Pakistan Economy - News & Updates - Archive

[Neo]

All set to finalise investment modalities on Hu's arrival

ISLAMABAD (November 23 2006): Islamabad is all set to finalise modalities of investment especially in railway, communication and port sectors with Beijing on the arrival of Chinese President Hu Jintao on Thursday.

The government anxiously anticipates unprecedented Chinese investment in a number of key areas, especially mega projects at Gwadar port, rehabilitation and realignment of Karakoram Highway and laying of rail track to connect the two friendly neighbouring countries.

It is widely believed that Hu Jintao's visit to Pakistan is bound to further promote bilateral co-operation in various fields and give new impetus to the Sino-Pak friendship.

"Although, I don't have any specific meeting in schedule with the Chinese authorities but we do hope a great investment from our brethren country for the development of our railway sector," Minister for Railways Sheikh Rashid Ahmed told Business Recorder on Wednesday.

Pakistan and China are planning to establish a rail link from Pakistani city Havelian to Chinese Kashgar city. "The government has earlier assigned a German firm to undertake the feasibility of the rail link. Following the special directives of President Pervez Musharraf we have also asked a Chinese firm to prepare feasibility study of the said route," Sheikh replied.

The minister said the feasibility study would be ready in a year, assuring that the government is committed to materialise the plan as soon as possible. Likewise, two Chinese firms have applied for operating bullet-proof train between Rawalpindi and Lahore. China has rich experience in railway sector and it can help Pakistan in improving the railway infrastructure besides investing in new mega projects, he said.

To assist Pakistan for developing the road network, China is very keen to rehabilitate and realign the quake-battered Karakoram Highway. Pakistan and China have signed a Memorandum of Understanding (MoU) early this year for re-alignment of KKH at an estimated cost of Rs 18 billion.

Sources said that both the countries are expected to take an overview of the project and will discuss other issues pertaining to KKH, a symbol of Sino-Pak lasting friendship. The two countries have already launched a cross-border bus service on two routes one from Gilgit to Kashgar and other between Sust and Tashurgan.

Furthermore, it is reliably learnt that the government is seeking help of the Chinese companies to develop a special industrial city at Gwadar besides setting up a big refinery at Gwadar port. It is learnt that a Pakistani high-level delegation had visited Beijing some days back to do some ground work prior to the visit of Hu Jintao.

 

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Financing sought from World Bank and ADB for NTC project

ISLAMABAD (November 23 2006): Pakistan has sought financing support from a consortium of the World Bank, Asian Development Bank (ADB) and Japan Bank for International Co-operation (JBIC) for $5-6 billion National Trade Corridor (NTC) project. A six-member delegation of the consortium held a meeting with the policy makers here the other day to discuss broader outlines of the project.

Planning Commission Deputy Chairman, Dr Akram Shaikh led the Pakistani side during the meeting. He was assisted by the senior officials of the ministries of Port and Shipping, Communications, Commerce and other related departments.

The donors' delegation is currently visiting Pakistan to asses its needs for setting up quality infrastructure of roads, trains and ports for establishing NTC.

Sources said the consortium representatives were given a detailed presentation on NTC project, covering its significance for Pakistan, cost and period of completion.

NTC is the part of Pakistan's ambitious plan worked out to establish a strong base for redesigning its trade links with the regional players, besides providing them a transit facility for their bilateral trade.

Pakistan had conceived the idea of NTC sometimes back and keeping in view strategic advantage over other countries of the region decided to complete the project on priority basis. Other than NTC, energy corridor is also the part of the plan.

Since it's a mega project, Pakistan is looking for financial support from the consortium of World Bank, Asian Development Bank (ADB) and Japan Bank for International Co-operation (JBIC).

Sources said Pakistan needs a basic infrastructure of the international standard to establish a link in different parts and make sure that tradable items are transported from one part to another quickly and without much hassle. They said the authorities were also fully aware that poor infrastructure was adding to the cost of its tradable items besides delaying their supply to the market.

One member of the official team told Business Recorder on Wednesday that the consortium representatives were informed that Pakistan will have a strong road network to provide the transit facility to the regional countries to help them enhance trade with each other.

 

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Government reluctant to release province-wise poverty data

MULTAN (November 23 2006): The federal government is reluctant to release the poverty figures of federating units, Sindh, Balochistan, NWFP and Punjab to avoid backlash from the smaller provinces, sources told Business Recorder on Wednesday.

