Pakistan Economy - News & Updates - Archive

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EU willing to enhance further trade ties: Kasuri

ISLAMABAD (May 30 2007): Foreign Minister Khurshid M. Kasuri met with EU Commissioner for External Relations Ms Benita Ferrero-Waldner and discussed increased trade co-operation. During the meeting at the sidelines of the Asia and Europe Meeting (ASEM) conference in Hamburg Kasuri said the EU is the biggest export market for Pakistan, and there is a lot of investments from the EU into Pakistan.

A message from Hamburg said. Kasuri said that Pakistan wants to enhance its trade with EU and start negotiations on the Free Trade Agreement. He emphasised the need for a level-playing field in trade for Pakistan.

The EU commissioner said that EU wants to further enhance its relations with Pakistan and increase its financial support for Pakistan. She said the EU intends a serious dialogue with Pakistan regarding trade and as a first step a meeting of the sub-group on trade will be held during the current year between Pakistan and EU. Ms Waldner expressed the hope that it will open more avenues for further co-operation. She said that Pakistan was playing an important role in the fight against terrorism.

She emphasised the need for more co-operation between Pakistan and Afghanistan, and thanked Pakistan for its efforts to host a regional conference on Afghanistan. She said the EU will provide more development aid for NWFP and Balochistan as part of the over all development assistance.

Kasuri briefed the EU commissioner about the progress on composite dialogue between India and Pakistan, saying both the countries are committed to resolving all outstanding issues, including Kashmir.

Ms Waldner hoped that a constructive approach in the dialogue will help achieve peace in the region. She also noted Pakistan's role in inviting the EU as an observer of Saarc during 2006 Summit in India. The foreign minister appreciated the assistance provided by the EU for the rehabilitation of victims of October 2005 earthquake in northern Pakistan.

Apprising the EU commissioner on the progress of rehabilitation of earthquake victims, he said the former UN secretary-general Kofi Annan has appreciated efforts of the government of Pakistan to rehabilitate the earthquake survivors and has termed this as the best possible management of a natural catastrophe in the world.

http://www.brecorder.com/index.php?id=570580&currPageNo=1&query=&search=&term=&supDate=

 

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Pakistan needs to harmonise products quality

KARACHI (May 30 2007): Institutional capacities for certification and inspection need to be strengthened to meet the WTO Technical Barriers to Trade (TBT) and Sanitary and Phystosanitary (SPS) challenges. This is one of the several recommendations made by the two-day '2007 US-Pakistan Standards and Conformity Assessment' workshop held in Lahore on May 24 and 25.

The workshop was organised by Pakistan Standards and Quality Control Authority in collaboration with National Institute of Standards and Technology (NIST), USA. According to recommendations available to Business Recorder here on Tuesday, emphasis was laid on building up strong confidence between industries and government. Sectoral industrial committees, consisting of industrialists, academics and government officials may be set up which should regularly discuss industrial issues and future directions of industrial and export promotion and recommend, to the government, proactive measures to be globally competitive.

Further, the harmonisation, technical equivalence with trading practices including recognition of the private standards (notably in the EU, US & Japan, and China) need to be achieved. Level of flexibility and policy space should be allowed at national level for adjustments to private standards and the specific procedural requirements on private standards like Good Agriculture (GAP) and Hazard Analysis & Critical Control Point (HACCP). Bench-making should be provided to the stake holders through National Enquiry Point (NEP).

The national experience with the development of 'quality systems' for exportable horticultural products needs to be highlighted in all available mass/print and electronic media. Clear understanding that national GAPs are primarily designed for small and medium sized producers/exporters, and their requirements, need to be integrated.

The workshop recommended that national conditions need to be reflected in standardisation process at all levels, and importance of extension services for meeting GAP/HACCP requirements need to be emphasised upon the stakeholders. Government role in national GAPP development and implementation may play a proactive role in this regard.

Workshop participants thought that supportive role of bilateral donors and international institutions through MOUs/MRAs was the need of the day. To meet the requirements of WTO, Pakistan needs to harmonise quality of its products to internationally accepted standards and practices. It was desired to update food laws to bring them in line with Codex Alimentarius Commission guidelines with HACCP integrating private standards in principles with GAP which are widely accepted and are risk-based (preventive) instead of reactive standards.

Standardisation be guided towards supply chain management. Importing countries as well as buyers demanded that exporting countries should carry certification marks in areas of food safety and food hygiene. Therefore, there is need to engage proactively in this area. Quality testing and referral laboratories need to be established and services be integrated through one-window certification. Since the current food legislation and regulations do not meet the present-day requirements, there must be objective review so as to harmonise these Codex Standards and other international standards.

Pakistan being a signatory of WTO has to apply the agreements on TBT and SPS to develop modern food control and safety programmes to assure consumer protection, facilitate international food trade and promote economic growth.

It was, therefore, considered necessary that Pakistan Standards & Quality Control Authority (PSQCA) should establish a dedicated WTO Cell, led by an expert. Mutual coordination with National Institute of Standards and Technology (NIST) US, for human resource development, infrastructure development such as certification, labs upgrade and equipment need to be worked out.

Human Resource Development (HRD) and institutional capacity in risk analysis and risk management need to be developed. Formal and international recognition of the labs, through accreditation and conformity assessment procedures needs to be accelerated and supported, and facilitation of bilateral and multilateral trade, through equivalence arrangements need to be fostered.

