Pakistan Economy - News & Updates - Archive

[Neo]

Heavy participation witnessed in PIB auction: Rs 15 billion accepted

KARACHI (April 22 2007): Heavy participation was witnessed in the 38th Pakistan Investments Bond (PIB) auction, the fourth in the current fiscal year, while all were reopening of previous issues. The SBP almost maintained its given PIB target amount of Rs 15 billion.

The accepted amount was Rs 15.45 billion against total offered amount of Rs 49.1 billion. The total realised amount was Rs 14.877 billion. For 3-, 5- and 10-year bonds it was the fourth issue. For 3-year bonds, market's offered amount was Rs 6.35 billion, which has a remaining life of 25 months. The accepted amount was Rs 1.05 billion at a cut-off yield of 9.3315 percent against last cut-off yield of 9.3690 percent.

For 5 years, which shaved off 14 basis points (bps) from last cut-off yield of 9.7652 percent to 9.6197 percent, the accepted amount was Rs 800 million, against market's offer of Rs 10.1 billion; and for 10-year paper, which has a total life of 9 years and one month, the cut-off yield fell to 10.1332 percent against last cut-off yield of 10.1988 percent. The accepted amount was Rs 6.65 billion against market offer of Rs 20.5 billion.

Major bidders in 15- and 20-year papers were pension fund and corporate sector, which was re-opening of 3rd issue of October 31 2006, which also meant that its life has been shortened by six months. In 15-year, the cut-off yield remained unchanged at 10.98 percent, and the accepted amount was Rs 950 million versus offered amount of Rs 1.65 billion.

In 20-year, which had been rejected in the previous auction, the cut-off yield fell to 11.1999 percent versus December 22, 2006 PIB auction cut-off yield of 11.4203 percent. Similarly, 30-years paper, which was also a rejected in the March 5, 2007 auction, is 2nd re-opening of December 22, 2006 issue. The accepted amount was Rs 4.5 billion at a cut-off yield of 11.5906 percent.

The last cut-off yield on December 22, 2006 was 11.7006 percent. In tenors, from 3 years to 30 years, the market witnessed fall in PIB yields. This was no change in the market sentiment, but the real cause of fall in yield was the shortened life of the papers of various tenors. The basis of yield calculation was based on yield to maturity with the days of maturity, or YTM versus DTM.

Due to demand for long-term government paper, it would be interesting to see if the SBP comes up with another PIB auction before the end of the current fiscal year, which ends in June. Therefore, the announcement could only be possible before mid-June, as trading period for when issued paper requires 15 days.

It seems that there is no set defined target for PIBs, because in current year's budget the provision for PIB was for Rs 3 billion only, which also means that with Rs 42 billion maturity, the expectation was to raise Rs 45 billion through PIBs auction. So far, borrowing through PIBs target amount has exceeded the original target amount by Rs 23 billion to Rs 68 billion.

Looking at the initial plan for borrowing for budgetary support it was Rs 120 billion, and in 9-months the borrowing has jumped to Rs 123 billion, suggesting further rise in borrowing numbers. It is about time that in an emerging market like ours, the country's financial managers should be prudent in their approach and instead announce a realistic number to manage its long-term borrowings.

This would also help the government in diversifying its domestic debt portfolio in a proactive way. A ratio of borrowing against long-term bond of something like 40/60 looks more appropriate.

While majority of the money market analysts are of view that the general perception of easing of rates amongst money dealers was due to softening of inflation number, what is more important is the fall in inflation number, which is still far above its original target of 6.5 percent.

The central bank is aware that the drop in inflationary figure is also due to number of steps taken at all levels, including administrative measure, which is also one of the causes of pushing current account deficit number higher.

The biggest problem that the central bank faces is the inflow of liquidity. Market estimates that on monthly basis roughly around Rs 15 billion to Rs 20 billion is flooded in the market, which requires regular mopping up through Open Market Operation (OMO) and draining of excess funds through fortnightly Treasury bills.

On Monday, the market is expected to remain long by Rs 10 billion to Rs 15 billion, due to two OMOs maturing amount of Rs 30.4 billion. SBP may prefer short dated mopping through OMOs due to coming fortnightly T/bills auction, due on Thursday, which has Rs 600 million maturity, while it is expected that because of government salary payments Rs 10-12 billion will drain out by the month-end.

Meanwhile, after the rise in FEEL, the interbank foreign exchange market is getting used to market volatility. The market has to prepare for small moves in the foreign exchange market to get it tuned, so that when the central bank decides to allow banks to make oil payments, forex market is prepared to absorb the shocks. The size of annual oil bill could range between $6.5 billion to $7 billion, or over 0.5 billion on monthly basis.

