Pakistan Economy - News & Updates - Archive

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Task force of Pakistanis working on Wall Street set up: Shaukat seeks long-term investment

NEW YORK (November 12 2006): Prime Minister Shaukat Aziz has constituted a task force of Pakistani nationals working on Wall Street for attracting investment from hedge funds, private equity, venture capital and other fund management into Pakistan.

At an interactive meeting with a group of Pakistanis Friday evening from across the US arranged by the Pakistan embassy, the Prime Minister said under the new paradigm we are already tapping the capital market with bond and GDR issues.

But besides this, we want to attract long-term investment from the surplus pool of money and use it intelligently as a driver of the economy. He said our neighbour is doing it-so these funds have already reached South Asia. We need to pull some towards us and create the absorption capacity, he added.

Responding to the Prime Minister's plea for help, the Wall Street gurus said these funds were meant for seven to 10 years. The investors want security capital and an exit strategy. For this to happen the legislative system must provide guarantee that these funds are not usurped by successive governments.

The Prime Minister assured participants that the government was prepared to provide the enabling environment as well as the necessary legislative guarantees.

He asked them to come up with definite proposals and asked the minister of state for finance to co-ordinate with the task force comprising to channelise these funds into Pakistan.

Talking to media on Saturday, Prime Minister Shaukat Aziz said in order to enhance tourism the government has decided to focus on Trekking and Mountaineering clubs in North America, the Sikh community wanting to visit their religious sights and the Pakistani Diaspora wanting to know their roots.

He also said during his visit he has interacted with some members of the Democratic leadership. In the past, we also dialogued with them as the minority party. However, once various committees in the Congress are constituted we would further interact with them. He said the conduct of foreign policy is in pursuit of national interest.

"Our contacts will be used for the nation and not for personal gains," he added.

APP adds: Speaking about the upward trend in investment, the prime minister said a lot of foreign and domestic investment was taking place in power generation. The government, he said, was trying to attract people to set up power generation stations and provide electricity through public-private sector partnership.

The prime minister listed IT, telecom, oil and gas exploration, refining and distribution, hotel, tourism, construction and retail and wholesale supply chains as sectors offering promising opportunities. He said that there was tremendous potential for agro business as more and more companies were investing in dairy and other farm products. This would increase income of farming community in rural areas and help eradicate poverty.

He said that in textile and engineering sectors the country has skilled people who produce textile and engineering goods. He pointed out that wages of Pakistani workforce are lower and their productivity is high.

Aziz said the government left the IMF mode and went into international market by issuing bonds in order to achieve economic sovereignty and set a benchmark for the private sector to follow.

Now the private sector is coming into the bond market and liquidity is high in the Pakistani market, he informed the gathering. He said the focus of the government is on change of approach from conventional to unusual methods as no country can grow unless it attracts foreign savings.

Pakistan, he said, is poised to see a sustained upsurge in economic activity. He referred to the forthcoming visit of Chinese President Hu Jin Tao to Pakistan and hinted at establishment of economic zones for Chinese companies in Pakistan to produce and export goods. The Prime Minister said some Middle Eastern entrepreneurs were interested in establishing oil refineries in Pakistan for export to other countries. This would also create job opportunities for Pakistani people, he added.

Aziz asked the Pakistani Americans to identify sectors for their investment in the country. During interactive session with investors, he sought their suggestions and assured them that the government would ensure proper protection for their investment.

 

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ADP to provide $200 million to implement Punjab resource management project

FAISALABAD (November 13 2006): Punjab Resource Management Programme (Subprogram- III) will be launched during 2007 with the financial assistance $200 million of Asian Development Bank.

According to official sources, the goal of financial assistance is to help formulate subprogram-III and implement the cluster programme.

This will help support poverty reduction through good governance, including improved public sector resource management.

This project will provide policy advice and capacity strengthening through consulting services, with a focus on civil service reform, human resources development, and development of key institutions; pro-poor delivery of basic social and public services; and private sector development, public-private partnerships, and reforms in public sector organisations.

Despite many initiatives aimed at developing Pakistan's economic and social sectors, the country's level of development remains below its potential. Social indicators are poor. Issues of governance encompassing public institutions and functions have been identified as being central to the poor development performance both at federal and provincial levels.

The government has undertaken reforms at various levels, including the provinces, and ADB has been asked to help Punjab to reform its public sector and processes.

The Punjab Resource Management Programme comprising three subprograms over the subsequent years began in 2003 and will be implemented over a period of about five years.

According to ADB sources, the third subprogram would be presented to ADB Board for approval in 2007.