Regulatory inspection and certification authorities should have well-defined and transparent operation which will give credibility to the system. Local standards must be harmonised with PSQCA which are mostly based on Codex Alimentarius Standards.

The workshop recommended that a national food safety and veterinary public health authority, as recommended by the World Bank, be established; early warning system based on 'Food Safety Alert' be institutionalised; and Pakistan should participate proactively in standardisation process ie, Codex, IPPC and OIE.

The workshop also made recommendations in the field of electro-technical/electronic product standards & conformity assessment procedures, information technology, and steel and surgical instruments, standards & conformity assessment procedures.

The workshop recommended that efforts are required in creating a database of Manufacturer's Testing Laboratories, especially of those who are engaged in exports and products approved by international testing laboratories and certification bodies, such as UL, KEMA, TUV and VDE, etc. If a national certification body is created, it can affiliate itself with accredited testing laboratories, such as PSB labs of Thailand, TSE of Turkey, SABS of South Africa, or such other willing laboratories.

Encourage and facilitate internationally recognised organisations in Pakistan eg American Association of Textile Chemist & Colorists (AATCC), and American Society for Testing & Materials (ASTM). In the case of steel & surgical instruments, although Pakistan has adopted/developed sizeable number of standards, a lot of work has yet to be done to cover the standards for whole range of plain carbon, low alloy & high alloy steels.

For economic growth of a country it is always per capita consumption of steel which determines its economic development which is too low in case of Pakistan and needs to be enhanced through expansion and modernisation of steel plants in the country to increase domestic share against future growths/demands and bid sharing demands in adjoining overseas markets. For expansion and modernisation of steel plants in the country joint collaboration/assistance programmes needs to be chalked out for implementation between Pakistani steel producers and their counterparts in United States.

http://www.brecorder.com/index.php?id=570582&currPageNo=1&query=&search=&term=&supDate=

 

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Nera selected to link Northern Areas with rest of Pakistan

RAWALPINDI (May 30 2007): Special Communication Organisation (SCO) has selected M/s Nera to provide Terrestrial Microwave based turnkey solution for linking Northern Areas with rest of Pakistan. The agreement was signed between SCO and M/s. Nera on Tuesday at SCO HQ Rawalpindi.

The project is expected to be completed within 9 months period. The completion of the terrestrial microwave link project will contribute significantly in enhancement of backhaul connectivity of Northern Areas with rest of Pakistan.

http://www.brecorder.com/index.php?id=570563&currPageNo=2&query=&search=&term=&supDate=

 

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$300 million investment in hotel industry for Karachi offered

KARACHI (May 30 2007): A noted company has shown interest for making a 300 million dollar investment in hotel Industry in Karachi. A delegation of company led by Chief Executive Hasan Fareed Khan and accompanied by Provincial Advisor Fakir Jadim Mangrio, met City Nazim Syed Mustafa Kamal here on Tuesday.

The delegation informed that the company is working in Britain but has an office in Dubai to facilitate their operation in the region and has decided to construct a 5-Star hotel in Karachi.

The delegation said development of Karachi has greatly pleased them and with improved law and order situation here, there will be no problem in making investment here. Mustafa Kamal informed that for the first time mega projects were launched in Karachi and development activities were progressing at a fast pace.

He pointed out that this city is the regional economic hub where present government with special focus is laying modern infrastructure of international standard with Rs 35 billion schemes being executed at present.

He said special incentives are being provided to businessmen, industrialists and investors while infrastructure development works costing Rs 4 billion were being implemented in industrial areas to facilitate the local industries.

Pointing out that these works will start completing by June end, Mustafa Kamal said these measures have provided vast investment opportunities and world fame companies have entered into private public partnership with City Government. He said so far, investment amounting to 1.2 billion dollars has been made.

He informed that work on elevated expressway is going to start soon and noted Malaysian firm has set up its offices in Karachi while Site offices also established. He said work on IT Tower and Mass Transit system will also commence soon. Mustafa Kamal said besides investment, the revenues of city government, too, will grow.

He told the delegation that city government will provide land for investment and all assistance to investors and protection to their investment. Talking to media along with Fakir Jadim Mangrio, the company's CEO Hasan Fareed said that western media had carried out negative propaganda against Karachi contrary to conditions, which actually exist. He said his company has decided to initially make an investment of 300 million dollars and more investment later.

He described his talks with Nazim Karachi very positive and said the work on partnership with the city government will start after site inspection.

http://www.brecorder.com/index.php?id=570537&currPageNo=2&query=&search=&term=&supDate=

 

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SBP group to look into mega project financing

KARACHI: The State Bank of Pakistan has constituted a working group to finance independent power and communication projects.

The working group comprises senior bankers of the central bank and commercial banks.

At present, the banks are looking at portfolios of these projects for providing financing for local and foreign currency components.

The banking community expects that there would be substantial flow of liquity into this sector.

Sources at the central bank said that Governor Dr. Shamshad Akhtar has suggested to commercial banks to give their recommendations concerning financial market strategy to the SBP’s concerned department.