Although, the federal government had released the national data in the Economic Survey 2005-06, claiming reduction in poverty from 34.6 percent in 2001 to 23.9 percent during 2004-05, so far it has not released the province-wise poverty data, they said.

The Center for Poverty and Income Distribution (CPRID) has already forwarded its analysis to the Planning Commission some two months ago on the vital subject, but the relevant authorities are not releasing these figures officially, the sources said.

The Planning Commission high-ups when contacted regarding any plan to release the official poverty data related to four provinces, no one was willing to talk on the subject obviously knowing the intentions of the ruling elite, which has no plans to release these figures in near future. Instead of sharing the information, one official replied rowdily, "You should not find negative things for reporting."

However, the sources claimed that the government did not want to plunge into a new controversy on poverty figures related to provinces hence they do not have any plan to release these figures by the end of current financial year.

On the other side, the World Bank estimates tabled before the government showed that the poverty level was almost stagnant in Punjab during 2000-01 and 2004-05 as it stood at 30.6 percent in 2000-01 and 29.5 percent in 2004-05.

In 2000-01, Punjab's urban poverty was 22.8 percent and 33.8 percent in rural areas, which stood at 21.2 percent in urban areas and 33.4 percent in rural areas in 2004-05.

The poverty in Sindh declined significantly from 37.4 percent in 2000-01 to 22.4 percent in 2004-05. The poverty in urban Sindh was 20.6 percent in 2000-01, which declined to 13.8 percent in 2004-05. The rural poverty in the province was 48.1 percent in 2000-01, which was reduced to 28.9 percent in 2004-05.

The WB estimates show the overall poverty in NWFP was 42.3 percent in 2000-01 with urban poverty of 29.9 percent and rural poverty 44.4 percent, which reduced up to 39.3 percent in 2004-05. The rural poverty in NWFP is 41.9 percent while urban poverty is 26.1 percent in 2004-05.

The bank estimates reveal that the overall poverty in Balochistan was 37.1 percent in 2000-01 with urban poverty of 27.4 percent and rural poverty 37.1 percent. The overall poverty reduced to 32.9 percent in 2004-05 with urban poverty of 21.5 percent and rural poverty of 35.8 percent in the province.

http://www.brecorder.com/index.php?id=500170&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

Punjab plans to develop SME industries

SIALKOT (November 23 2006): The Punjab government has initiated an action plan for the development of small and medium enterprise (SME) industries for ensuring strong industrial base in major towns, including Sialkot. Sources told Business Recorder here on Wednesday that the step had been taken to further accelerate the pace of export activities in the province.

Under the plan new industrial estates would be established near Gujranwala, Narowal and Pasrur. The proposed industrial estates would be developed on the pattern of Sunder industrial estate (Lahore) where all modern facilities would be ensured, the sources added.

They said special attention had been accorded to bring about the industrial revolution through setting up large-scale industries, including agro-based industries in the province. The government had set aside eight billion rupees for extending loan facility to the SMEs and newcomers for upgrading and setting up their industrial units.

In addition to this, steps had already been taken for facilitating businesswomen to promote women entrepreneurship in the province, they said. The sources claimed that adequate steps had also been taken to diminish the financial problems being faced by the businessmen engaged with small and medium industries as well as for removing the hitches, which were hindering the process of setting up of new industrial projects.

Besides, they said, the government was taking necessary steps to motivate the business community and manufacturers that should divert their attention on producing non-traditional products with innovation for fetching foreign exchange through the export of non-traditional products because there was a great demand of non-traditional products globally.

The government would provide all facilities, including financial assistance to the willing persons for manufacturing non-traditional products, they added. They said the government was also providing loan facilities to expand the agro-based industries and dairy development, engineering and information technology in Punjab.

The government was mobilising all available resources for motivating and attracting Overseas Pakistanis and foreign investors to invest in export processing zones, especially in Sialkot and Gujranwala.

 

[Neo]

'Rolls-Royce Phantom' debuts in Pakistan

LAHORE (November 23 2006): Rolls-Royce Motor Cars on Wednesday opened its first showroom in Pakistan at Lahore and announced to establish its outlets also in Karachi and Islamabad. Dewan Motors has been appointed as an exclusive representative of the motorcar company in Pakistan.