OFFICIAL SOURCES EXPLAINED THAT THE POLICY REFORMS UNDER THE PRMP ARE DIVIDED INTO THREE AREAS: fiscal and financial management, processes and institutions for pro-poor service delivery, and private sector development. PRMP will achieve its purpose when policy reforms result in public resource management that is efficient, cost-effective, transparent, and accountable and leads to higher equity and sustainability.

This project will have following components.

FISCAL AND FINANCIAL MANAGEMENT: A key responsibility of the program management unit (PMU) is to provide timely advice to the implementing departments and to co-ordinate support for implementation targets. Experts will be engaged to facilitate revenue and expenditure management; restructuring of public debt and provincial liabilities; analysis of inefficient subsidies and options for phasing them out; improve accountability and financial management systems; and a review of reforms for public procurement systems.

CIVIL SERVICE REFORM: To sustain the ongoing reforms, the Punjab government will reform its human resource management. This component will support the Punjab government to review and assess various options on restructuring the provincial civil service; assist in the preparation of a human resources policy; provide technical review for amendments to the legislation and rules of the provincial public service commission; and design a medium- term departmental restructuring plan.

In addition, this component will help the change management unit to circulate viable options for civil service reforms.

PRIVATE SECTOR DEVELOPMENT: A key focus of subprogram 2 is to facilitate province-wide reforms for private sector activities, forging public-private partnerships and reducing GOP's direct involvement in commercial activities.

Under this component, Project will be provided to draft laws, regulations and rules required to effect changes in the legal regime that impedes private sector growth; prepare templates for public-private partnerships; design provincial and local government innovations in business processes to encourage the inclusion of private sector in service delivery; help provincial and local governments to privatise and outsource agriculture-related functions; and prepare options for privatising public sector organisations.

 

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Dutch firm to open cash & carry stores

KARACHI (November 13 2006): The opening of three Micro Cash and Carry stores, being established by a Holland company in the city on immediate basis will be performed towards the end of November. Managing Director, Micro Cash & Carry, Mareh Miakie Wiez announced this while talking to City Nazim, Syed Mustafa Kamal during a meeting along with his delegation held at the Nazim's office.

A total of 150 local people would get employment in these three stores, he informed. The city nazim welcomed the company on starting their business activities in the city and said Karachi was one of the seventh largest cities of the world and its population is 17.5 million. It is not only the economic hub of the country but also of the whole region, where vast business opportunities are available.

The nazim said efforts were being made to provide the citizens with facilities of international standards, therefore, projects of infrastructure upgradation and development had been initiated in the city keeping in view the future requirements.

 

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Estimating the black economy

By Qazi Masood Ahmed & M. Haider Hussain

THE tax and tariff reforms during the 1990s can be regarded as the first comprehensive exercise of its kind and therefore it becomes desirable to gauge their impact on the black economy and on tax evading practices.

With some modifications, this paper uses the standard monetary approach to obtain the latest estimates of the size of the black economy and its macroeconomic implications.

If the underground economy is large and significant, there is a clear evidence of market distortions, poor governance and of disproportionate administrative regulations.

The phenomenon has been discussed and defined in economic literature under many different names such as unofficial, informal, unregistered, unobserved, shadow, subterranean, parallel, hidden, invisible and irregular.

Conceptually, there are four classifications of the underground economy according to the particular institutional rules they violate. These are: illegal economy; unreported economy; unrecorded economy and informal economy.

Moreover, as Schneider and Frey (2001), point out, the notion of underground or the black economy should not be identified only with illegality. Most of the activities are perfectly legal but the taxes are evaded due to different reasons and due to loopholes in the economy itself.

The study addresses the issue of the size of the unreported economy in Pakistan and in estimating the resources that are lost due to tax evasion and its avoidance.

As is evident, a comparison of these studies in the context of Pakistan reveals contradicting results vis-à-vis the size of the black economy. Econometrically, the bases of these alternative results may include (i) choice of variables, (ii) choice of the estimation period, and (iii) choice of the functional form and underlying assumptions.

The data for our analysis covers the 1960 to 2003 period and is obtained from various issues of the Pakistan Economic Survey and the State Bank of Pakistan’s annual reports.

The black economy turns out to be at its peak during the early 1960s, when the corporate and personal income tax rates were high. The corporate income tax rate was 30 per cent including 30 per cent super tax during that time. This (aggregate corporate income and super tax of 60 per cent) rate dropped to 40 per cent during the late 1980s.

Likewise, the maximum personal income tax rate was 75 per cent during the 1960-64 period, which was the reason for the black economy to remain well above 30 per cent of the GDP during the same period.

The black economy kept declining during the 1965-75 period, when this rate was brought down within the 60-70 per cent range (Qureshi, 1989, pp.23). Furthermore, this rate was 56 per cent during 1980-1986, later brought down to 39 per cent in 1988 and subsequently to 28 percent in 1993 – the effect of which is consequently reflected by the shrinking black economy in the periods under review.

