germany where parent Siemens AG is based. ``As it happens, those are the same markets where they have oil money to spend on growth.''
A fifth of the company's 50 billion rupees of new orders in the year ended Sept. 30, 2005, came from overseas. The company's profit almost doubled to 779 million rupees in the period from 412 million rupees a year earlier. Net sales climbed to 13.13 billion rupees from 7.11 billion rupees.
``Success stories like this are only possible when we have stable policies for several years,'' Siddiqui said. ``Our growth depends on the security situation, the economic environment and the cost of doing business remaining favorable.''
Home Revenue
The company's local sales will grow at double the gross domestic product rate in the next few years, he said. Pakistan's $129 billion economy is forecast to grow 7 percent in the year started July 1, compared with 6.6 percent the previous year.
Siemens Pakistan, which also makes networks for traditional and cellular phone networks, power generators, medical equipment and household appliances, has increased its workforce to 6,000 from 1,500 in the last seven years. The company plans to ramp up production to meet rising demand from the telecommunications and power transmission sectors in Pakistan, Siddiqui said.
Overseas investment in Pakistan telecommunications is expected to hold at $1 billion a year until at least 2009, Shahzada Alam Malik, head of market regulator Pakistan Telecommunications Authority, said in an interview on June 23. As many as half of Pakistan's 160 million people are expected to use telephones by that time, up from 23 percent in March this year and 4.3 percent in 2003, he said.
Transformers
Siemens Pakistan will complete building a plant that will produce 220 kilovolt power transformers at the end of this month. The 1 billion rupee plant, the first of its kind in Pakistan, will begin production in December 2007 and will be expanded to produce 500 KV transformers by 2011.
The company will also spend 1 billion rupees in the next two years to produce 3 megawatt power generators to add to the existing line of 2.2 megawatt generators. Pakistan expects an electricity shortfall of 5,530 megawatts by 2010.
Siemens will spend at least 500 million rupees every 12 months for the next five years on capacity expansion to take advantage of Pakistan's construction boom, Siddiqui said.
Pakistan's government allocated a record 435 billion rupees in the budget for the fiscal year that began July 1 for building roads and dams and upgrading ports.

http://www.bloomberg.com/apps/news?pid=20601100&sid=aVqdbRtdckPo

 

[Owais]

July-August remittances up by 22.72 percent


KARACHI (September 16 2006): Pakistani expatriates' remittances during first two months (July-August) of the current fiscal year 2005-06 registered an increase of $150.30 million, or 22.72 percent, as compared to the corresponding period of last fiscal year.

A total of $811.85 million was received as workers' remittances against $661.55 million of last fiscal year. The amount, $811.85 million, includes $0.80 million received through encashment and profit on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

During August 2006, workers remitted $434.84 million, against $348.41 million in August, 2005, depicting an increase of $86.43 million, or 24.81 percent.

The remittances during July-August, 2006 from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK, and EU countries amounted to $203.59 million, $165.34 million, $124.97 million, $115.42 million, $69.38 million and $24.60 million, respectively, as compared to $188.93 million, $119.56 million, $93.02 million, $85.49 million, $72.39 million and $17.15 million.

Remittances received from Canada, Australia, Norway, Switzerland, Japan and other countries during these two months amounted to $107.75 million as compared to $80.01 million in the corresponding period of last fiscal year.

The monthly average remittances come out to $405.93 million as compared to $330.78 million of last year. The inflows from almost all countries increased last month against August 2005.

According to break-up, remittances during August, 2006 from USA were $112.86 million, Saudi Arabia $84.42 million, UAE $65.35 million, GCC countries (including Bahrain, Kuwait, Qatar and Oman) $57.94 million, UK $37.68 million and EU countries $14.07 million as compared to $97.63 million, $62.93 million, $49.71 million, $44.93 million, $38.67 million and $9.89 million.

Remittances received from Canada, Switzerland, Australia, Norway, Japan and other countries during August 2006 amounted to $62.40 million as compared to $42.78 million during August, 2005.

 

[Owais]

Seven sectors identified for trade with Canada


KARACHI (September 16 2006): An 11-member delegation of Canada-Pakistan Business Council called on President of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Chaudhry Muhammad Saeed here on Thursday. Seven sectors of business were identified as potential sectors including health, education, financial services, Information Technology and power generation.

Anwer Merchant, leader of the delegation observed on the occasion that a Memorandum of Understanding (MoU) exist between the members of Business Council aimed at promoting trade between Canada and Pakistan. He said that Consul Generals in both the countries are working vigorously towards the same end.