Sources said bankers have conveyed to the governor that in order to meet the financing requirements of these mega projects, banks need to develop local and foreign currency products for infrastructure which could meet financial requirements of infrastructure development projects over a period of 15-20 years.

They said that banks need to change traditional focus on providing short-term financing to provision of long-term debt and introduction of more foreign currency hedging products.

Sources said the governor has assured the top bankers that the task of designing policy, regulatory framework, structure of financing, and risk assessment has already been assigned to the working group. Its report will address most of the issues.

She exhorted the banks to ensure credit availability to private sector in long-term financing.

She suggested that banks should also play their role in developing fixed income securities market in the country.

She indicated that banks could issue instruments for long-term investment to attract public savings as was being done by SBP and the government through PIBs.

She said that public confidence in banks would facilitate public investment in fixed income avenues.

Sources said that in reply to the governor’s suggestions, the bankers said: “In the wake of high rates offered by National Savings Scheme, it is difficult to offer products at competitive rates.”

However, the governor urged the bankers to design comparable products and look for avenues to make bank rate of return competitive with National Saving Schemes.

http://www.thenews.com.pk/daily_detail.asp?id=58197

 

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Rs10,000 minimum pay demanded

KARACHI: Top trade union activists of Karachi have urged the government to fix the minimum salary of unskilled workforce at Rs10,000 per month in the coming federal budget.

Addressing a pre-budget seminar organised by the National Labour Federation (NLF) at the Karachi Arts Council on Tuesday, Vice President All Pakistan Trade Union Federation, Habibuddin Junaidi, said present minimum salary of an unskilled worker at Rs4,000 could not even meet the expenses of kitchen of a seven-member family.

“We need to present our recommendations to the government for the coming budget, irrespective of the fact whether these have any impact on the government or not,” Junaidi said.

He said the present regime had transformed the country into a “state of elite class”. The government was using its resources for providing benefits to the privileged class, whereas more than 50 per cent of the population lived below the poverty line who could not afford two square meals a day.

“These rulers are neither progressive nor religious, but their own interests are important for them,” he said.

He said the government had created an executive class in almost all the organisations and that class could get salary raise of any amount. “They are hired at Rs5 million or even higher than that. “The president of a bank announced a reward for himself of Rs10m, whereas some workers in the same organisation get small salaries in the range of Rs4,000 to Rs4,500,” Junaidi said. The trade union activist said contractual workers were the most suppressed class in the country and demanded that all the contractual employees should be granted permanent jobs. He also demanded 100pc increase in the salaries of employees of public and semi-public organisations.

Amir of Jamaat-e-Islami Karachi, Dr Mairaj-ul-Huda Siddiqui, in his speech, said the prime minister was claiming seven per cent growth while the middle class was taking its last breath due to wrong policies of the government.

“I don’t expect the government to listen to our proposals as wheat could not be grown on a cactus tree,” he commented.

Dr Siddiqui said there was so much poverty in the country that people were selling their kidneys for survival. He said workers were being forced to work for 12 hours a day and they were not allowed any leave in a week. “Workers are being made slaves through imperialist tactics,” he added.

He said there existed unity amongst military, feudal and industrialist classes and common people needed to create unity among themselves for their own sake.

President NLF Karachi, Rafique Ahmed, said billions of rupees in Workers’ Welfare Fund should be utilised for the welfare of workers. He said the government should provide relief to the labour class so that they could survive in the present high-inflation environment.

Shaikh Majeed said the government had signed agreements with multinational companies on blocking trade union activities in the country. He demanded that IRO 2002 should be withdrawn for the welfare of workers.

http://www.thenews.com.pk/daily_detail.asp?id=58199

 

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May 30, 2007
Profit outflows reach $504m: Liberal repatriation policy

KARACHI, May 29: The negative side of the record foreign investments into the country could start haunting the nation as the outflows in the form of profits and dividends have sharply increased, which may reach $800 million by end of the fiscal.

The government’s liberal policy, which allows the investors to take away 100 per cent profits and investments whenever they want, might not be suitable for the country in the longer run.

The new data issued by the State Bank, which reveals more transparency about the economic activity, showed that during the last ten months — July-April 2006-07 — profits and dividend outflows amounted to $655 million. This was much higher than the total outflow $504 million in 2005 06.

It has been a point of satisfaction for the government that huge foreign investments helped it to meet the unexpectedly widening trade gap and current account deficit. During the last ten months of the current year, the country received record $6 billion, while an additional $1 billion is expected till the end of the current fiscal.

Analysts said the foreign investment brought economic growth, while the outflow of foreign exchange was the cost of the economic growth, which every country has to pay.

However, they were not ready to accept that a situation like - Far Eastern economic crisis in 1990s - would happen again that could put Pakistan in trouble.

In 1990s the economic crisis led to massive outflows of foreign investments, which eventually resulted in the collapse of the economies like those of South Korea and Thailand. In those days Pakistan had negligible foreign investments and economists termed the situation a ‘blessing in disguise’ for Pakistan.

Analysts believe that foreign investment could not be attracted without giving complete autonomy for investment and disinvestment and the risk involved in it is a ‘must’ for doing such business.

Others, who differ with the idea of unchecked foreign investment, said there should be some tools to keep monitoring foreign investment as the threat of disinvestment is always there.