However, Kemal (2003), reports an increasing trend of the black economy during 1995 and 1998 – which is contrary to our results.

A possible explanation could be the tax reform effect, which was absent in Kemal (2003). Furthermore, results of Kemal (2003) are based on a special specification where lagged dependent variable is used as explanatory variable with a high positive co-efficient.

In the present study, the impact of tax reforms is dominating. The black economy as a percentage of GDP declined by nine percentage points in case of both currency ratio and currency bearer bond equation during 1996 and 1997. The corresponding decline in tax evasion as percentage of GDP was 39 per cent and 32 per cent, respectively, for both methods used.( Figure 1 and 2)

The black economy remained relatively high during the early 1990s at around 26 per cent of GDP. During that period, tax-to-GDP ratio was almost stagnant at 13 per cent and the rate of return on deposits was falling - a disincentive to withdraw from activities related to the black economy

Nevertheless, during 1996-97, tax-to-GDP ratio dropped to 12.7 per cent after touching its peak at 14 per cent, coupled with the increase in rate of return on deposits from 6.4 per cent to 6.8 per cent. Both these factors, especially the tax reform effect, played a significant role in slashing the black economy.

The further decline of tax-to-GDP ratio during the 1999-00 period, which does not appear to have great impact on the size of the black economy, was actually the result of re-basing of the country’s GDP. On the other hand, the sharp decline of rate of return on deposits from 1998 onwards, acted as a hurdle in reducing the size of the black economy.

Roughly, the inclusion of bearer bonds increases, on an average, the black economy as a percentage of the GDP by five percentage points each year. Bearer bonds were introduced during the mid 1980s to promote savings.

Later on, they became a handy medium of exchange due to their limited physical quantity requirement for any transaction as against currency and also because of their hassle-free acquisition.

The annual compound growth rate of currency in circulation and bearer bonds during the last two decades remained almost the same; i.e. at 12 per cent. Also the size of the black economy has slightly increased from 2000 onwards. This is, perhaps, due to the reduction of rate of return on deposits, which declined by more than 30 per cent during the 2000-2003 period, revealing the weak stance of the monetary policy.

During the same period, the effective coverage of indirect as well as direct taxes was increased. This brought some of the untaxed sectors into the tax net, causing the tax-to-GDP ratio to increase slightly by 0.26 per cent.

In this paper, an attempt has been made to estimate the size of the unreported part of the economy, that is the result of tax evasion. This becomes of special importance once the impact of taxation reforms is incorporated. Overall, the black economy has a declining trend as a percentage of GDP. This is due to the tax reforms involving rationalisation of tax rates.

Despite the fact that the black economy as a percentage of the GDP has decreased, the annual compound growth rate of the black economy during the sample period remained more than 11 per cent. At disaggregated level, this growth remained at two per cent during the 1960s, 17 per cent during the 1970s, 15 per cent during the 1980s and 13 per cent during the 1990s and onwards .

Similarly, tax evasion grew at the rate of 12 per cent. This growth remained at five per cent during the 1960s, 19 per cent during the 1970s, 16 per cent during the 1980s and 11 per cent during the 1990s and onwards.

Estimates of the black economy cannot be taken as precise measures. They can, nevertheless, be effectively used to deduce broad trends and directions.

In the light of above discussion, therefore, several suggestions pertaining to policy actions can be made. Although increase in the direct tax revenue is vital for a developing country because of its redistributive effects, the medium of this increase, nonetheless, cannot solely be the increase in tax rates since this gives rise to tax evasion.

Instead, broadening the tax base would be an ultimate solution. To supplement these efforts, official administration regarding the detection and preventing of tax evasion should be improved.

Tax reform process should be consolidated and integrated with other macroeconomic reforms. The presence of loopholes in the system and the prevailing corruption among the tax authorities cannot be ignored when dealing with the issue of evasion.

These inefficiencies must be dealt accordingly in order to curb the tax losses and to reduce the cost of being part of the reported economy.

(Edited excerpt from SPDC research report on “Estimating the Black Economy through Monetary Approach”: A Case Study of Pakistan”).

 

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Hurdles in Indo-Pakistan trade

By Sabihuddin Ghausi

WHILE politicians in Pakistan and India continue to blow hot and cold, measured steps are continuing to enlarge bilateral trade ties between the two countries.

The statement by Indian Foreign Minister Parnab Mukerjee on Safta’s future in absence of co-operation he seeks from Pakistan or the threat held out by Pakistan’s Railway Minister to stop operation on Sindh-Rajasthan sector if India does not start its train service, are meant to cajole each other to move forward more speedily. These indicate some impatience with the pace of progress, made by either side, towards a mutually agreed direction.