In one-month to six-month tenors, swap points lost 5 to 10 paisa. Exporters sold their forward dollars holding to take advantage of swap premium. The market is keenly watching the strength of Indian rupee, which has gained 5.8 percent since March 2007 to close at 41.60 per dollar. Many dealers are of view that Pakistan's central bank may have to follow the Indian currency, which also helps to contain inflation. Near term, the likely ranges could be between 60.50 to 60.85.

http://www.brecorder.com/index.php?id=553835&currPageNo=1&query=&search=&term=&supDate=

 

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Nine-month textile exports cross $8 billion

KARACHI (April 22 2007): Pakistan's textile exports crossed $8 billion mark registering a growth of 7 percent during first nine months (July-March) of the current fiscal year (2006-07), according to official statistics on Saturday.

According to statistics, textile exports remained at $8.027 billion during nine months of the current fiscal year were higher by $525.682 million against $7.501 billion of the same period of last fiscal year (2005-06).

Month on month basis, the country's textile exports witnessed 11 percent rise at $987.484 million in March 2007, depicting an increase of $95.27 million, against $892.214 million of March 2006. Textile exports in March 2007 also showed an increase of $198.923 million, or 25 percent, against $788.561 million recorded in February 2007.

Leading textile exporters are of the view that textile exports have started to rise after 5-6 percent research and development (R&D) support announced by the government on export of textile, knitting and some other textile products. Major increase has been recorded in the raw material products like yarn and cotton yarn, they said.

They said that 7 percent growth in textile export during July-March was still below the target of 18 percent growth. "Current statistics show that despite all efforts we will not achieve the textile export target of $10.15 billion," they added.

Statistics show that out of 12, only four textile products, including raw cotton, cotton cloth, cotton carded and bed-wear exports have decline by 2-51 percent during July-March 2007, while other products' exports including readymade garments, synthetic textile, yarn, knitwear, art and silk exports rose by 2-159 percent. Raw cotton exports declined by 15 percent; cotton cloth by 7 percent; cotton-carded 51 percent and bedwear by 2 percent.

However, synthetic textiles have shown record growth of 159 percent to $377.949 million. Cloth exports rose by 3.41 percent, yarn by 145 percent, knitwear by 15 percent and towels by 2 percent during this period.

Similarly, made-ups exports increased by 5 percent, tents by 133 percent, readymade garments 9 percent, and exports of other textile sectors registered 21 percent growth. Exporters said that growth in textile exports did not show good performance of industry and if the R&D support would not continue, textile exports would again start declining.

http://www.brecorder.com/index.php?id=553809&currPageNo=1&query=&search=&term=&supDate=

 

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Gujranwala and Narowal to get new industrial estates

SIALKOT (April 22 2007): The Punjab government has initiated a new action plan for the development of small and medium entrepreneurs (SMEs) in the province. Official sources told Business Recorder here on Saturday that the measures had been taken to accelerate the pace of export activities.

Under this action plan, new industrial estates would be set up in Gujranwala and Narowal districts. Over 1,000 acres of land on Kamoki-Eminabad road near Gujranwala has been selected for this purpose.

In order to bring industrial revolution in the province, the provincial government would provide all modern facilities to investors for setting up new industries, sources said. The government has allocated Rs 8 billion for extending loan facility to the SMEs and newcomers for upgrading and setting up their industrial units in the province.

In addition to this, special attention had been focused on the "women entrepreneurship" and a number of steps had already been taken for facilitating the businesswomen in the Punjab. The government will provide all facilities including financial assistance to the willing individuals for manufacturing non-traditional products.

Apart from this, the government is also catering loan facilities for the advancement and expansion of agro-based industries, dairy development, and engineering and information technology in the province. The government is making hectic efforts and mobilising all available resources for motivating and attracting Overseas Pakistanis and foreign investors to invest in export processing zones especially in Sialkot and Gujranwala.

http://www.brecorder.com/index.php?id=553859&currPageNo=1&query=&search=&term=&supDate=

 

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Niltar power project to be completed soon

ASTORE (April 22 2007): The present government is paying special attention to the development of Northern Areas and has launched record development schemes in the area. This was stated by the spokesman of Construction and Works (C&W) department NAs, while talking to APP here on Saturday.

He said the government is spending Rs 235 million on various power projects to ensure smooth supply of power to the people of the area and after completion of these power projects, not only the power crisis would be overcome but also it will change the fate of people of Northern Areas, besides also meet the power needs of the region.

He said the big project of hydel power at Niltar, which would generate 18 mw electricity would be completed by the end of April, this year adding that tender would hopefully be invited for new power projects soon.

The spokesman said that the government is working on emergent basis for the provision of electricity to the people of Northern Areas to bring progress and prosperity in the area.

http://www.brecorder.com/index.php?id=553888&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

Pakistan reforming capital markets: PM

BOAO: Prime Minister Shaukat Aziz on Saturday said Pakistan was regularly reforming the country’s capital markets by undertaking more reforms including de-mutualisation besides having stronger regulatory regimes.

Talking to Chairman of Merrill Lynch here on the sidelines of the Boao Asia Forum 2007, the Prime Minister said more companies were being encouraged to list in the market and raise equity through public offerings.