The leader of Canadian delegation informed the businessmen that their counterparts are ready to transfer technology and are interested in working with people in food sector like preservation and quality improvement.

President FPCCI, Chaudhry Muhammad Saeed exchanging views said that Pakistan is a growing economy. The per capita power of the nation needs to be focused for a real economic breakthrough. He praised the present government for its liberal investment policies and said that yet Pakistan's natural wealth is to be explored. All that needed for boosting Pakistan's economy is progressive planning. We are the fifth largest milk producers but import dairy items, he said.

He dispelled the negative propaganda against Pakistan and said that people of Pakistan are very peaceful and policies pursued by the government are beneficial to foreign investors. During a candid discussion over investment opportunities in Pakistan, when human resources were mentioned from FPCCI side, a member of Canadian delegation inquired about the percentage of skilled labour.

FPCCI president admitted that skilled labour availability is limited at this point of time. He however told that concrete steps have been taken by Punjab government and federal government. Nine technical universities are planned out of which one at Sialkot is coming up fast, he informed the questioner.

To another question about important pieces of legislation to save foreign investor from cumbersome court procedures in case of a dispute as mentioned by a member of FPCCI, it was told that Pakistan has 20-30 trained Arbitrators. Arbitration Centres are being set up and legal, factual mechanism was being put in place, the delegation was informed.

Haroon Rashid, a former Karachi Chamber of Commerce and Industry (KCCI) President and senior member of FPCCI told the delegation that maximum facilities are extended to foreign investors. Pakistan offers security, financial inventive and above all legislative protection. He cited the examples of multinational companies and said these are earning money as their profit rates are 30-70 percent.

 

[Owais]

Engro to invest $200 million to globally expand its food industry


KARACHI (September 16 2006): The Chief Executive Officer (CEO) Engro Foods Limited Sarfraz A Rehman has announced to spend over 200 million dollars to expand its food industry globally as part of a larger programme.

This he said at a press conference held at a local hotel on Friday. Director Supply Chain Shamsuddin Sheikh, Director Marketing Ali Akbar, and Director Sales Babar Sultan were also present on the occasion.

CEO Engro Food Limited said that company had come out with a plan which comprised three phases to emerge as a global player. In the first phase the company will be transformed within the next five years into first national food industry giant, he said.

Unfolding the plan, he further said that in the second and third phases, they would intend to transform the company first into regional force and later into a global player in the dairy sector.

Regarding next year plan, Sarfraz said company's board had already approved Rs 2.0 billion investment package for 2007, in capacity expansion and marketing, including setting up of a proposed plant in central Punjab.

He said several dairy firms had entered the market in the past but failed to survive due to lack of technical expertise and financial soundness. "Some other business groups are thinking of also entering this field but have not realised the complex demands of the industry which require several years of preparatory work, high calibre of human resource and substantial investment in time and efforts," he maintained.

He speculated that in next three to five years only two or three major dairy firms would be existing in the consumer market and Engro would be one of them. He announced that the company would introduce new products/brands in various dairy categories after completing solid consumer and product research. The company has already hired various global research partners to develop its future portfolio, he added.

He observed that 46 percent livestock in the country could not be so far exploited. The company is running 300 shops in the country currently, and planning to set up more 1,500 such shops in next five years with the capacity of 2,000 direct jobs, he said.

Shamsuddin Sheikh said that Pakistan would emerge as one of the leading global dairy industries in the world after Europe and United Stated had started minimising subsidies in the dairy sector.

Regarding setting up a plant in Karachi, he said no plan by the company has so far been chalked out to set up its plant in Karachi, however in future it may be considered. Ali Akbar said that Central Asia and Middle East were the focusing zones for Pakistan to export dairy products.

 

[Owais]

Pakistan, Iran for early conclusion of talks on IPI pipeline


DUSHANBE (September 16 2006): Pakistan and Iran on Friday, while agreeing for an early conclusion of talks on their gas pipeline project, said it would not only benefit the two peoples, but also the entire region in the long run.

Prime Minister Shaukat Aziz in a meeting with the Iranian Vice President, Ali Saidu, on the margins of the SCO meeting of heads of governments also discussed bilateral relations, political and diplomatic ties and measures to further deepen their co-operation in all facets.