“We are the nation of a hot region. Any imbalance in politics of the region could imbalance the economy of the country, which should be discussed at the highest level to prepare a strategy as long-term planning,” suggested an analyst.

Highest outflow in terms of profit and dividend during the ten months was recorded in the power sector where the outflows amounted to $118.3 million during the ten months.

The telecommunications sector was another major sector, which witnessed a steep rise in outflow of dollars. The telecommunications sector sent $107 million abroad during the same period. Previous year, the sector’s outflow was just $17 million.

Other sectors recorded outflow of $92 million from financial business, petroleum refining $48.7 million, pharmaceuticals $48.2 million, chemicals $42.7 million, oil and gas exploration $35.1 million, food $32 million and trade $26.3 million.

http://www.dawn.com/2007/05/30/ebr1.htm

 

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Wednesday, May 30, 2007
Agribusiness project for Pakistan: 705 projects to be completed

* 12,500 farmers skills to be utilised
* 100 business development support companies soon

By Razi Syed

KARACHI: Agribusiness project is expected to lead to the development of 705 agriculture business enterprises in the country by forming 1,250 farmers’ groups involving 12,500 farmers.

Chairman Fruit and Vegetable Processors and Exporters Association (FVPEA) and Sindh director for Agribusiness Support Fund (ASF) Appraisal Committee, Mateen Siddiqui stated this on Tuesday.

He said the project would also build 100 business development support companies and 30 research and extension service provider companies.

It was also supporting 10,000 agriculture business enterprises backed with a strong human resource component.

An Agribusiness Support Fund (ASF) a non-profit company has been established under which about 2,000 agro-enterprises are expected to benefit over the five years of the project’s life, he added.

Agriculture sector in Pakistan is still facing many serious challenges and constraints for future growth. These challenges are embedded in the rising demand for agricultural products with the growth of population and incomes and the expanding role of free and competitive markets in agriculture trade at the national and international levels.

The project envisages a comprehensive and systemic approach to remove developmental constraints for agribusiness development in Pakistan, namely poor infrastructure, limited access to appropriate technology packages, lack of financial and capacity services required for agriculture enterprises and absence of proper processing and quality control mechanisms for value added exports of agricultural products, he added.

Through project interventions, Pakistan would be able to tap growth opportunities provided by regional and international markets with the implementation of trade regimes of WTO and SAFTA.

ASF Appraisal Committee has started supporting fruit and vegetable exporters to comply with the Euro-Retailer Produce Working Group, Good Agricultural Practices (EUREPGAP) and ISO certification requirements besides grant them funds for produce quality promotion, Mr Siddiqui added.

ASF is shouldering 50 percent of the expenses of farmer and exporters to acquire certification in order to enable them to compete in the international market.

He said ASF is an independent body with five directors from private sector, one each from four provinces and a banker, work with four directors appointed from the public sector for the promotion of exports and production of fruits, vegetable and dates.

According to official sources, Ministry of Food, Agriculture and Livestock (MINFAL) with the support of Asian Development Bank has launched a Programme Agribusiness Project for the improvement of horticulture and livestock related businesses in the country. The cost of the project estimated at Rs 4.1 billion.

Three main donors, ADB, FAO and UN through WFP window, primarily support the agriculture sector in Pakistan. ADB is providing development assistance through two main project portfolios, Agriculture Sector Program Loan-II and Agribusiness Development Project.

ASPL-II program, which is worth $350 million, started operating in early 2004. The program is designed to assist government in addressing key constraints in agriculture sector regarding productivity and profitability with a deliberate emphasis on the development of small agriculture. The five-year umbrella program would accelerate agricultural growth and rural employment, and reduce poverty level. Specific reform measures incorporated in the program include, to promote efficient markets for the major agricultural commodities including wheat, cotton, rice, sugarcane, fertiliser and seed, and to strengthen support services of research and extension especially for small farmers and regulation to improve quality control.

http://www.dailytimes.com.pk/default.asp?page=2007\05\30\story_30-5-2007_pg5_6

 

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MWH to Provide Construction Management Services for Hydropower Project in Pakistan

Rapid Economic Growth Drives Demand for New Facility, Part of 25-Year Plan
to Meet Increasing Demand for Energy
Water and Power Development Authority (WAPDA) to
provide construction management and contract administration services on the
Jinnah Hydropower Project (JHPP) through a joint venture with local
engineering companies. The project, which broke ground in December 2006,
and is scheduled to be completed

CHICAGO, May 30 /PRNewswire/ -- MWH, a global provider of environmental
engineering, construction and strategic consulting services, has been
selected by the Pakistan by the end of 2010, is part of a 25-year
master plan to meet increasing energy demand being driven by rapid economic
growth in Pakistan.

In its role on the project, MWH will complete a detailed review of the
JHPP engineering design and oversee procurement, construction, programming
and quality assurance procedures. This includes quality control testing of
construction materials and the final structures and components. In
addition, MWH will monitor design and construction procedures to ensure
they are completed correctly and comply with project specifications and
local laws.

"MWH has a long history of working in Pakistan and with WAPDA," said
Alan Krause, president of the Natural Resources, Infrastructure and
Industry unit of MWH. "Working in strategic roles by contributing our
technical expertise to hydropower projects, such as the Jinnah project, is
among the things that MWH does best. We're pleased to have been selected
and look forward to working with WAPDA to meet the engineering needs of
this project."