He said many larger Pakistani companies were tapping the global markets and the government was also encouraging these to raise equity in the market. He said greater participation of foreign and local investors in the equity market was being encouraged to create growth and allow Pakistan to tap the huge pools of liquidity that exist in the market today.

The Chairman of Merrill Lynch said his company was very bullish on Pakistan’s equity market and said more investment will come as the market was still undervalued and there was lot of interest from all over the world in Pakistani equities.

A latest research by Merrill Lynch described Pakistan as its favourite Asian market. It stated that in Pakistan foreigners can own only 4 per cent of the stock market, but its turnover was USD 400 million per day. It also described Pakistan’s privatisation program as the best in Asia and companies like Standard

Meanwhile, the Chairman Microsoft Bill Gates assured that for the promotion of IT, his company would provide technical expertise for establishment of R&D centres in Pakistan.

Bill Gates was talking to the Prime Minister at the sidelines of Boao Conference. Aziz said Pakistan wants to establish a strong and long-term relationship with the Microsoft to promote IT culture and IT literacy in the country.

He said Pakistan is planning to set up Research and Development centres in IT and will invite experts from Microsoft and wants to establish strategic relationship with Microsoft to develop its IT infrastructure.

He said that Pakistan wants to position itself as a regional hub for outsourcing and software development and is introducing the IT education to the youth at school level.

Efforts are being made to provide IT access easily to the youth so that they could play their due rule even at the world level, headed.

“It is the age of Information and Microsoft which has tremendously promoted computer and IT technology. Therefore we want Microsoft to have more involvement in Pakistan,” the Prime Minister said.

He said that Pakistan would enhance its contacts with the Microsoft for the promotion of IT education among the youth.

http://www.thenews.com.pk/daily_detail.asp?id=52334

 

[Neo]

US security steps impact badly on Pak exports

By Mehtab Haider

ISLAMABAD: The security measures placed by the US administration on Pakistani made-ups are negatively impacting the nation’s stagnant exports, it is learnt.

A Study on Logistics Security Assessment of Exports from Pakistan says terrorism is normally against people and not against goods.

A report titled “Globalization and Its Impact on Poverty in Pakistan” prepared under contract with the United Nations Development Programme for Pakistan, while citing above-mentioned study, says the terrorists target people whom they do not like or use explosives to kill large number of innocent people in order to create scare and hit the headlines. So far there has been no explosion in any of the containers or export goods being shipped from Pakistan.

In fact, there have been no terrorist attacks anywhere in the world on merchandise cargo. Hence international commerce has so far been extremely safe from any terrorist activity and commerce from Pakistan has been no exception to this international behavior.

Knitwear exporters, struggling for survival in the wake of plunging unit prices of their products in the US and Europe, are trying hard to comply with the security requirements of buyers.

“To meet the security requirements of the US administration is a bit difficult for many exporters, especially the smaller ones, as it involves additional investments and costs,” it added.

There is a paradox with respect to Pakistan’s exports. Its exports, which were stagnating for many years before 9/11, rose by 33 percent during the first two years following 9/11.

Similarly, in the 1990s when Pakistan continued to devalue its currency the exports failed to rise. Yet exports surged sharply after appreciation of the Pakistani rupee. There is, however, no doubt that with better security perception about Pakistan, exports would have risen more, especially to the USA.

“More importantly more foreign traders could have visited Pakistan and this could have resulted in larger orders. There is a great need to make Pakistani ports and our cargo transit security compliant to ensure our share in the global markets,” it maintained.

There are several aspects of these UNDP studies that need consideration. As in most other aspects of the trade area there is a disconnect between the research and the formulation and actual implementation of policy.

The studies themselves are generally done in isolation with no regard to the holistic integration of the major recommendations within the framework of globalization. The recommendations themselves are in most cases quite general and the next step to translating these into action is found missing.

Developing countries, the study states, need to ensure competitiveness of their enterprises in the global economy. This requires reasonably good investment climates in which firms, particularly small domestic firms, can start up, prosper, and expand. Good governance ó- control of corruption, well-functioning bureaucracies and regulation, contract enforcement, and protection of property rights ñ- is an important pre-condition without which globalization cannot achieve growth and poverty reduction.

If workable social protection measures are not put in place then not only significant sections of society are at risk but also the whole process of integration because of the erosion of confidence based on the inability to provide for the inevitable marginalization of a few, it further states.

The process of globalization is bringing the people of the world together to realize their common goals and challenges. One large challenge is that of addressing global and national poverty.

Pakistan has been an active participant of the WTO for the last decade. It has endorsed the fundamental reforms in agriculture trade; phasing out quotas on developing countries exports of textiles and clothing; reductions in customs duties on industrial products; expanding the number of products with bound custom duty rates under the WTO, making increases in the import duty rates difficult.