 

[Owais]

Oil and gas sectors: Pakistan offers to train engineers of Yemen


ISLAMABAD (September 16 2006): The Ambassador of Republic of Yemen, Abdul Elah Mohamed Hajar called on the Federal Minister for Petroleum and Natural Resources, Amanullah Khan Jadoon here on Friday and discussed with him matters pertaining to promoting oil and gas co-operation.

During the meeting the Minister said that there exists a lot of opportunities for Pak-Yemen co-operation in the oil, gas and mineral sectors and both countries could learn from each other's experiences.

Jadoon informed that Oil & Gas Development Company Limited (OGDCL) had already been participating in the bidding of two blocks in Yemen and team of oil and gas experts would soon visit to the country to explore for further opportunities in the oil and gas sector.

He said that Pakistan could provide training to Yemen engineers in the reputed Oil & Gas Training Institute (OGTI) here and extends co-operation in intra-country Pipe Line Transmission and Distribution Network in Yemen. He also extended invitation to Yemeni counterpart to visit Pakistan.

The Ambassador welcomed the OGDCL's participation in the exploration activities in his country and hoped that oil and gas co-operation between them would grow and flourish in the days ahead for the mutual advantage.

Secretary Petroleum and Natural Resources, Ahmed Waqar, DG (P.C) Naeem Malik Acting Managing Director OGDCL, Mubashar A Zafar were also present during the meeting.-PR

 

[Owais]

Turkish company keen to set up 150MW power plant near Sialkot


ISLAMABAD (September 16 2006): A 4-member delegation of Turkish company, Gama Energy, called on Minister of State for Privatisation and Investment Omer Ghuman and Chairman Board of Investment (BoI) here on Thursday and expressed interest to invest in power sector of Pakistan, initially setting up a 150 MW power plant near Sialkot.

The delegation headed by Suriyya also included Yucel Ozden, Member of the Board Managing Director of Gama Energy. The minister said brotherly relations between Pakistan and Turkey needed to be transformed into equally excellent economic relations. He said Pakistan offered the most liberal investment policies in the entire region, and asked the Turkish investors to take benefit of the conducive environment here.

The leader of the Turkish delegation showed interest in investing in the power sector and said they were also looking at other projects in the energy sector specially based on coal. Gama Energy (Turkey) is part of Gama Holdings which has revenues of approx $1 million in yearly revenue. It also owns a group of companies which includes IPPs in multiple countries around 2000 MW. Talat Miyan, Acting Secretary BoI and other senior officers of BoI also attended the meeting.

 

[Neo]

LAHORE (September 16 2006): Pakistan needs to incorporate new technologies and modern management practices and put intense focus on building an information-based economy by upgrading the technical and managerial skills of its people.

Punjab Information Technology Minister, Abdul Aleem Khan expressed these views while speaking at a launching ceremony of LCCI IT handbook "Open Source Technology", here on Friday. LCCI President Mian Shafqat Ali, Vice President Aftab Ahmad Vohra and Convener LCCI IT Standing Committee Armaghan Saqib were also present on the occasion.

The minister maintained that Pakistan could not attract major revenue from the world markets because its economy still largely based on the low-tech, low-value industries that have long been fully mechanised and running very efficiently in developed nations.

He further said that many countries had taken concrete steps to rejuvenate their stagnated industrial base by rapidly moving to the new-age technologies to produce products and services that are in great demand in the world markets.

According to him, information technology is the current choice of many developing and developed countries to upgrade their economies and become competitive in the global market place.

The IT-based economies have streamlined the most complex economies of the world and enhanced the productivity to the level where an economy such as that of the US has wriggled out of the entire trillion-plus dollars national deficit and turned into a surplus in recent years. The LCCI president said that the book has come to rescue the problems being faced by the IT users. The Handbook would serve as reference for the new comers and especially to managers.

 

[Neo]

Saturday, September 16, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\16\story_16-9-2006_pg5_5

KARACHI: Sindh governor Dr Ishrat-ul-Ebad Khan has expressed the hope that some 100,000 people will get job opportunities after the establishment of Garment Center and Textile City.

Presiding over two different meetings at governor house in which the progress achieved so far in relation to Garment Center and Textile City was reviewed.

He emphasised upon making available walk-in facilities to skilled workers for providing them self-employment facility in Garments City to be established in Baldia.This garment city, he said, should consist of big, middle and small units where business of all levels could be carried out and even small units could join the exports of international standard.

He stressed that work should be done with the concept of promoting workers, skilled people and labours. He also called for establishment of training centres in Garment and Textile cities.