It also indicates, as seen at the political level, the interest of the two sides do not coincide in some areas in the immediate context. Yet, the changing global trade trends leaves them with no or very little option but to forge closer trade ties.

These statements from the two senior politicians of India and Pakistan notwithstanding, the two neighbouring countries have recently taken three important decisions that will serve as catalysts for expanding their bilateral trade.

First, the ratification by Indian cabinet on October 28 of a protocol of direct shipping link between the two countries; second, a decision to resume cargo service between Indian and Pakistani Punjab and on the Sindh- Rajasthan sector; third, the move to open branches of two banks in each others’ countries.

Pakistan included more than 300 items early this month in its positive list for trade with India. “It means diversification of more than a billion dollar global import towards India,’’ remarked an executive of a giant chemical multinational who added that the list includes dyes and chemicals needed by Pakistan’s textile industry.

Within days after these announcements, Indian and Pakistan businessmen got busy in setting up warehousing facilities for dyes and chemicals at Lahore and Karachi.

“With the operation of direct railway cargo service and permission to import dyes and chemicals from India, we will save on freight, we will get a quick delivery. It will enable us to maintain a week or 10 days inventory rather than for three months’ period that we are presently doing while importing from Europe’’ said Mirza Ikhtiar Baig, a denim manufacturer whose product needs lot of dyes and chemical inputs.

Indian software houses are meanwhile exploring outsourcing a part of their international job to Pakistani companies. “It is wrong to assume that Indo-Pakistan trade is a one way affair” Baig said. Indians too need to share part of their commitments with Pakistanis and are desperately looking for partners at Karachi and Lahore. Pakistan Software Association leaders are in consultation with their Indian counterparts.

The bilateral trade volume is now close to $1 billion a year and businessmen look pretty confident of “at least 100 per cent rise in trade this year” says a Jodia Bazar trader. His optimism is based on increase of importable list from India, bilateral facilities like direct shipping, cargo train service and opening of bank branches.

A study of State Bank of Pakistan has recently projected two-way trade potential between Pakistan and India at more than $5 billion a year. The study is based on an analysis of items imported by Pakistan from countries other than India and available in India also. Indian global imports can be catered by Pakistan.

While the official two-way trade remains close to $1 billion, businessmen put volume of smuggling and circular trade through UAE at about $1-2 billion a year. ‘”The volume of trade—formal and informal, direct and indirect—is already worth about $3 billion’’, a Jodia Bazar trader said. Karachi’s famous Rainbow Centre in Saddar is a big ware house of smuggled Indian DVD’s of latest and old films, music and dance albums.

In Bombay Bazar, the shops display hoardings and billboards that offer packets of goods that can fetch between Rs5,000-10,000 in India. Called, “Done Trade’’ in business jargon, this is going on openly in India and Pakistan and beneficiaries are the hundreds of visitors.

Raees Ashraf Tar Mohammad, a leader of Pakistan importers based in Jodia Bazar, said that as many as half a dozen small and big launches sail between Karachi and Mumbai and Kundala in India. In May last year, Raees was in Mumbai with a goodwill delegation.

‘”The governments in India and Pakistan have no business to deny consumers the right to get goods and commodities in either of two countries at reasonable prices’’ he declared at a meeting amidst applause. His logic is simple. “Restrictions on trade promote smuggling because it is consumers’ right to get good quality goods at reasonable prices from anywhere’’.

Amjad Rashid, an international food trader doing relief and rehabilitation work in Afghanistan and Iraq holds bureaucrats of the two countries responsible for creating hurdles in two-way business.

“Now we should look beyond trade and explore signing some protocol to enter into joint venture arrangements’’. Amjad got an order to supply blankets to war-torn Afghanistan.

Pakistani blanket firms lacked the capacity to supply the order and so Amjad got these supplies from Amritsar and other parts of East Punjab.

The blanket industry in East Punjab is based on recycling and offers a piece at Rs150-200 that suits Pakistanis, while an average quality local blanket cost anywhere between Rs2,500-3,000. Those coming from Iran are somewhat cheaper. “ The Indian technology can create employment and provide blankets at affordable prices to local consumers,’’ argues Amjad.

Pakistan and Indian businessmen have suffered a lot because of their bureaucracies. Visas are difficult to get in Islamabad and Delhi. On most of the occasions, visas are denied without assigning any reasons. They are issued for specified cities rather than for the whole country.

Recently, an Indian journalist narrated in detail on website the hardships of Pakistani visitors invited by a Bangalore-based company to see their manufacturing facilities.

This company has set up a subsidiary in Dubai to service its customers in North Africa, West Asia and Central Asia. A few Pakistani companies came in contact with this firm and showed interest in doing business. Consequently, these businessmen were invited to India.