Despite liberalization under the WTO over the last 10 years, there are still several challenges to increased market access. These include, among others, exceptionally high tariffs on products of export interests of developing economies; tariff escalation impacting adversely the exports of value-added products; subsidies on agriculture sector, indiscriminate use of antidumping and countervailing duties, etc.

http://www.thenews.com.pk/daily_detail.asp?id=52335

 

[Neo]

Exploiting wind power

THE official obsession with mega projects often comes in the way of less grandiose solutions to pressing problems. Besides lack of vision and a penchant for pomposity, the potential for graft is clearly a factor in a country that ranks high on the global corruption scale — the bigger the project, the larger the kickback. In the energy sector, however, the prospect of a crisis that could cripple industry by 2010 is forcing a change in both attitude and official policy. Large hydropower dams are still very much part of the plan but even the most realistic of the lot, Diamer-Bhasha, will take about a decade to come on line. As such, the focus now is on power plants that can be set up in relatively short time, such as thermal units. At the same time, the government has finally woken up to the vast, hitherto untapped potential of renewable energy. The first major step in this connection came in December last year with the approval of the country’s first renewable energy policy — a move rewarded almost immediately by the Asian Development Bank which offered a $510 million loan facility for developing clean and efficient sources of power.

While the ADB facility will initially focus on small and medium-sized hydropower plants in the NWFP and Punjab, private investors are now showing considerable interest in proposed wind farms along the Sindh coastline. The Alternative Energy Development Board has issued letters of interest to 81 local and foreign firms, of which 15 have already acquired land in a project area situated between Gharo and Keti Bandar. How much power these wind farms will collectively generate is still unclear, but some are expected to be operational by the end of next year. However, there is no doubt that Sindh’s exploitable wind power generation potential is enormous — 11,000MW, according to a recent government-funded study. While this figure is still a distant dream, realisation of even a fraction of the potential output can go a long way in easing the current energy crisis. A clean and infinitely renewable form of energy, wind power is where the future lies and every effort must be made to expedite its harnessing.

http://www.dawn.com/2007/04/22/ed.htm#2

 

[Neo]

Sunday, April 22, 2007

7m tonnes of surplus cement by June-end

By Hamid Waleed

LAHORE: Pakistan’s cement industry is likely to produce 7 million tonnes surplus cement by the end of current fiscal year ending June 2007, followed by another 12 million surplus production during next fiscal year 2007-08.

Sources in the cement industry told Daily Times that the industry is estimating at shipping some 10 million tonnes cement to India through Dubai or directly across the border. According to them, the latter would be a better option, as it would become more economical for the Indian manufacturers, which despite fantastic results are not able to maintain prices due to higher interest rates there.

They added that shortage phenomenon in India could be assessed from the fact that the Indian government has withdrawn excise duty on cement bags besides declaring cement import duty free in the country.

It may be noted that sources in the finance ministry said that Pakistan government is likely to allow cement exports to India through Wagha border. The industry sources had also confirmed the development while adding that the issue came under discussion between the prime ministers of both countries during recently held SAARC conference in India.

According to the industry sources, countries like Dubai, Iraq, Iran and Kuwait are other likely destinations of surplus productions of the industry in the days to come.

Meanwhile, industry sources told that the clearance process from Bureau of Indian Standards for exports of Pakistan cement might take two months, as the representatives of the said Bureau issue clearance certificate after inspecting the said plants, ensuring quality of cement as well as shelf life of the cement.

“Applications for clearance certificate are filed with the Bureau some 10 days earlier and completion of inquiry can take another 50 days,” said the industry sources, adding, “No further consignment of Pakistani cement is likely to cross the border for at least during the inspection period.”

http://www.dailytimes.com.pk/default.asp?page=2007\04\22\story_22-4-2007_pg5_6

 

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Pakistan prepares action plan to attract investment

21 April 2007

ISLAMABAD — Pakistan government is considering a set of proposals to attract substantial local and foreign investment by offering new incentives and by drastically improving regulatory framework for various sectors.

Official sources said that an "action plan" has been firmed up for attracting investment specially by removing impediments in industry, agriculture and services sectors.

The action plan contained in a detailed report is expected to be discussed and approved in the next cabinet meeting. It has been jointly prepared by the Planning Commission, Higher Education Commission (HEC) and Pakistan Institute of Development Economics (PIDE).

Sources said that before the cabinet meeting, President General Pervez Musharraf would also be briefed about the report.

"This is a very important report which aims at improving all the major sectors of the economy by implementing a number of proposals", federal minister and the chairman of HEC Prof. Dr Atta-ur-Rehman said.

The report has, he said, carried out an in-depth analyses of the major sub-sectors of the three major productive sectors of the economy — agriculture, industry, and services — and within each sub-sector identified key issues and challenges and suggested a detailed action plan to realise the major economic objectives of the government.

The two major themes of the report, he said, are human resource development and research and development to provide incentives to the private sector to invest in potential sectors of the country's economy.