Dr Ebad directed the concerned authorities that work should be started on the same pattern in various districts of interior of Sindh with particular focus on Thatta, Badin, Khairpur, Mirpurkhas, Sukkur etc on priority basis. He emphasised upon promoting traditional and old skills of various areas and expediting “one Hunar, one Nagar” (one product, one village) programme in this regard.

He made it clear that government’s objective is not to indulge in business or sell land but its all focus is on providing employment to common man and alleviating poverty.

 

[Neo]

Saturday, September 16, 2006http://javascript<b></b>:; http://www.dailytimes.com.pk/print.asp?page=2006\09\16\story_16-9-2006_pg5_8

LAHORE: Punjab Minister for Agriculture Muhammad Arshad Khan Lodhi has said that Punjab produced 17.2 million tons of wheat in 2005-2006 and the government wants to enhance this production to 20 million tons by benefiting from the latest technology and availing of experiences from the developed countries.

He was presiding over a departmental meeting to review the arrangement for a three- day seminar on wheat production national wheat production technology to be held in Faisalabad where agriculture experts and agro scientists and progressive farmers from all the four provinces will participate and give their recommendations to enhance wheat production. The minister said that the government wants to enhance wheat production. He said that farmers in Punjab are hardworking and land is fertile, and the latest technology should be used to increase production.

 

[glyn]

All good stuff Neo, and most interesting, but may I give a word of caution? Please do not get over-reliant on the undoubted short term benefits of agro-chemicals to boost crop yield, as there could be long term problems. One way round this is to add more agro-chemicals in future years, but this is expensive and is not good for the soil. If agro-chemicals are needed I would suggest that they are only used where absolutely necessary and applied at the lowest volume possible.

 

[Neo]

KARACHI: In its quest to modernise the indigenous engineering base and provide a springboard to the engineering industry of Pakistan to pursue a market expansion strategy, the Engineering Development Board (EDB) is all set to field a strong group of 16 engineering companies to display their products and capabilities at the world’s leading technology fair ‘MIDEST 2006’ scheduled to be held from November 7 to 10 2006 at Paris, said a press release issued on Friday.

MIDEST, the world’s leading industrial subcontracting show, offers a broad spectrum of technologies in metal processing, plastics processing, composite materials, electronics and electrical, micro techniques, surface treatments, industrial fasteners and industrial services fields.

After the resounding success of Pakistan’s participation at Hannover Messe 2005 and 2006, participation at MIDEST has also doubled over last year, indicating a mindset transformation where more and more companies are now looking towards export markets to stay on course in an increasingly competitive environment.

Technology fairs like MIDEST offers them a unique opportunity to embrace cutting edge technologies and forge business alliances with companies looking for viable outsourcing destinations.

 

[Owais]

Prime Minister for speedy execution of investment projects


ISLAMABAD (September 17 2006): Prime Minister Shaukat Aziz has emphasised the need for greater inter-ministerial and inter-provincial co-ordination to further expedite the implementation of local and foreign investment projects. He said this at a meeting held at Prime Minister House on Saturday to review the investment prospects and their fast tracking in the country.

The meeting was attended by Minister of State for Board of Investment Umar Ahmad Ghumman and officials of federal and provincial governments. The Prime Minister said that Pakistan is fast becoming a destination of choice for investors and investment is coming in from all parts of the world as a result of the macro economic stability, consistency and continuity of the government policies, transparency of procedures and investment friendly policies.

He said that processes should be simple and seamless to facilitate investments contributing to more economic activity, jobs' creation and enhancing the production capacity. The meeting identified power, cement, construction, agribusiness, livestock, real estate and hotel business, IT & telecom as potential areas where extensive opportunities exist for local and foreign investors.

Ghumman updated the meeting about various initiatives taken by the Board of Investment to attract investors. He briefed the meeting about major proposals for investment being processed by the Board of Investment.

The meeting was also attended by Minister of State for Food and Agriculture Muhammad Ali Malkani, Principal Secretary to the Prime Minister, Secretary Water and Power, Secretary Petroleum & Natural Resources, Secretary Industries and Production, Secretary Food, Agriculture and Livestock, Secretary Tourism, Secretary Defence, Secretary Board of Investment, Chief Secretary Punjab, Chief Secretary Sindh, Acting Chairman Wapda, Managing Director PPIB and senior officials.

 

[Owais]

July and August trade deficit rises to $2.13 billion


ISLAMABAD (September 17 2006): Pakistan racked up a $2.13 billion trade deficit during the two months (July, August) of 2006-07, which is about 36.7 percent higher than last year's deficit of $1.56 billion, Federal Bureau of Statistics (FBS) said on Saturday.