Farooq Mustafa, President and Chief Operating Officer of Dewan Motors revealed this while briefing newsmen. Frank Tiemann, Manager, Corporate Communications, Europe and Middle East, Rolls Royce Motor Cars, Axel Obermuller, Managing Director Europe and Middle East Rolls Royce Motor Cars, Dewan Yousaf Farooqui, Chief Executive Officer of Dewan Motors were also present on the occasion.

Farooq Mustafa said that this partnership has opened the last chapter in our relationship with prestigious BMW Group, having already launched the BMW and Mini Importer ships. Dewan Group through Dewan Motors has again taken the lead in bringing the most successful premium automobiles in the world to the emerging Pakistan's economy.

About his company, he said that Dewan Farooque Motors, the first company of Dewan Group- Automotive Operations, opened its doors for business in April 1999 and in short span of seven years, we have grown to seven companies. The entry of Rolls-Royce in the Pakistan automobile market reflects the rapid economic growth taking place in the country, he added.

Speaking on the occasion, Axel Obermuller, Managing Director Europe and Middle said that Rolls Royce Motor Car that has capacity of producing 1000 units per year, produced 796 cars during 2005 and like to meet the target of 800 cars world-wide.

He also highlighted the company's history and salient features of the current model. As many as 5.5 million cars are produced annually out of which Rolls Royce has share of 800 cars because every car is manufactured on individual order basis. The car engine and chassis is standard while rest of car is customised and manufactured as per requirement/desire of the customer, he added.

He further said that Rolls Royce currently has eight dealers in the Middle East region; in Abu Dhabi, Bahrain, Dubai, Doha, Jeddah, Kuwait City, Lahore and Riyadh. The Rolls Royce dealers have been increased to 76 in the world, he added.

 

[Neo]

Govt acts to put PIA back on track

ISLAMABAD, Nov 22: The government has asked the management of Pakistan International Airlines (PIA) to make full disclosure of its financial position and future business plans as a pre-condition for allowing the airline’s restructuring.

Adviser to the Prime Minister on Finance Dr Salman Shah told reporters here on Wednesday that many factors, including oil prices and other structural problems, were responsible for the current financial crisis faced by the national flag carrier.

He declined to comment on measures being considered by the government for the restructuring of the corporation, which continues to suffer on an average Rs1 billion a month, but said it was Pakistan’s national asset and would be put on a sound footing very soon. He said the airline had a big market and there was no reason why it could not be made a profitable entity.

He did not say how much public money would have to be injected to bail out the company whose total losses exceeded its assets by more than Rs22 billion.

Sources said the government had made up its mind to sell some assets of the PIA Investment Limited (PIAL), including the Roosevelt Hotel in New York whose majority shareholding came to PIA recently in a deal with a Saudi prince.

Secretary Finance Tanveer Ali Agha said the government could not provide guarantees or inject money unless the company made full disclosures of its financial position. He said a restructuring package would hopefully be prepared in consultation with PIA’s financial advisers. This would include relief on loans in the kind of interest and repayment restructuring.

He said fuel price was one of the reasons, but other structural problems were to be blamed more and added that several other airlines were earning profits or were able to break even despite facing similar fuel price trend. He said the corporation had submitted its restructuring plan to the government and the finance ministry had also appointed a financial adviser to examine it, adding that a bail-out package would be based on future business plan of the company.

The weak financial health of PIA came to light recently when its internal auditors said conditions indicated the existence of a “material uncertainty which may cast significant doubt about the corporation’s ability to continue as a going concern”.

The corporation’s chartered accounts Anjum Asim Shahid Rahman and Ford Rhodes Sidat Hyder & Co wrote in their note to the half-yearly report that the corporation incurred a gross loss of Rs74 million and a net loss of more than Rs6.1 billion during the half year ended June 30, resulting in accumulated losses of over Rs17.9 billion of the balance sheet date.

The corporation's current liabilities exceeded its current assets by Rs20.326 billion, the auditors said. They said due to lack of adequate audit trail to support the carrying value of inventories at moving average costs as result of problems with the inventory management system, they could not verify the valuation of capital spares and consumable stores and spares with carrying value of more than Rs3.7 billion and over Rs2.4 billion, respectively.

 

[Neo]

Pakistan may import 2m bales of cotton

KARACHI, Nov 22: The country may have to import around two million bales of cotton even after harvesting the estimated 12.7 million bales during the current season 2006-07.