According to the report, a sustained growth rate of five to six per cent in agriculture is imperative to ensure rapid growth in national income, macroeconomic stability, improvement in distributive justice and reduction in poverty. This can be realised by exploiting the potential of all the sub-sectors of agriculture.

A higher level of investment in agricultural research and development activities supported by favourable policy instruments, human resource development and necessary physical and institutional infrastructure can prove a catalyst towards achieving enhanced productivity and a desired growth rate.

The textiles and clothing sector is the mainstay of Pakistan's economy. With a 24 per cent share in the manufacturing sector, the textiles sector employs 38 per cent of the workforce in the industrial sector and constitutes roughly 70 per cent of total exports. The textiles sector, the report added, is facing a number of challenges including a low technological base, lack of research and development, lack of trained manpower, low quality standards, concentration in low value-added products and too much reliance on cotton. To address these challenges and to facilitate the transformation of the textile sector into a strong, dynamic, and internationally competitive industry led by the private sector, the public sector must create an enabling environment through a business-friendly regulatory framework, appropriate incentives to the private sector, institutional support and provision of quality infrastructure.

Key elements of the proposed action plan for the textiles sector include: improving the regulatory and policy framework; human resource development through improvement the HRD institutions and encouraging the private sector to invest in skill enhancement; promoting research and development through strengthening the existing institutions and establishing new institutions in the areas of garments, knitwear, sample development and CAD/CAM centres; technology upgradation; rewarding value addition; ensuring quality standards and establishing common facility centres.

Leather and leather products play a significant role in Pakistan's economy. The leather industry is mainly export-oriented and has a potential to grow rapidly, provided measures are put in place to encourage value addition as well as to improve product quality.

"There is a need to diversify into fast growing sectors like engineering and electronics". Engineering industry is one of the most dynamic industries in world having great potential for growth. The strategic focus in the engineering sector is on bridging the widening technological gap with the developed countries by providing conducive environment including the required technological, financial and physical infrastructures, and creating a seamless integration with emerging trends of global production systems.

The most important step for the promotion of engineering sector in Pakistan, the report believed, is to allocate more resources to technical education. There is also a need to develop design engineering capabilities, databases and infrastructure, create testing laboratories and instrument and initiate public-private partnership in projects leading to innovation of new products and processes.

http://www.khaleejtimes.com/Display...l/business_April508.xml&section=business&col=

 

[Neo]

China Mobile to invest $400 million in Pakistan

By Reuters
Sunday April 22, 2007

BOAO, China, April 22 (Reuters) - China Mobile Ltd., the world's top cellular carrier by subscribers, plans to spend $400 million this year to expand its network in Pakistan, the firm's Chairman Wang Jianzhou said.

China Mobile already has a foothold in Pakistan, which has more than 52 million mobile users, after it agreed earlier this year to buy an 89 percent stake in money-losing operator Paktel Ltd. for $284 million, its first acquisition outside its home market.

Wang said that China Mobile had invested $460 million in Paktel to date, but he did not elaborate, according to the official Webcast of comments he made at the Boao Forum for Asia being held on the southern island province of Hainan.

Wang said that China Mobile would make further investments next year focused on improving Paktel's sales systems and building new brands.

He also said China Mobile was hoping to garner experience from the venture that it could apply to further overseas expansion.

Separately, speaking with reporters on the sidelines of the forum, Wang reaffirmed that China Mobile planned to list shares on mainland China bourses, but he declined to give any detailed timeframe.

Pakistani Prime Minister Shaukat Aziz told the opening session of the forum on Saturday that he saw China's rapid economic growth as a model for other Asian countries.

He said he saw trade between Pakistan and China growing to $15 billion a year within five years.

Aziz also said that he expected Pakistan to take in about $6 billion in foreign direct investment this year, reaffirming an existing estimate.

http://in.news.yahoo.com/070422/137/6euo1.html

 

[Neo]

Investment under CFS hits Rs 54.5 billion

KARACHI (April 23 2007): Total investment under Continuous Funding System (CFS) at the Karachi share market touched an all time high of Rs 54.5 billion on Thursday, however, settled at a slightly lower amount of Rs 54.4 billion on Friday as compared to Rs 49.7 billion on the same day last week.

The CFS rate also rose steadily on week-on-week basis, reaching 11.86 percent on Friday compared to 11.74 percent last Friday. An Analyst said the CFS rate is expected to rise in the coming week should rally continue. Of the total CFS investment, about 50 percent (Rs 27 billion) is concentrated on the five stocks namely PPL, OGDC, NBP, POL and DGKC. Interestingly, the investment in the new comer, DG Khan Cement, increased by 47 percent to reach Rs 3.3 billion compared to Rs 2.2 billion last Friday (April 13).