Located in the Punjab province, 234 kilometers southeast of Islamabad,
the main components of the JHPP include a headrace channel; a powerhouse
that houses eight low head pit turbines each producing 12 megawatts of
power for a total of 96 megawatts; a tailrace channel; a 132 kilovolt
double circuit transmission line; and a 132 kilovolt switchyard. The annual
688 million kilowatt-hours of energy the hydropower facility is expected to
produce will be transported along a five kilometer transmission line to
provide power to the national electric grid system.

The project is being implemented under an EPC (engineer, procure,
construct) contract awarded by WAPDA to Dongfang Electric Corporation, a
Chinese contractor, for a total project cost of US $128 million.

MWH's Work History in Pakistan

MWH has been a general consultant to Pakistan since 1959 and has
carried out a variety of assignments in the development of water, land and
energy resources during the past 25 years. In 1978, MWH was awarded a
special medal by WAPDA, the first ever awarded to a consulting firm, in
recognition of services to the country.

As general consultants, MWH assisted WAPDA with the engineering review
and construction oversight of the Indus Water Treaty works, one of the
largest water transfer projects ever undertaken. The project was the result
of a settlement between India and Pakistan that required Pakistan's three
western rivers to be brought under control and their flows partially
diverted to supply extensive irrigation systems previously fed by rivers
that flow out of India. Accomplishing this replacement of flows required
the construction of two major dams, five new barrages, a gated siphon, and
eight new inner-river link canals. The total project cost was approximately
US $2.25 billion.

In 2005, MWH served as consultants on the Ghazi Barotha hydroelectric
project in the Northwest Frontier province of Pakistan. The US $2.25
billion project has a maximum capacity of 1450 megawatts and was
successfully commissioned last year.

MWH has an office in Lahore, Pakistan and maintains project offices in
various parts of the country.

MWH's Dam and Hydropower Services

MWH has been providing engineering services to the dam and hydropower
sector since 1920 and is currently working on numerous dam and hydropower
projects throughout North and South America, Europe, Asia and Africa. MWH
has played a key role in some of the largest dam and hydropower projects in
the world, including the Three Gorges Dam in China, Ghazi Barotha
Hydroelectric Scheme in Pakistan, Mohale Dam in Lesotho, Tekeze Dam in
Ethiopia, Caruachi Hydroelectric Project in Venezuela and Karahnjukar
Hydroelectric Project in Iceland.

About MWH

Headquartered in Broomfield, Colo., MWH is a private, employee-owned
firm with more than 6,000 team members worldwide. The company provides
water, wastewater, energy, natural resource, program management, consulting
and construction services to industrial, municipal and government clients
in the Americas, Europe, Middle East, India, Asia and the Pacific Rim. For
more information about MWH, please visit the company's Web site at
http://www.mwhglobal.com.

http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/05-30-2007/0004598393&EDATE=

 

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Rs 724 billion development outlay proposed

ISLAMABAD (May 31 2007): The Planning Commission has proposed total development outlay of Rs 724 billion for the next fiscal year which also would include Rs 35 billion for reconstruction of earthquake affected areas, and Rs 204 billion outside PSDP.

According to an official document available to Business Recorder, the Planning Commission has proposed Rs 335 billion for federal PSDP, including Rs 228 billion for federal ministries, Rs 21 billion for special areas, Rs 37 billion for special programs and Rs 49 billion for corporations, while operational shortfall is expected to be Rs 35 billion. Provinces would get Rs 150 billion from federal PSDP outlay.

The Planning Commission has planned to spend Rs 162.7 billion on infrastructure (48.6 percent from Rs 335 federal PSDP, followed by Rs 159.5 billion (47.6 percent) and others Rs 12.9 billion (3.8 percent).

In addition, public sector corporations are likely to invest about Rs 204 billion, of which Wapda would spend Rs 73 billion on power sector, Rs 73 billion by SSGC, SNGPL and OGDCL, Rs 42 billion by CAA, PIA, PNSC and PQA etc, while Rs 16 billion would be spent on Utility Stores Corporation and Capital Development Authority (CDA).

The Planning Commission is of the view that the water sector continues to receive government attention as highest allocation of Rs 74 billion has been proposed, against Rs 50 billion during 2006-07. The proposed allocation comes to 22 percent of total federal programme, showing 48 percent increase over current year. This would help reduce poverty, accelerate agricultural growth and create construction-related additional jobs.

A major investment of Rs 20 billion is programmed for completion of Mangla dam raising project, which would make available additional 2.88 MAF water to increase agricultural productivity. The National Highway Authority (NHA) may be allocated Rs 29 billion. They have also been advised to raise at least Rs 6 billion through toll receipts and other revenues, to complete the development projects in time.

The total NHA outlay of Rs 35 billion during 2007-08 would facilitate speedy completion of projects. The Islamabad-Peshawar Highway would be completed by September 2007 as federal government has earmarked an additional amount of Rs 5 billion for this purpose.

For mega dams and related infrastructure, a substantial investment of Rs 40 billion is being made during 2007-08. Likewise, to commence work on Neelum- Jhelum Project, Wapda has been advised to arrange resources either through bonds or supplier credit outside PSDP arrangements.