During July and August, exports amounted to $2.85 billion and imports to $4.98 billion, resulting in the goods and services deficit of $2.13 billion, the FBS said, and added that the gap was steadily widening.

It indicated that Pakistan spent more on importing petroleum products, machinery, sugar, raw material and other goods and services. Everybody paid more for oil, while Pakistan's businesses sold far less exportable products overseas.

The data shows that Pakistan's economy pulled in 17.86 percent more imports during the two months than the imports worth $4.23 billion recorded during the same period of last fiscal year, while its exports depicted an increase of only 6.87 percent. The high growth in imports and slow pace of exports are responsible for the burgeoning gap--a matter of great concern.

During August 2006, exports grew by 7.62 percent to $1.51 billion, from $1.40 billion of August 2005. Imports during this month amounted to $2.52 billion, which reflect a growth of 13.04 percent from $2.23 billion of August 2005.

The burgeoning deficit has put pressure on the rupee, which could also create inflationary pressure as Pakistan pays more for imported goods. It suggests that the rupee may still need to fall to help in narrowing the gap. But there is a risk of pushing inflation higher, if it does.

It is worth mentioning that the government has targeted imports of $28 billion and exports of $18.6 billion with a trade deficit of $9.4 billion. Now, in July-August (2006-07), the trade deficit stands at a bumpy $2.13 billion. At this rate, the deficit for the whole fiscal year 2006-07 could work out to about near $13 billion.

If the current pace persists, several economists said, more worrisome is the possibility that the swelling trade deficit will eventually cause a steep drop in rupee value against dollar and other currencies. Local importers would demand more for dollars in the coming months to finance their surplus imports. It would also increase interest rates rapidly and lower Pakistanis' living standards.

A glance at the trade data shows that consistent rise in the country's imports is disturbing for trade officials as exports/imports gap would be much wider than estimated.

 

[Owais]

Soviet-era junk steel ruining ship-breaking industry


KARACHI (September 17 2006): Over 100-year-Old Russian steel junk is paving its way into local market, which is hampering the ailing ship-breaking industry of the country. Newly elected chairman of the Pakistan Ship Breaking Association (PSBA) Azam Malik told Business Recorder on Saturday.

The ship-breaking industry facing hard times since 2004 as a large quantity of old Soviet-era junk steel, including outdated rusted water and oil pipelines continuously arriving in the country's market via Afghanistan through Chaman and Taftan borders from the Central Asian States.

Owing to its sub-standard quality, this junk steel is sold at a very low price in domestic markets as compared to broken ship steel and attracting some re-rolling mill operators on pricing issue, which is about Rs6-8 per kilogram cheaper than broken ship materials.

Malik appealed to the government to save the ship-breaking industry, which was annually generating Rs 3-4 billion in terms of taxes and duties to the national exchequer in 1999, but which have now shrank to only Rs 270 million in 2006.

He elaborated facts contributing to ship-breaking industry's decline. For higher profits, domestic re-rolling mills are utilising the Soviet steel for making steel bars used as construction material.

The issue becomes serious in view of the trend of building high-rises in cities. Who knows how much of this low quality steel will be utilised in these upcoming residential & commercial projects, he questioned, adding, "how many more Margallah towers like tragedies may waiting to happen."

Malik appealed to Chief Justice Iftikhar Muhammad Chaudhry to take 'suo motu' notice against unscrupulous elements, who are playing with the safety of the residents of newly constructed high-rises.

At present, domestic ship-breaking industry provides employment to 20,000 labourers and also provides indirect employment to 80,000 workers, who are facing the imminent danger of unemployment.

When President Musharraf took over power in October 1999, the industry generated revenues to the tune of Rs 3.53 billion, with 64 scrap ships anchoring at Gadani ship-breaking yard in Balochistan.

In 2000, 37 ships anchored at Gaddani, during the year and the government earned revenue of Rs 2.40 billion. In 2001, 27 ships arrived for breaking purpose that contributed Rs 778 million in tax revenues. In 2002, the number of ships increased to 36, whereas the government earned Rs 2.40 billion in revenues. In 2003, the government only earned revenue of Rs 710 million from domestic ship-breaking industry.

These revenue figures reached Rs 1.1 billion in 2004, but declined to as low as Rs 280 million in 2005. Tax authorities have earned Rs 160 million revenues in 2006 to date, he informed.