Total open interest in the April counter decreased to Rs 9.5 billion on Friday as compared to Rs 9.8 billion last Friday. On week-on-week basis, futures spread remained depressed at 1.21 percent on the last day of the outgoing week as compared to 4.86 percent on the same day last week. The good spirits of the ready market failed to increase activity in the futures market as both the open interest and spreads declined. The top five companies, OGDC, NBP, POL, PPL and MCB, in terms of investment contributed around 60 percent to the total open interest.

The next week is the rollover week where an outstanding amount of Rs 9.5 billion needs to be rolled over from April to May contracts. This rollover amount is on the higher side in contrast with its historic values, where open interest in futures market on average stood between Rs 7 billion and Rs 8 billion a week ahead of the rollover week.

http://www.brecorder.com/index.php?id=554600&currPageNo=1&query=&search=&term=&supDate=

 

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Per capita income to be $1000 in fiscal year 2008, says Shaukat

ISLAMABAD (April 23 2007): Prime Minister Shaukat Aziz has hinted above 7 percent GDP growth during the current fiscal year and in rural areas it would be more impressive than urban areas. "We set the target of 7 percent GDP for current fiscal (year) and it will be above our expectations," he said while addressing a press conference here on Sunday evening.

Aziz, who covered all the relevant issues in the press conference including his recent visit of China, judicial crisis and politics, hoped that there will be record economic growth and the share of rural areas would be higher than other areas.

Replying to a question he said that the per capita income would increase to $1,000 in next fiscal as compared to $900, which according him, is current per capita income.

When his attention was drawn towards power crisis in the country, he said that he has called a meeting of all the stakeholders to review the situation and strategy to deal with growing demand supply gap.

He said that Iranian gas and imported LNG would also be used in power generation.

Regarding power crisis in Karachi he said that KESC system had been improved but the current management is engaged in its maintenance and hoped that it would be complete soon.

Asked if President would shed off his uniform in December, he said it is up to him to take this decision and clarified that the Supreme Court of Pakistan had allowed him to keep dual offices.

In reply to another question, he said that the present assemblies would elect him as President. Asked if the government would take action against those judges of high courts who participated in functions arranged for the 'non-functional' Chief Justice Iftikhar Mohammad Chaudhry, he kept himself away from commenting on, saying that it was a sub judice issue but added "we want supremacy of law and no on is above the law".

APP ADDS: Prime Minister Shaukat Aziz said his five-day visit to China has opened new avenues of cooperation between the two countries in different fields. He said, Pakistan and China have signed 25 agreements in public and over 15 in private sector during this visit, to promote trade, economic and investment opportunities in Pakistan.

The Prime Minister said he exchanged views with Chinese leadership to further promote political, economic and diplomatic relations.

He said he has the honour to address the Communist Party School. He said he also visited Chengdu, where he inaugurated new Consulate General of Pakistan, which is the third consulate.

The Prime Minister said the visit would also follow up to Five Year Development Programme on Trade and Economic Cooperation and Free Trade Agreement signed on the occasion of President Hu Jintao's visit to Pakistan in November last. He said under FTA, the volume of trade would be increased to dollars 15 billion in next five years and service sector has also been included in the FTA.

ELECTIONS ON TIME; NO CABINET RESHUFFLE:

Prime Minister Shaukat Aziz said the next general elections would he held on time after the completion of the tenure of the present assemblies.

He said that there will be no change in the cabinet and dispelled the reports about any reshuffling in the portfolios of the ministers.

He said Pakistan Muslim League and its allied parties would contest the election on a single platform.

Rejecting any deal with Pakistan Peoples Party, the Prime Minister said there is no deal with any party and PML has the deal with the masses on the basis of their welfare.

Answering a question about provincial autonomy, the Prime Minister said the government is committed to give full provincial autonomy. He said a parliamentary committee headed by senator Wasim Sajjad is working on it and he will review its work next week.

NFC AWARD:

Answering a question on NFC award, the Prime Minister said due to the interim award, the financial position of the provinces has been improved.

He especially referred to the financial position of Sindh province and added that Sindh government has Rs 20 to 25 billion as reserve and there is no feeling of inferiority among the provinces on the issue of their share from the federal government.

http://www.brecorder.com/index.php?id=554575&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

UAE firm to produce low-cost solar plants

ISLAMABAD (April 23 2007): Asharq Al-Awsat- leading UAE-based Dhabian group of companies will set up a manufacturing unit to produce high quality but cheaper small solar and wind power plants in Gwadar industrial area. The Norwegian technology will be used to produce small solar and wind power plants which cost around $1000 each.

Each plant will generate electricity, sufficient to cater to the requirements of one village at a low cost, private TV channel reported.

http://www.brecorder.com/index.php?id=554674&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

April 23, 2007
Record wheat harvest, exports

This summer, farmers are reaping a record wheat harvest of 23 million tons plus which, when translated into hard cash at the rate of officially fixed procurement price of Rs425 for 40 kg or Rs10.62 per kg is expected to inject more than Rs230 billion in the rural economy.