The flow pattern of phutti (seed cotton) from fields to ginneries so far indicates that the crop size would be around 12.5 million bales because Sindh crop is running short and Punjab is little better than last year.

The textile industry believes that cotton demand this year would be over 14 million bales and this will create a gap of around 1.5 to two million bales between demand and supply. Consequently, besides importing long staple variety the industry would also have to import substantial quantity of regular quality cotton to meet its demand.

Industry sources expressed resentment over government’s attitude towards the problems being faced by the largest industrial sector of the country.

“We have failed to understand the mindset of policymakers towards problems confronted by the textile industry which is the major source of foreign exchange earner as well as job provider in the country,” lamented former Aptma chairman Anwar Tata.

He said that the policymakers promote the view that the industry should learn to operate without official support but they fail to explain how to conduct business if it has to pay 14 per cent mark-up on its capital goods as well as working capital after getting the same at four per cent when BMR was being carried out about five years back.

Mr Tata was also critical about sudden decision for removing polyester fibre imports from DTRE and asking importers to pay 6.5 per cent duty.

According to official figures, around 6.807 million bales have been processed up to November 15, 2006 by the ginneries in both the cotton growing provinces of Sindh and Punjab. This is 0.9 per cent or 6,013 bales higher over the corresponding period last year.

However, slow phutti arrival from Sindh cotton fields is an indicator that the estimated production at around 12.7 million bales would be hard to achieve. Consequently, it is being privately estimated that raw cotton production during 2006-07 would remain around 12.5 million bales.

During the period under review cotton production in Sindh remained 13.23 per cent lower at 1.480 million bales as against 1.706 million bales recorded in the same period last year.

Despite the fact that arrival of phutti in Punjab was slightly better and up to Nov 15, 2006 around 5.327 million bales were produced or 4.55 per cent higher over 5.095 million bales recorded in the corresponding period last year, but it is expected that the arrival would flatter out in due course, particularly after first picking.

As a result of this prices of raw cotton in the domestic market are being recorded at higher level and are currently in the range of Rs2400 and above per maund.

It is interesting to note that fairly huge stocks of unsold cotton of around 2.078 million bales are also lying with the ginners but the underlying sentiment in the cotton economy as a whole is of depressing and uncertain as most of the textile units are reported to be faced with financial crisis.

 

[Neo]

CDB investment to build Pakistan's economic infrastructure, Salman told

ISLAMABAD (updated on: November 23, 2006, 21:55 PST): A high-level delegation led by Lie Kegu, Vice Governor, China Development Bank (CDB) called on Dr. Salman Shah, Adviser to Prime Minister on Finance, Revenue, Economic Affairs and Statistics here on Thursday.

Welcoming the delegation, the adviser said that Pak-China economic co-operation will greatly contribute to economic development in both the countries. He particularly mentioned the development opportunities of infrastructure both urban and rural in Pakistan. He also pointed out that the economic co-operation between the two countries would be based on the partnership between the corporate and private sectors of both countries with the government playing a leading supporting role.

He said that Pakistan would welcome Chinese companies to invest in different sectors of Pakistan inline with the five year economic and trade agreement. He said that Pakistan has a great potential for growth and development and now it should be our objective to create an environment to fully achieve the potential.

The Chinese vice governor appreciated Pakistan's rapid economic development in the recent years. He said that the China Development Bank would invest in Pakistan especially in building up the economic infrastructure and industrial development adding that China would also provide necessary financial support in the sectors of industry, services, agriculture, healthcare and education. He said that the business relationship between the two countries should be further developed and strengthened.

The two sides agreed to quickly set up the Joint Investment Company soon after the signing of MoUs on Friday between the two countries. They emphasised on evolving an efficient working mechanism so that the project should start as early as possible. The two sides agreed that Pakistan and China who have already developed a joint working group would also establish a preparation-working group between the Ministry of Finance and China Development Bank for long term financing of different projects in the country. This joint working group would workout different details of the projects to be implemented with the help of China Development Bank.

The adviser said that the two countries will sign five-year economic co-operation plan and the joint investment company objective would be to implement part of the economic co-operation plan. He said that the joint investment company would work as a window of the China Development Bank for evaluation of joint ventures between the two countries. He informed the delegation that according to the plan development of the special economic zones and investment in the sectors of telecommunications, infrastructure, industry, agriculture will be expedited.