The committee under the chairmanship of Advisor to Prime Minister is working to find innovative financing mechanism outside budget for these projects. Rs 5 billion have been released from the budget during 2006-07 to Neelum -Jhelum Hydero Project.

Allocations for education and training have been increased by 17 percent to ensure availability of qualified human resource to match the highly competitive world market.

The allocation for the health sector has been increased by 33 percent from Rs 12 billion to Rs 16 billion, reflecting continuous emphasis on improving the productivity of human capital and general quality of life. Allocations for special areas (AJK, NA & FATA) have been enhanced by 20 percent with a view to accelerating development in less developed areas.

In order to alleviate poverty, generate employment and undertake quick maturing projects, Rs 34.4 billion would be spent under Khushhal Pakistan Programme with the involvement of provincial and district governments. An investment of at least Rs 6.5 billion will be made during the next financial year to provide safe drinking water down to the union council level.

An amount of Rs 500 million has been allocated for dairy industries during 2007-08. In order to enhance competitiveness and quality of industrial products, a number of projects in the areas of ceramic development, glass production, foundry services, gem & jewellery and marble and granite are being started with involvement of private sector during the next year at a total cost of Rs 3.6 billion.

An amount of Rs 500 million has been proposed during 2007-08 for export promotion plan/measures. For textile sector, three garment cities at Karachi, Lahore and Faisalabad would be set up at a cost of Rs 3.3 billion.

Official sources said that Planning Commission has asked the National Economic Council (NEC) to authorise it to make adjustments, if needed, within the same size of the programme, to accommodate important projects on the basis of quarterly reviews.

They said that NEC would also advise Finance Ministry to place development funds allocated and readjusted as a result of quarterly reviews at the disposal of Planning Commission and expeditiously release funds to the executing agencies to ensure timely completion of projects without delays and cost over-runs.

http://www.brecorder.com/index.php?id=570857&currPageNo=1&query=&search=&term=&supDate=

 

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Growth in 2006-07 GDP: Planning Commission contests Prime Minister's claim

ISLAMABAD (May 31 2007): The Planning Commission has contradicted Prime Minister Shaukat Aziz's claim of 7.02 percent growth in Gross Domestic Product (GDP) in the current fiscal year (2006-07), saying that the growth would be 7 percent, official sources told Business Recorder.

They said that six sectors ie minor crops, livestock, forestry, large scale manufacturing, transport, storage and communical and wholesale and retail trade had missed their targets. There has also been decline in the output of electric transformers, cotton cloth, paper and paperboard, nitrogenous fertilisers and cigarettes.

For 2007-08, the government has set 4.5 percent growth target for major crops, against 4.3 percent during the outgoing fiscal year, 2.3 percent for minor crops, 5.7 percent for livestock, 4.2 percent for fisheries and 3.5 percent for forestry.

There is no change in targets for minor crops and forestry, as both commodities did not show any noticeable growth in 2006-07. In the industrial sector, growth target for mining and quarrying has been fixed at 4.5 percent, as compared 3.6 per cent in 2006-07. However, this sector is expected to show 5.6 percent growth.

Sources said that the government is projecting 12.5 percent growth in large-scale manufacturing in 2007-08, 0.5 percent less than the target of current fiscal year.

The growth target for small and household industries is projected at 7.5 percent, against 7.4 per cent in 2006-07, while the target for slaughtering would be 5 percent.

The Planning Commission has estimated 8 percent growth for construction industry, against 7 percent in 2006-07, as this sector is expected to touch 17.2 percent growth. Electricity, gas and water supply have also been projected to grow by 3 percent in 2007-08, against 3.5 percent in 2006-07.

In services sector, the growth target for transport and storage has been projected at 5.9 percent, 7.8 percent in wholesale and real estate, 15 percent in finance/insurance, ownership of dwellings 4 percent, public administration and defence 4 percent and social community 5 percent. The Planning Commission expects 21.4 percent increase in total investment, to Rs 2004 billion (23 percent of GDP), and in fixed investment by 21.9 percent to Rs 1864 billion (21.4 percent of GDP).

The confidence of foreign investors has visibly improved as non-debt creating capital flows touched $5.3 billion in ten months of the current fiscal year. Foreign direct investment (FDI) in this period has risen from $485 million in 2001-02 to $4.2 billion in 2006-07, and portfolio investment has reached the $1.8 billion mark.

According to Planning Commission, the economy has also witnessed a sharp rise in the workers' remittances, which increased to $4.5 billion during July-April 2006-07 and, by the end of the current fiscal year, are expected to reach $5.5 billion. The Planning Commission has also claimed that unemployment rate had declined from the high level of 8.3 percent in 2001-02 to 6.2 percent in 2005-06.

Poverty, measured on head count basis, which was 34.4 per cent in 2001, came down to 23.9 percent in 2004-05 as the trend in rural areas is more pronounced than in urban areas.

http://www.brecorder.com/index.php?id=570854&currPageNo=1&query=&search=&term=&supDate=

 

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Pakistan graduating to middle and higher income economies: minister

ISLAMABAD (May 31 2007): The Asian economies, including Pakistan, are steadily growing from low income to middle and higher income economies said Hina Rabbani Khar, Minister of State for Economic Affairs. She stated this while speaking at 32nd annual meeting of IDB Board of Governors (BoGs) started in Dakar Senegal on May 29,says a message received here on Wednesday.