In India, these visitors were asked to report to police stations in which their hotels were located. “In one city, Pakistani visitors had to go to five different police stations because of their lack of knowledge about jurisdictions’, the journalist said..

“The experience of our Pakistani visitors with our bureaucracy was so horrendous that it was a real study in ‘how to repulse the visitors,’’ sums up the Indian journalist.

The communication between Indian and Pakistani businessmen is much easier than between businessmen of any two other countries because of the language. The market dynamics, customer expectations, cultural patterns, fashions and tastes for goods are almost same in the two countries.

These factors encourage big and small companies in India and Pakistan to explore new areas of cooperation. But bureaucrats and politicians miss no opportunity to create hurdles.

In Pakistan, the bureaucrats and politicians sit on decisions for giving MFN status to India.

Similarly in India, the politicians and bureaucrats want to keep Pakistan, Bangladesh and China away from any economic venture in their communication and infrastructure projects because of “security reasons.”

 

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Exports up 1.3 percent in Jul-Oct 06

ISLAMABAD: November 14, 2006:The country's exports in first four months of current fiscal (July-October) year were recorded at around $ 5.552 billion, showing an increase of 1.3 percent over the exports worth $ 5.478 billion realised in the like period of previous fiscal.

According to official trade figures, the exports during the month of October, 2006 totalled at around $ 1.282 billion as against $ 1.325 billion realised in the corresponding period of the last fiscal, showing a decrease of 3.2 percent in the like period of the last year.

The exports achieved 29.8 percent of the set target of $17.00 billion for the current fiscal while the import achieved 34.1 percent of the set target of the current fiscal.

During the first four months of the current fiscal, the imports also witnessed 9.0 percent growth to $ 9.560 from $ 8.877 billion in the same period of the last financial year.

The country's imports in October 2006 were recorded at $ 2.132 billion, witnessing a decrease of 8.3 percent over imports worth $ 2.326 billion realised in the corresponding month of last fiscal.

According to the provisional trade figure released here on Tuesday the balance of trade has reached -$ 0.850 billion in October 2006 from -$1.027 billion in September 2006.

 

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ADB Karachi uplift fund doubles, adds Hyderabad, Thatta

KARACHI: November 14, 2006: The Asian Development Bank (ADB) raised funding of Karachi Mega City Development Project from $400 million to $800 million, besides supporting expansion of Karachi master plan to include Hyderabad, Thatta and other nearby towns in it.

City Nazim Syed Mustafa Kamal in his recent tour to Manila had successful talks with ADB officials to raise funding for the project.

The ADB has also set up a local support unit in Karachi for study of uplift project with cost of $13million.

On Monday, an ADB delegation, comprised of director Dr. Jim Arthur, transport specialist James A Leather and urban economist Shane Rosenthal called on the City Nazim and discussed uplift projects of Karachi.

It was observed that after completion of master plan it would greatly help to plan and expedite uplift projects.

The delegation said the bank was interested in projects of transport, solid waste management, Katchi Abadies, training of employees, master plan and water board.

The delegates also held separate meetings with DCO Karachi and EDOs.

Meanwhile, the CDGK had set up a district town co-ordination committee for study of various sectors of Karachi Mega City Project. All town Nazims and town municipal officers would be members of this committee.

On the occasion, the City Nazim disclosed that after the talks with ADB officials, it was decided to expand master plan of Karachi and make it a regional plan by adding Thatta, Hyderabad and other nearby towns.

He said the studies would be conducted on problems of these towns, as well as, facilities available there, so that their residents could be provided with job opportunities near their homes.

He said that $ 13 million study of local support group of Karachi Mega City Project include Rs 10 million project of developing parks and forests to reduce pollution, Rs 35 million for transport issues, Rs 40 million for converting Karachi master plan into a regional one, Rs 30 million for geographic information system of Karachi, and Rs 54 million for Karachi Water and Sewerage Board (KWSB) projects.

For study of Karachi urban transport model Rs 24 million were tagged while Rs 5 million were earmarked for linking Orangi with other areas of the city, Rs 55 million for controlling transport-based pollution, Rs 14 million for Malir water study, Rs 15 million for study of construction elevated expressway from Guru Mander to Northern Bypass and Rs 2 million for study of linking Superhighway with the National Highway.

For study of industrial estates Rs 15 million were earmarked, while Rs 2 million were tagged for revamping of industry in Orangi town, Rs 45 million for pilot project to uplift Katchi Abadies, Rs 20 million for comprehensive study of solid waste management and Rs 32 million for study on viral diseases and healthcare issues.

 

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Balochistan uplift with greater focus on jobs: Musharraf

RAWALPINDI (November 14 2006): President General Pervez Musharraf on Monday underscored the need for sustaining pace of development work in Balochistan, saying that completion of various infrastructure and social sector projects would bring a sea change in lives of common people in the province.