The adviser assured the Chinese side that a mechanism of financial co-operation between the two countries would be soon established to achieve the targets of long-term co-operation with China.

The vice governor of China Development Bank said that economic co-operation between China and Pakistan will go beyond five years.

 

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Pak-China trade to hit $15 billion after FTA


ISLAMABAD: November 23, 2006: Pakistan and China will sign a free trade agreement (FTA) during Chinese President Hu Jintao's on-going visit, state media quoted a senior diplomat as saying on Thursday.

Pakistani ambassador to China Salman Bashir told the official Associated Press of Pakistan that the accord would be signed on Friday after talks between President Musharraf and his Chinese counterpart.

"A free trade agreement will be the highly important document to be signed," Bashir said, adding that the two sides had completed negotiations on the deal in "record short time" since starting in August last year.

The agreement will cut tariffs to zero on hundreds of items for import and export between the two countries, he said.

"We are expecting to take volume of bilateral trade to 15 billion dollars within the next five years with the implementation of the FTA," Bashir said.

The foreign ministry said earlier that a number of agreements would be signed during the visit but did not specify which.

Last year, trade between China and Pakistan grew by 39 percent to 4.26 billion dollars compared with 2004, according to Chinese Commerce Ministry statistics.

 

[Neo]

ADB to provide $600m for infrastructure

LAHORE: Asian Development Bank (ADB) is lending $600 million to help increase private sector participation in infrastructure development in Pakistan.

According to a press release issued by the bank on Wednesday, the programme should attract private investment in power, transport and water sub-sectors by helping the country establish a comprehensive framework that will address key policy, legal, regulatory and institutional constraints to private participation in these areas.

The Pakistan government has identified $81 billion in investment, which is likely to come from the private sector over 2005-2010, but nearly 70 per cent of this is expected to go to manufacturing, agriculture and housing.

“The ADB programme will support the government in creating an environment that encourages and supports private participation in infrastructure, rather than building the needed infrastructure exclusively with public funds,” says Jurgen Conrad, an ADB Senior Financial Economist.

“Given the scarcity of financial resources, this is the only feasible approach for addressing the mismatch between limited supply and increasing demand for infrastructure.”

The program comprises of two sub-programs, the first of which involves a $400 million loan from ADB’s ordinary capital resources. The loan carries a 15-year term, including a grace period of three years.

The interest rate will be determined according to ADB’s LIBOR-based lending facility. Subprogram two for $200 million will continue the reforms after successful implementation of the first subprogram.

Under the first subprogram, pilot projects will be carried out to demonstrate how infrastructure projects involving private participation can be successfully prepared and implemented in previously unregulated areas.

Several government agencies have started to build strong pipelines of projects to be tendered to the private sector, and the program will provide a mechanism for arbitration to protect investors, and standardize bidding procedures and documents to increase transparency.

About 40 projects are expected to materialize under the subprogram, with private resources financing more than 80 per cent of overall investment costs. A policy task force has already been established to oversee program implementation.

A technical assistance grant of one million dollars from the Japan Special Fund, provided by the Government of Japan, will help the Government carry out the reforms called for under the loan.

The Ministry of Finance is the executing agency for the first subprogram, which will be carried out over three years. The second subprogram will be processed toward the end of the first and run for another four years to 2013.

 

[Neo]

Suzuki rolls out 100,000 vehicles

KARACHI: The Pak Suzuki Motor Co Ltd has rolled out 100,000 vehicles from the production assembly lines on November 22. Pak Suzuki is the first automobile company of Pakistan who achieved the production and sales of more than 100,000 vehicles during the year 2006, a company statement said here on Wednesday.

Kenichi Azukawa, MD and CEO Pak Suzuki performed the Tape Cutting in simple and graceful ceremony held on their assembly line. Azukawa appreciated the efforts of all employees in increasing the production beyond 100,000 units in a single year, it said.

Ayukawa said our next milestone is to roll out the 200,000th vehicle within the next 5 years. He told the team members to continue enhancing the quality levels to give the customers value for their money, the statement said.

 

[Neo]

Rating upgrade shows world confidence in Pak economy

ISLAMABAD: Dr Salman Shah, Adviser to the Prime Minister on Finance and Revenue has announced that Moody’s Investors Services, an international rating agency, has upgraded Pakistani government bond rating from B2 to B1 bringing the country at par with rating of Indonesia.