It comes as a big opportunity for the government in an election year but is also likely to prove a challenge for the political leadership and bureaucrats to manage. How a challenge comes from a situation of plenty, was well articulated in the last annual report of State Bank of Pakistan (SBP). ``Domestic wheat prices may rise despite an anticipated bumper crop, if speculators seek to take advantage of the rising international prices, the central bank warned the government as far back as in December 2006 when farmers were looking hopefully at their fields after a tiring plantation job in the autumn.

The SBP then urged the government to ensure that, ``the benefit of higher prices should accrue to farmers and it also pointed out that, ``an excessive rise due to speculative activities can lead to a net welfare loss to the economy.” The SBP’s advice was meant to caution the government against the speculators by ensuring availability of sufficient buffer stocks with the government agencies. It forcefully urged the government to defer export of wheat, until size of crop in known and buffer stocks are in place.

While the government has raised its wheat crop estimate from earlier projection of 21.5-23 million tons, the commodity traders predict a much more optimistic export outlook and are convinced that in the final count, the crop would exceed even 24 million tons. Their optimism is based on the international media reports that the size of wheat crop in Australia and few other countries is not up to the expectations. Traders say their offices are being flooded with wheat demand from India, Bangladesh, Sri Lanka, Indonesia, Malaysia, UAE and many African countries.

Reports of a bumper wheat crop had already brought down prices in the open market to Rs1,050 and Rs1,100 for a 100 kg bag in late March which is a shade above the officially fixed procurement price of Rs 1,062. Procurement operations were delayed because of rains while farmers were getting restive. During last one week or so when Sindh government was going ahead with its procurement and traders are said to be buying wheat for export in the open market, the prices gradually crept up to Rs1,150 a bag. A week ago the wheat was being quoted at Rs1,120 for a 100 kg bag.

By April 19. officials in Sindh reported procurement of 212,000 tons. Punjab is about to begin its procurement from today. But media reports say that a ship carrying a small quantity of Pakistani wheat has already sailed off to India on April 16. ``A Pakistani trader has contracted 25,000 tons of wheat export to India, Bilal Sufi a senior leader of millers in Lahore informed this correspondent on telephone.

``The best time for wheat export was in October-November 2006 when world grain prices were $280 a ton (about Rs16,800 a ton) and we carried plenty of stocks from the previous crop, Bilal said adding that the demand for wheat is there but prices are not attractive.

Traders in Karachi confirmed that about 250,000-300,000 lakh tons of wheat has already been shipped or is in final stages of shipment to African countries (Somalia, Kenya etc.), Yemen, UAE, India and other countries and orders for additional 300,000 tons are being booked or are in advance stages of the negotiations. Pakistani wheat is considered to be the best for its nutritional value, grain taste and other qualities. Traders are getting $209-216 a ton on their export orders.

Exporters are said to have booked orders for `unprocessed wheat at $180-190 a ton. It means that wheat is being exported at Rs12,960-12,540 a ton as against local official price of Rs10,620. Traders meet all their incidental expenses including interest rates on bank loans, transportation and handling within this margin of Rs1,900- 2,300 on a ton and making some good money. The margin is the difference between the purchase price and export price.

Market watchers are apprehensive of these hectic activities of commodity traders in the domestic market. A local analyst said the global food companies are the deadliest sharks in international business making huge profits from distress imports and exports particularly in the developing countries like Pakistan where regulatory frameworks are virtually absent and legal and administrative structure is too weak to withstand the pressures of money.

These companies have a vast network of their business representatives in almost all the developing countries and enjoy good amount of influence on the political leadership and bureaucrats. ``They know how to play and make good profits when it is a situation of plenty or scarce, the analyst said.

Pakistan lacks an effective and accurate system for estimating a crop. In these days when even many developing countries employ satellite technology to predict weather changes and crop estimate, Pakistan depends on `patwaris of the area to assess any particular crop. Samples are designed on tehsil and district basis. But these samples designed for such monitoring and subsequent information gathering also remain mere a guess work.

There have been many instances in the past when initial estimate of plenty ended up in scarcity and scarcity into plenty. A glaring example was the Spring 1997 when Nawaz Sharif was elected with a big majority and one of the first his first decision was to increase official price of wheat in the face of the general expectations of a bumper crop.

Whether that was a bumper wheat crop or not remains an unanswered question till this day. However it proved to be one of the worst years in the history Pakistan when wheat flour prices went up to Rs24-25 a kg and there were demonstration on the streets of Peshawar and other Northern cities. Flour mills and wheat stocks were set on fire in many places by the angry mob.

The anti climax came when the then Punjab Food minister reported that he saw himself flour bags of Pakistan mills in stores of Moscow and many Central Asian cities during his visit that summer. Since the year 2002, the flour prices in retail have never been stable. With the arrival of Ramzan every year, the supply of wheat flour, sugar, pulses, cooking oil and vegetable ghee becomes scrce and prices of these commodities shoot up never to come down. .