Chairing a high-level meeting here, attended by the Balochistan governor, the chief minister and senior political leadership of the province, the President said that past governments neglected Balochistan, which has tremendous potential in various sectors like livestock, fisheries, mining, etc that can be promoted for the prosperity of the people of Balochistan.

He said the government was concentrating on peace and development in Balochistan with greater focus on creating job opportunities and ensuring better education and health facilities.

President Musharaf recounted various initiatives of the present government to improve living standard and make up for the past neglect meted out to the people of Balochistan.

The participants of the meeting also discussed in detail and exchanged views on various political initiatives being taken for the promotion of peace and harmony in the province. Besides political initiatives being taken, he referred to creation of 32,000 jobs in the province by the federal government, many of which have already been filled with the induction of the local people.

The increase in quota for Balochistan from 3.5 percent to 5 percent will also result in some additional 6,000 jobs, he added. President Musharraf expressed his satisfaction over the ongoing development activities in the province where mega projects like Gwadar and Mirani dam were nearing completion besides many small schemes at the local level.

As many as 138 projects at a cost of Rs 164 billion are underway in the province, he said, adding that Rs 31 billion has been allocated for the current year as against Rs 25 billion last year. The government is also providing funds out of Khushhal Pakistan Programme for many local schemes, he said.

President Musharraf noted that law and order in the province was showing improvement which, he added, would also help in creating an enabling environment for the private sector to supplement government's efforts in the development process.

He firmly stated the government would not allow any subversive activities in Balochistan to impede the process of development and would ensure the writ of law for the safety and security of its people.

 

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Expatriates remitted $16.9 billion in five years, National Assembly told

ISLAMABAD (November 14 2006): The Pakistani expatriates have remitted $16.9 billions in the last five years, Minister of State for Finance and Revenue Omar Ayub Khan stated this in a written reply submitted to the National Assembly.

While answering a question from MNA Sher Akbar Khan advocate during the National Assembly session held on Monday, he said the year-wise remittances are $4236.85 million (2002-03), $3871.58 million (2003-04), $4168.79 million (2004-05), and $4600.12 million (2005-06). However, district-wise data has not been compiled, he added.

To another question from MNA Yasmeen Rehman, the minister replied that Government of Pakistan floated Pakistan Sovereign Bonds (10-year maturity) worth $500 million and Pakistan Sovereign Bonds (30-year maturity) worth $300 million during the year 2005-06, but none in the current fiscal year so far, he added.

The major recipients of 10-years maturity bonds were United Kingdom with $195.6 million, Singapore with $118 million, United States with $88.6 million and Hong Kong with $76.74 million and same countries responded sale of 30-year maturity bonds, he added.

While responding to Hakim Qari Gul Rehman's question Omar Ayub Khan said that there is no proposal for declaring District Mansehra as tax-free zone and to another question from Samia Raheel Qazi the state minister said that there is no proposal to remove GST on computers and parts thereof.

Certain organisations using green belt in Islamabad for their parking are paying monthly rent to the government, the Minister for Interior Aftab Ahmed Khan Sherpao said while submitting his reply in the Assembly to a question from Begum Ishrat Ashraf.

Marriott Hotel, he said, is paying the highest amount of Rs 59,820 and Agriculture Development Bank of Pakistan is paying Rs 9610. The National Accountability Bureau, Bahria Institute of Management Sciences, Bestway Cement and World Bank, all pay in the range of Rs 5000 to Rs 6000 approximately, he added.

In another in-writing reply Minister for Commerce Humayun Akhtar Khan on a question from Fauzia Wahab said the quantities of rice, fish and spices exported during 2005-06 were 3,638,576MT, 128,486MT and 19,910 MT respectively. He said that there has been improvement in exports of all the three commodities compared to last year data ie 25.85 percent in quantity and 23.19 percent in value.

The minister on a question from Begum Ishrat Ashraf on edible oil import has informed that in 2004-05, 605,054.6MT of edible oil was imported, which valued Rs 45,038.5 million, whereas 1,695,905MT was imported in 2005-06 valuing Rs 44,218.2 million.

 

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Islamabad and Beijing close to FTA

BEIJING (November 14 2006): China and Pakistan have all but wrapped up the free trade agreement ahead of the state visit to Islamabad later this month by President Hu Jintao, the official Xinhua news agency reported on Monday.

Xinhua quoted sources with China's Ministry of Commerce as saying that negotiators cleared the last major hurdle, on market access, during a fifth round of talks in Beijing on Friday. The talks began after a visit to Pakistan in April 2005 by Chinese Premier Wen Jiabao. Two-way trade increased 39 percent last year to $4.26 billion.