Addressing a press conference on Wednesday, he said that it was big step forward and this step showed that international agencies had confidence in the country’s economic policies.

He said that the government has decided to restructure Pakistan International Airlines (PIA). The high oil prices in the international market and some internal problems have made the restructuring of national flag carrier very necessary. He said that new airbuses would be provided to the PIA, which, according to him, has larger market to excel after the restructuring. A meeting in this regard would be held shortly.

He rejected the international financial institutions (IFIs)’s projections that the country’s budget deficit would touch 5.5 percent of the GDP. “The budget deficit is likely to be contained to 4.2 percent of GDP,” he added. He said that improvement in ratings would help Pakistan to stay at better position in the international bond market. Pakistan will be floating bond each year in the international market, he said.

This improvement will have a good impact on the OGDCL Global Depository Shares (GDS), which is currently being floated at the London Stock Exchange (LSE). The volume and price of GDS would be determined by the end of this month, he said. The planned road shows of OGDCL in the US, Middle East and Far East will also have positive impact on the company’s GDR.

The Moody’s rating was a result of persistent decline in external debt to GDP ratio in Pakistan. The new ratings would encourage the foreign investors to invest more in the country. They will start investing with more confidence, he said. The government, he said, would also build up foreign exchange reserves.

In reply to a question, he said that current account deficit would not pose any major challenge to the national economy. The inflow of foreign direct investment and remittances would help the government to contain the current account deficit within budgetary limits.

 

[Owais]

Musharraf, Hu to sign free trade pact today


ISLAMABAD (updated on: November 24, 2006, 09:49 PST): Chinese President Hu Jintao and President Pervez Musharraf were expected to sign a free trade deal on Friday after talks aimed at sealing the allies' ties in a changing region.The pact is set to be one of the key points of Hu's visit, the first by a Chinese leader to the Muslim nation for 10 years.

Hu was greeted with a 21-gun salute after flying in late on Thursday from a trip to India, during which he pledged to double trade between the two countries and speed up work to resolve a border row.

At a welcoming banquet Hu reassured his hosts that China's relationship with their "dear brothers" in Pakistan remained unchanged, the official Associated Press of Pakistan quoted him as saying

He praised Musharraf, a key ally also of the United States since the September 11, 2001 attacks, for "effectively responding to serious and complex developments both at home and internationally".

Musharraf said Pakistan's friendship "has remained constant and unchanged regardless of the transformed global circumstances".

The two leaders were due to meet for wide-ranging talks on strategic and economic issues on Friday.

Hu will also meet Prime Minister Shaukat Aziz. Officials said the two countries would sign a number of deals after the talks, and Pakistan's ambassador to Beijing, Salman Bashir, told state media on Thursday that the "most important" was the free trade agreement.

Last year, trade between China and Pakistan grew by 39 percent to 4.26 billion dollars compared with 2004, according to Chinese Commerce Ministry statistics.

Bashir said Pakistan expected the figure to hit 15 billion dollars within five years of implementation of the free trade pact.

China will also sign a five-year development program for trade and economic co-operation in the first agreement of its kind ever signed by Beijing, the official Chinese news agency Xinhua reported this week.

Hu and Musharraf are also expected to inaugurate a special economic zone in Lahore when the Chinese leader travels to the historic eastern city on Saturday.

Pakistan will also give Hu the rare honour of addressing the nation live on state television, becoming the first foreign dignitary to do so since then-US president Bill Clinton in 2000.

Pakistan's foreign ministry said reports of a possible nuclear deal similar to one made by India and the United States earlier this year were "speculative", but stressed the long-term cooperation with China in the field.

China has built an atomic power plant in Pakistan and is helping with a second, despite international concerns.

Beijing remains Islamabad's largest arms supplier and the two are jointly developing a fighter jet. It has also invested millions of dollars in a "megaport" in Gawadar to gain access to the Arabian Sea.

Maqbool Bhatti, Pakistan's ambassador to China from 1982 to 1987, said Hu's "milestone" visit after a 10-year gap had "psychological importance" for Pakistan after the US decided to treat India as a strategic partner.

But he added that Beijing and Islamabad would not focus too closely on New Delhi, adding: "One important aspect of the Sino-Pakistan friendship is that it is not aimed at any country."