Officials in Sindh government said that a high level meeting with Prime Minister Shaukat Aziz in chair recently took stock of the wheat situation. Sindh has been asked to procure 0.7 million tons but it should procure 0.3 million tons more to maintain a buffer stock of one million tons. The PASSCO has been given the job to purchase 1.3 million tons and Punjab government will procure 2.5-3 million tons.

However the lobby of rich farmers has been successful in persuading the government to ignore the SBP’s warning and go for immediate export so that wheat prices start moving up in the market. The government has initially fixed an export target of 0.8 million tons for private sector but there is no benchmark export price to prevent a cut-throat competition. As the indications are, the initial export target of 0.8 million tons would be met in a week or 10 days. Traders are coming with demand to unfreeze this cap of 0.8 million tons export.

http://www.dawn.com/2007/04/23/ebr3.htm

 

[Neo]

April 23, 2007
An uplift programme for Fata

A nine-year ambitious uplift plan for the Federally Administered Tribal Area (Fata), estimated to cost $2.6billion, was unveiled at a donors conference held on April 12. Representatives of different agencies, UN bodies, humanitarian organisations and diplomats attended.

According to Arbab Muhammad Arif, Secretary Security (Fata), the idea behind the programme is the creation of a peaceful and equitable society in the tribal belt in order to curb militancy.

Fata wants the donors to share 50 per cent of the programme cost. An amount of $1.3 billion would be arranged by the federal government and will also come from the resources to be generated by Fata.

The programme will tackle problems in such areas as education, health, rural development, agriculture, livestock, housing, forest, irrigation and roads. Officials say plan will also be presented at the Pakistan Development Forum on April 27 at Islamabad.

Fata’s social and economic development has never been a priority for successive rulers in spite of these areas on Afghanistan border being of special interest to international and regional players.

However 9/11 has forced the government as well as donor agencies to earmark more resources for the social uplift of the tribal area. Since 2000-01, the Fata ADP has jumped from Rs1.2 billion to Rs10 billion in current fiscal year.

Fata covers a total area of 27,220 sq km with a population of 3.1 million living in seven agencies and six Frontier Regions. The government says it intends to bring the tribal area at par with rest of the country. However, so far no significant achievement has been witnessed towards this end. The Fata literacy ratio is hardly 17 per cent (against the nation’s 45 per cent) which include 29.51 per cent for males and just three per cent for females.

Indicators on health sector too depict a dismal picture, where for 2179 persons only one bed and for 6762 persons only one doctor is available. However, the security situation does not offer ideal environment for unhindered development. In most of the tribal agencies, skirmishes between militants and security forces and inter-tribal feuds are a routine affair. But the conflict may not go away easily if the tribal areas remain under-developed.

Apart from law and order, there has been an absence of coherent overall development plan –something that restricts the benefits of public investment to specific areas. The project selection criteria is at the core of the faulty development agenda.

Most of the projects whether part of Annual Development Programme (ADP) or any special initiative are not on the need basis and priorities of the communities.

Governance in tribal areas is altogether different from the settled parts of the country where Political Agents with the help of some Maliks (tribal elders) ensure government writ. These Maliks help the administration in maintaining its authority, while, in turn, the Political Agents award them with development projects. In addition to routine stipends, the Maliks are also awarded development projects and offer employments in these projects.

Most of such development projects ,soon after their completion, become useless because of absence of a proper monitoring mechanism. In most of the cases, buildings are abandoned or converted into Hujra[community centre] of the Maliks. Officials appointed in such projects do not attend to their duties but draw salaries regularly.

Lack of maintenance and repair of the public infrastructure is another issue that impacts on the development process in the tribal areas.

Sufficient funds are not allocated for routine maintenance and repair, which ultimately destroys the infrastructure of roads, irrigation and buildings in the tribal areas. Fata officials associated with development planning complain that during last 60 years, countless buildings have been built for housing schools, hospitals or vocational centres but these do not serve any public good.

Apart from new projects, the renewal of the existing infrastructure facilities should not be neglected. Lack of capacity of the implementing agencies is also a major constraint in Fata’s development.

At the Agency level, the government has set up planning and finance departments, but they do not function properly because of the absence of an effective financial management system.

Lack of coordination between various departments and the donor agencies also cause duplication of work and leads to financial wastage and administrative failures.

Similarly, the community participation approach needs to be introduced in Fata. In recent past, the government tried to undermine the role of Maliks in project selection and making the process more participative by involving the Agency Counsellors, majority of whom are selected by the Political Administration.

At the policy formulation level, the Counsellors are authorised to select and recommend the execution of development plans, but in reality no heed is paid to their recommendations.

The planners believe that without putting in place an institutionalised mechanism for project selection, designing and implementation, sustainable development in FATA would not be possible.

http://www.dawn.com/2007/04/23/ebr7.htm