In her capacity as IDB Governor for Pakistan, she is representing Pakistan at the meeting. Hina Rabbani Khar also had the honour to represent the Asian Group of Countries during the inaugural session of the meeting. Speaking on behalf of the member Asian Countries, Hina Rabbani Khar said Asian economies, including Pakistan are steadily graduating from low income to middle and higher income economies.

While emphasising the need of collective action, she said "Asia reflects the challenge that world faces today. She said as President Musharraf reflects - "we collectively bear the responsibility, within countries that have not been able to eliminate the curse of poverty within regions and as comity of nations within the world - especially the Islamic World."

She also highlighted that trade and investment rather than aid can help us achieve the economic development. She appreciated the establishment of the International Islamic Trade Finance Corporation (ITFC) within the IDB Group that will help boost the intra-trade amongst OIC member countries.

Launching ceremony of Poverty Alleviation Fund within the IDB Group also took place after the inaugural session. The fund aims at combating poverty, unemployment, illiteracy and diseases such as tuberculosis and malaria in the OIC member countries.

During the launching session, the member countries were invited to announce their contributions to the fund. The minister announced a contribution of 10 million dollar to the fund on behalf of Government of Pakistan. Earlier, the Minister while addressing the working sessions commended the recent initiatives taken by IDB for human development in the member countries.

"The increase in allocation for health and education to 25 percent of IDB's active portfolio is appreciable, however, more needs to be done, "if the member countries have to come at par with the developed nations of the world."

While stressing the need for focused interventions in the social sector, she said, "Poverty alleviation, greater education, better health and assured social justice can become pillars of our future growth." Hina briefed the session on the different initiatives undertaken by the Government of Pakistan in the field of human development and poverty alleviation.

The minister said, "Sound economic growth of nearly 7 percent over the past four years underpinned by Government's strong and stable economic policies have led to reduce unemployment - falling from 8.3 percent in 2001 to 6.5 percent in 2006.

"High GDP growth, decline in unemployment and higher spending on poverty reduction projects have contributed to 10.6 percent decline in absolute poverty and the poverty head count which was 34.4 percent in 2001 has come down to 23.9 percent," she added.

The Minister felicitated the IDB management for the high ratings achieved by the Bank from Moody's and Standards and Poors. The Minister also congratulated the fellow governors on the observer status accorded very recently to IDB at UN General Assembly.

The annual meeting will last for two days ie May 29 to 30. Annual meetings of other entities of IDB Group ie ICD (Islamic Corporation for Development of Private Sector), ICIEC (Islamic Corporation for Insurance of Investment and Export Credit) and ITFC (International Islamic Trade Finance Corporation) will also take place during the annual meeting.

http://www.brecorder.com/index.php?id=570953&currPageNo=1&query=&search=&term=&supDate=

 

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FTA with Malaysia likely in two months: Humayun

ISLAMABAD (May 31 2007): Commerce Minister Humayun Akhtar Khan has said that Pakistan-Malaysia Free Trade Agreement (FTA) was expected to be signed within two months as the two sides had concluded the negotiations on all technical aspects.

Speaking at a news conference here on Wednesday, he said that Pak-EU Sub-Group on Trade will monitor the impact of EU's trade policies in the region on Pakistan's preferential access to EU markets and will identify possible options for improvement in bilateral trade. The minister denied that the EU had linked the market access to Pakistan with the doffing of President General Pervez Musharraf's uniform.

"As far as I am concerned, the EU has never raised this point in trade negotiations," he said. Responding to another question on President's uniform, he said that foreign office would be in a better position to answer this question. The minister said both Pakistan and EU also agreed that Sub-Group on Trade should meet in autumn this year with a view to initiating a study in consultation with Pakistan on the impact of EU trade policies in South Asia especially its trade relations with least developed countries (LDCs) in the region. In reply to a question, he said he was hopeful that major economic blocs of the WTO would shortly sign Doha Development agenda, adding for the first time in the last five years, the momentum is high in different capitals of the developed countries.

Negotiations on the Pak-Malaysia FTA were successfully concluded at Kuala Lumpur on May 24. The initiatives include trade in goods and services. Besides this, the FTA would also focus on investment and economic co-operation, he said.

Under the agreement, Pakistan would reduce special duty on palm oil, which is Rs 9,000 per metric ton, by 15 percent from January 2008, said an official. He said that Pakistan would reduce this duty by around two percent every year.

According to documents distributed to media, for trade in goods, the package with Malaysia was successfully negotiated to achieve objectives of trade liberalisation while giving due protection to the local industry. Pakistan, the minister said, has undertaken to eliminate/reduce tariff mostly to raw materials and Malaysia will provide market access to our textiles, bed linen, other home textiles, kino, and prepared foods, etc.

The manufacturing sectors of Pakistan will now be able to source raw materials and intermediary goods from China as well as Malaysia at preferential or zero duty, Humayun said, adding this will address the issue of trade diversion and help in global competitiveness of Pak exports.