 

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'Cities in Pakistan poorly configured for economic life'

ISLAMABAD (November 14 2006): Despite the fact that cities are the engine of economic growth, in Pakistan these are poorly configured for economic life and lacking offices, commercial and warehouse spaces, Dr Nadeem-ul-Haq, Director, Pakistan Institute of Development Economics (PIDE), pinpointed this on Monday.

City organisation and policy development is an issue that has not been sufficiently discussed, he while announcing that PIDE, in collaboration with National Reconstruction Bureau (NRB), is holding a two-day conference on city organisation on November 15, (Wednesday) in Karachi.

Research on urban issues is rare in Pakistan, more so in the context of cities. Process of urbanisation, and to some degree service delivery, are the only areas where researchers have shown some interest, while cities as an entity have escaped their attention.

Little research throws light on cities: residence patterns; zoning; optimum size; architecture; globalisation; governance; or the developing phenomenon of urban sprawl in Pakistan.

Due to these serious shortcomings, city organisation and development in Pakistan had been very poor and the country would need better-organised cities, which give impetus to production, to achieve sustainable economic growth, Nadeem said.

He added that research and innovative ideas are a miss owing to budget cuts on research and the country's dependence on donors' community in initiating new policy ideas.

Nadeem said that overcrowding, soaring land prices, intense competition, traffic congestion, poor housing, poor sanitation, mounting social problems, deteriorating environment and rising crimes could push people and businesses away from urban centres. He said world was turning urban, and economic growth and urbanisation are becoming inextricably linked. He declared urbanisation as an essential condition for durable development. Every form of economic development has a basis in the city.

The two-day conference would discuss the issues like why don't capital and people move outside, combining themselves with cheaper land and thereby increasing profits, he said. Increasing number of people live in or near cities and most economic activity takes place in them. Economic growth often involves conversion of rural land to urban uses, residential, commercial and industrial, as economies make transition from an agrarian-based economy to an urban economy based on industry and services.

Pakistani cities are inherently different from most cities in the world, as they provide no urban density in the heart of the town. There are no social institutions for middle class, like libraries, clubs and theatres or town squares in any city of the country.

 

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More planned cities needed for growth

ISLAMABAD: The city organisation and development in Pakistan had been very poor and the country need well planned and organised cities, which should be places of production, in order to achieve sustainable economic growth.

It was stated by Dr Nadeem-ul-Haque, Director, Pakistan Institute of Development Economics (PIDE) on Monday. Pakistani cities appear to be not configured for economic life since all of them lack office, commercial and warehouse spaces, said Dr Nadeem as he announced that PIDE in collaboration with National Reconstruction Bureau (NRB) is holding a two-day conference on city organisation on Wednesday in Karachi.

Overcrowding, soaring land prices, intense competition, traffic congestion, poor housing, poor sanitation, mounting social problems, deteriorating environment and rising crimes could push people and businesses away from urban centres, he said.

The two-day conference would discuss the issues like why don’t capital and people move outside, combining themselves with cheaper land and thereby increasing profits, he said. Increasing number of people live in or near cities and most economic activity takes place in them.

He said world was turning urban, and economic growth and urbanisation are becoming inextricably linked. He declared urbanisation as an essential condition for durable development. Every form of economic development has a basis in the city. Economic growth often involves the conversion of rural land to urban uses, residential, commercial and industrial, as economies make transition from an agrarian-based economy to an urban economy based on industry and services.

Cities are centres of growth because of the density and proximity of complementary economic activities in urban areas, leading to economies of scale. In addition, cities promote growth of productivity because they offer a larger market.

Larger market size is critical, since fixed costs can be spread out among more consumers. In cities, modern technologies are generally more readily available and more affordable. Pakistani cities are inherently different from most cities in the world, as they provide no urban density in the heart of the town. City centres are reserved for the state, and only elites are allowed to share it with the government. Land is mainly owned by government and managed through heavy and complex regulation.

There are no social institutions for middle class, like libraries, clubs and theatres or town squares in any city of the country. Research on urban issues is scarce in Pakistan, more so in the context of cities.

 

[Neo]

Pakistani medicine exports touch $80m

KARACHI: Exports of locally manufactured medicines has surged to $80 million during the last few years, which is 6 percent of the total sales of $1.6 billion in the country.

While talking to Daily Times, Dr Qaiser Waheed Chairman of the Pakistan Pharmaceutical Manufacturer Association said that over the last few years, exports of locally manufactured medicines were stagnant at $35 million but pursuance of better and effective marketing strategies by the pharmaceutical companies and competitive prices of their products compared to neighboring countries, pushed the exports figures up.

He said that Africa, Philippines, Vietnam, South America, Burma, Yemen, Middle Eastern countries and Afghanistan are some of the countries ranked as largest buyer of locally manufactured medicines.