Bhatti predicted the deals to be signed would include assistance for a nuclear power plant, as well as on conventional energy sources like coal-based stations and on a rail link to Central Asia.

 

[Owais]

Chinese textiles flood Pakistan's markets


RAWALPINDI (updated on: November 24, 2006, 11:18 PST): Chances are these days, the traditional shalwar kameez baggy trousers and tunics that most Pakistanis wear will be made of Chinese fabric, not Pakistan-made material.

China-made fabrics have flooded Pakistan in the past few years, to the delight of consumers but to the alarm of Pakistani manufacturers who are seeing their share of the domestic market fast shrinking.

Chinese President Hu Jintao arrived in Pakistan for an official visit on Thursday.

Boosting trade between the old allies will be high on his agenda -- and a free trade agreement is expected to be announced -- but China's textile trade with Pakistan is doing just fine.

At the main fabric market in the city of Rawalpindi, most of the countless bolts of material of every colour stacked up in rows come from China, traders said.

"Customers are very fashion-conscious. They love to wear outfits made of well-woven, colourful Chinese fabric," said Jan Alam, a shopkeeper at the Rabi Centre fabric market.

"Their prices are also better than local stuff," he said. "Demand for Chinese fabric is huge."

Mujtaba Hassan, a woman college lecturer shopping for fabric for her daughter's wedding dress, said she would only buy Chinese material.

"Their colours and textures are wonderful, the quality is good and the prices are reasonable so there's no question of buying anything else," Hassan said.

Some traders are reluctant to even stock Pakistani material.

"Sales of locally manufactured fabrics are very low and nobody wants to tie up their money for a long time. That's why people have switched to the imported fabric," said Ilyas Gul, owner of Gul China Silk shop.

DAMAGE

Shoppers don't have much sympathy for Pakistani manufacturers.

"It isn't a matter of nationalism. It's about what you're offering and at what price. They should make their material and prices competitive," said 25-year-old Sukaina Azhar.

Pakistan's fabric imports from China rose to $109 million last year from $40 million the previous year, according to official figures, but a huge quantity of fabric is smuggled in, officials say.

The domestic industry is reeling.

"This is going to damage Pakistan's textile industry," said Akbar Sheikh, spokesman for the All Pakistan Textile Mills Association.

"It's a major problem because you can never compete world-wide unless you're efficient in your own market."

Sheikh criticised the government for reducing duties on imported fabric while levying taxes on raw-material imports.

The government should cut input costs and improve availability of raw materials, he said.

The expected free trade agreement with China is also raising concern with industry officials complaining it would benefit China more than Pakistan.

A Textile Industries Ministry official said the government was helping manufacturers reduce costs, including cutting interest on loans, but they had to improve their competitiveness.

"China is very much in competition but as good businessmen, they should first put their house in order," said ministry secretary Syed Masood Alam.

 

[Owais]

$20 billion trade accord with China today

ISLAMABAD (November 24 2006): Pakistan and China sign more than $20 billion five-year trade and economic co-operation agreement on Friday which will pave the way for Chinese investment in all sectors, a senior officer told Business Recorder here on Thursday.

He said a Chinese advance team has been holding discussions with the various ministries at the Economic Affairs Division to finalise a number of agreements/MoUs for last 10 days relating to infrastructure, further development of Gwadar seaport, oil refineries, agriculture, engineering, and tourism sectors.

He said the huge five-year trade and economic co-operation agreement will be singed by PM's Adviser on finance Dr Salman Shah and his Chinese counterpart at a ceremony at the Aiwan-e-Sadr in the presence of Chinese President Hu Jintao and President Pervez Musharraf.

Sources said that Pakistan and China agreed at a meeting between Dr Salman Shah and a high-level delegation led by China Development Bank Vice Governor Lie Kegu here on Thursday to quickly set up a joint investment company to implement economic co-operation plan which would work as a window of the China Development Bank for evaluation of joint ventures between the two friendly countries.

Communication Minister Shamim Siddiqui and his Chinese counterpart will sign another agreement under which China will provide $337 million for rehabilitation and re-alignment of Karakoram Highway (KKH) which has become necessary because of construction of the Munda dam.

Private sectors of the two countries will also sign about 18 agreements at the Planning Commission for co-operation in automobile, oil and gas, housing, agriculture, vending, and tourism sectors.