For trade in services, Malaysia has provided market access to various sectors, including Islamic banking and Takaful, said Humayun, adding these concessions have not been extended by Malaysia to any other country. The limit of aggregated foreign equity participation in the Malaysian domestic financial institutions has been increased from 30 percent to 49 percent. This facilitation will also qualify Pakistani financial institutions to conduct full range of Takaful business in international currencies without any limit, he said.

This landmark agreement will be the first between two OIC member countries and will serve as a precedent for reaching many such agreements in future between Muslim countries. Malaysia is an important member country of Asean and this agreement will provide Pakistan a firm foothold in the vibrant and growing economies of East Asia, the minister said.

Humayun said that Asean and China have already concluded the FTA. The Asean member countries are in the process of reducing or eliminating tariff for import from China. The Pakistani exports, which are already facing tariff barriers in Malaysia due to the Asean FTA, would have been even more adversely affected by 2012, when tariffs are to be eliminated on textile imports from China by Malaysia, he said. The Pak-Malaysia FTA is a timely move. With the signing of FTA with Malaysia, the Pakistani exports would not be adversely affected, he remarked.

The minister said that Pakistani exports suffer due to certain policies of the EU with LDCs and Bangladesh, Maldives, Bhutan and Nepal in South Asia. The Sub-Group on Trade will look into this issue in detail, he added.

Responding to a question, the minister said that Pakistan exports in this fiscal year would remain very close to the target of 18.6 billion dollars. He admitted that tight monetary policy had some negative implications on the trade deficit and exports.

http://www.brecorder.com/index.php?id=570943&currPageNo=1&query=&search=&term=&supDate=

 

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New development projects to be launched in Punjab

LAHORE (May 31 2007): The present government would launch new development projects throughout the province during new fiscal year, to help eliminate unemployment. Punjab Mines and Minerals Minister Muhammad Sibtain Khan said this while talking to various delegations of Pakistan Muslim League (PML) here on Wednesday.

He said that a strategy has been evolved for bringing far-flung areas at par with the developed ones and for this purpose, vocational training institutions will be set up on priority basis.

"Infrastructure of hospitals and educational institutions would further be improved and for this purpose, the government has allocated a huge amount on emergent basis," he added. The minister said that the present government has formulated people-friendly policies.

He said that the decisions taken by Punjab Chief Minister Chaudhry Pervaiz Elahi of free of cost education up to matriculation level and reduction in the mark-up on agricultural loans had brought betterment in these sectors.

http://www.brecorder.com/index.php?id=570979&currPageNo=2&query=&search=&term=&supDate=

 

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May 31, 2007

Pakistan lured $3.5bn FDI in 2006

WASHINGTON, May 30: The Foreign Direct Investment (FDI) inflows to Pakistan increased from $2.2 billion in 2005 to $3.5 billion in 2006 with much of investment in the oil and gas and financial sectors, says a World Bank report released on Wednesday.

The total FDI inflows also include instalments made on a major telecom privatisation deal in 2005.

The World Bank’s Global Development Finance Report of 2007, however, points out that Pakistan’s GDP increased by 6.6 per cent in 2006 significantly down from the 7.8 per cent growth rate recorded the previous year.

The World Bank said that since 2003 the period for which imports could be covered by foreign reserves has declined by about four months in both India and Pakistan.

While reserves in India remain significantly above the level of three months worth of imports, they are much closer to that level in Pakistan and below in both Bangladesh and Sri Lanka, suggesting that each country would be vulnerable to a significant terms-of-trade shock, such as another hike in oil prices.

The report notes that net capital flows to South Asia reached a record $40.1 billion or 3.6 per cent of GDP in 2006 from $28.3 billion in 2005, which was 2.8 per cent of GDP. Most of the increase went to India.

But the report warns that sustaining recent high growth in South Asia will require continued economic reform, expansion of infrastructure capacity, and further reduction of security threats.

The report predicts that these efforts will also contribute to higher capital inflows, which have been spurred by progress in these areas in recent years.

“Increased political instability represents another main risk. Heightened security concerns could hurt investor sentiment and undermine foreign capital inflows, which have contributed to the region’s record four-year expansion,” the World Bank warns.

It notes that continued easing of political tensions between the governments of India and Pakistan bodes well for progress toward improved relations.

Although India attracted a major chunk of the record capital inflows into South Asia in 2006, restrictive policies could stunt investment growth leading to slower economic expansion, says the report.

“India’s restrictive policy conditions are expected to lead to deceleration in investment growth and weaker private consumption and government spending, contributing to a slowdown in GDP growth to 7.8 per cent and 7.5 per cent in 2008 and 2009, respectively.”

India’s GDP grew by 9.2 per cent in 2006-07, although signs of slowing appeared at the end of the fiscal. Total FDI inflows last fiscal (April-March) was $15.7 billion.

Net equity inflows to South Asia, however, increased only slightly as a $3 billion increase in FDI was partly offset by a decline in portfolio equity flows, the report said.

The World Bank points out that high growth rates posted in recent years have helped South Asia make significant progress toward achieving the Millennium Development Goals. The GDP in South Asia expanded a robust 8.6 per cent in 2006.

Most notably, the percentage of people living on less-than-a-dollar a day declined to just over 30 per cent in 2003 from 40 per cent in 1990 and is now projected to be about 13 per cent in 2015, below the initial goal of 20 per cent.

http://www.dawn.com/2007/05/31/ebr4.htm