He claimed that deregulated exports of some Pakistani low-priced medicines, which runs in millions of rupees monthly, is unaccounted for as through illegal channels, Pakistanis medicines cater the requirement of the large Afghani population.

Citing instance in this regard, he said that Glycerine Tri Nitrate, which is a life-saving drug and used in emergencies for cardiac patients is available at Rs 8 for 30 tablets and it is exported in bulk quantity to Afghanistan.

Expressing his dissatisfaction over current export ratio of medicines, he said that compared to India, Pakistani is lagging far behind in this field as export of Indian medicines constitute 15 percent of their total sales.

Citing reasons for the better exports of medicines manufactured in India, he said that due to the government backing and incentives offered to local pharmaceutical industry, their pharmaceutical industry is making good progress.

For the purchase of modern machinery, plant automation and import of modern equipments, the Indian government is offering loan on 2 percent interest, which is far below compared to the 16 percent offered to Pakistani pharmaceutical by the government.

He also blamed the unrealistic and irrational policies by the federal health ministry as major deterrent factor towards increase in export of locally manufactured medicines. The local pharmaceutical industry needs regular and persistent policies by the concerned ministry for boosting the local drug industry and enhancing country’s exports to a substantial level.

 

[Neo]

Bumper rice crop to boost exports

ISLAMABAD, Nov 13: The country's rice exports are likely to be boosted by falling domestic prices because of an expected bumper harvest in the 2006-07 crop year.

According to a private TV channel the rice output will be increased to 5.6 million tons from the previous year's harvest of 5.4 million tons after an increase in the area under cultivation and a high yield.

“We have harvested around 5.3 million tons and hopefully the crop will be over 5.6 million tons by the end of the season,” said a senior official at the ministry of food and agriculture.

Pakistan's eight-month long rice crop runs from April to November and the official said a final estimate on the crop size would be available in December. Annual domestic consumption is about 2.3 million tons.

Rice production has risen in the past few years backed by a government

drive to boost output and as more farmers switch over to rice also because of better availability of irrigation water.

Production this season could surpass the target of 5.6 million tons because of better availability of water following winter rains in February, the heaviest in Pakistan for 30 years, the official said.

“Better availability of water has also nominally increased the cultivation area this year to 2.6 million hectares (6.424 million acres), and has also improved yield per acre,” the official said.

Abdul Majid, a major rice exporter, said the country planned to increase rice exports in the fiscal year 2006-07 despite stiff competition from Southeast Asia.

“Our estimate suggests that we hopefully will end the season by exporting up to $1.3 billion worth of rice,” he said.

Pakistan sold a record 2.9 million tons of rice last year, when rice-export revenues exceeded $1.1 billion, beating the previous high of $933 million in 2004-05.

Majid said the international demand was on the rise, especially for top quality basmati rice, while local rates were coming down.

The main buyers of Pakistani rice were African countries, Sri Lanka and Afghanistan.

He said the Irri-6 crop from the southern province of Sindh was already in the market, while basmati would be ready for harvest later this week.

 

[Owais]

World Bank calls for hefty increase in taxes on LPG and CNG

ISLAMABAD (November 15 2006): The World Bank has demanded of the government to tax liquefied petroleum gas (LPG) and compressed natural gas (CNG) heavily to remove distortion in the petroleum products' pricing mechanism.

Sources told Business Recorder a high-level delegation of the World Bank headed by its managing-director had drawn the attention of authorities in Islamabad towards huge distortion in petroleum products' prices during a recently concluded visit.

The delegation asked authorities to substantially tax CNG and LPG to do away with their policy of providing incentives to one kind of fuel at the cost of others. The delegation cautioned authorities Pakistan's policy of giving tax incentives to CNG and LPG can result in sharp decline in the government revenue receipts and create serious problem for it.

The delegation was of the view gasoline has traditionally been the fuel of choice for private vehicles, as a result it was taxed heavily. It pointed out in recent years, CNG has captured a significant market share given that out of a fleet of about five million light vehicles, in excess of one million now operate on this cheaper fuel. The delegation argued CNG costs about 40 percent of the price of motor gasoline and as a result it was a major source of distortion in petroleum products' prices.

Sources said the delegation also showed concern over marginally less taxation on LPG and demanded of the government to increase rate of taxes for this cheaper fuel.

It maintained the government authorised LPG use as fuel in private vehicles in 2005 and since then it was an easy option available with vehicles owners. The delegation was of the view, like CNG, LPG also need to be taxed to bring it reasonably close to gasoline price.

The delegation maintained LPG price represents 80 percent of gasoline, whose taxes account for about 23-29 percent of the retail price. The delegation cautioned authorities distortion in petroleum products' prices could affect inter alia government's fiscal receipts and refining industry income in the future.