Pakistan Economy - News & Updates - Archive

[Neo]

Economic zones planned to facilitate investors

ISLAMABAD (June 08 2007): Various special economic zones have been planned in the country aiming to provide better facilities and incentives to the investors, Investment Advisor, Board of Investment, Marvi Memon said on Thursday. Talking to CNBC channel she said Chinese investors would provide 40 percent equity for establishing industries in special Pak-China economic zone.

Various incentives have already been provided to investors including income tax holiday for five years. Exemption of customs duty will be strictly on imports of capital and not for raw material. Depreciation allowance of 50 percent will too be considered, she added.

An aggressive Foreign Direct Investment (FDI) target has been set for the next financial year. The country has already attracted 5.89 billion dollars FDI during the current FY.

Investment in power generation through wind has been pouring in. A reputed foreign company would invest 250 million dollars while another UK based company will establish wind power generation plant worth 500 million dollars in the country, she said.

http://www.brecorder.com/index.php?id=574792&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

Friday, June 08, 2007

Development projects: Target to prepare revival plan for KEPZ

* Better export processing zone on India and China’s pattern n PIDC’s 250 acres of land in Landhi would be functional by next one year

KARACHI: Federal Minister for Industries and Production Jahagir Khan Tareen has given a target to the new management of Export Processing Zone Authority (EPZA) to prepare a revival plan for Karachi Export Processing Zone (KEPZ).

He was talking to reporters after attending a presentation by the chairman of EPZA Kamran Mirza at PIDC House here on Thursday. I have asked them to make KEPZ as a fully functional entity and create a viable and better export processing zone on China and India’s pattern, he added.

He said that EPZA management will give him a briefing by mid of July this year as how to improve the working of KEPZ and how to revive it on modern lines.

“I have asked them to cancel plots of those investors who had yet not started work on the plot after so many years. They are not serious investors but speculators and these plots should be given to genuine investors,” he added.

He said that EPZA would issue notices to all of them and complete a legal procedure before the cancellation of plots. The allottees of these plots will not suffer any losses, as their deposits with KEPZ will be refunded.

He told reporters that Balochistan government has allotted 1,000 acres of land for Gwadar export processing zone. The work on this zone will start soon and this project will be developed along Gwadar Port, he noted.

Mr Tareen said new zones at Sunder, Faisalabad, Risalpure and Karachi are being created in the country to boost industrial activities.

He pointed out that industrial estate on PIDC’s 250 acres of land in Landhi would be functional by next one year.

Similarly, another industrial estate being developed over 1,000 acres near Steel Mills will be dedicated for small and medium enterprises (SMEs). This will have small plots for small units of down stream steel industry, engineering and auto clusters, he opined.

To a question, he said that industrial sector would get further incentives in the budget in the shape of skill development and tariff rationalisation.

This is the effort of the government to rationalise tariff on industrial raw material and machinery, he added.

To a question regarding price of edible oil, he said that the government was providing ghee and edible oil to consumers at Utility Corporation at Rs 67 a kilo, which is cheaper by Rs 17 compared to the open market.

He said prices of palm oil has increased by 45 percent in the international market rising from $ 450 to $ 850 per tonne in the last six months, whereas prices in Pakistan have increased by only 20 percent during the same period.

http://www.dailytimes.com.pk/default.asp?page=2007\06\08\story_8-6-2007_pg5_2

 

[Neo]

Friday, June 08, 2007

Government all set to start 969MW hydroelectric project

By Sajid Chaudhry

ISLAMABAD: The government is all set to start physical work for the construction of much awaited $2.14 billion Neelum Jhelum Hydroelectric Project in the next fiscal year 2007-08, an official told Daily Times on Thursday.

The construction of Neelum Jhelum Hydroelectric Project would enable Pakistan to get water usage rights over River Neelum. In the event of any further delay in the construction of the said project, Pakistan would have to forfeit its rights over River Neelum and allow India to use these waters for power generation, said the official.

The official explained that the PC-1 cost of the project was estimated at $1.4 billion and the total cost of the project has been estimated at $2.14 billion. Government of Pakistan has approached Kuwait Fund and French financers M/S BNP Paribas for arrangement of the foreign exchange component of $785 million.

The project is estimated to have an installed capacity of 969 MW and an annual energy generation capability of 5150 kWh. The project would be connected with the National Grid at Rawat through two separate transmission lines of 500 kV.

Water and Power Development Authority (WAPDA) has already approved award of the contract to the lowest bidder ie CGGC-CMEC on March 9, 2007 at the contract price of Rs 90.885 billion including foreign exchange component of $785 million or Rs 47.089 billion.

The Government had made an allocation of Rs 5 billion for the project in this year’s Public Sector Development Program (PSDP) and a sizeable amount is expected to be allocated for this project in the PSDP for the next fiscal year, the official added.

Located in the vicinity of Muzaffarabad, Azad Jammu and Kashmir, the project is scheduled to be completed in 8 years after the start of physical work.

The official informed that around 2,500 kanals of land would be acquired for the project and in the first phase acquisition of 1123 Kanals of private land is under way. WAPDA has already transferred Rs 336 million to the Azad Jammu and Kashmir government as provisional cost of private land being acquired by it.

http://www.dailytimes.com.pk/default.asp?page=2007\06\08\story_8-6-2007_pg5_6

 

[Neo]

Friday, June 08, 2007

‘PSEB plans to increase IT sector size to $10b’

ISLAMABAD: The Pakistan Software Export Board (PSEB) has proposed a four-year draft strategic plan, which will increase the IT industry’s size to $10 billion in the year 2010, said Managing Director Yusuf Hussain here Thursday.

Addressing a Microsoft seminar on “Working Better Together”, Yusuf Hussain highlighted PSEB’s initiatives to promote this vital sector, which registered growth of 57 percent during last year.

Eight strategic areas with missions and annual targets have been identified which include facilitation, human resource development, industry finance, marketing, office space provision, public policy, quality and telecom bandwidth provision, he added.

Yusuf Hussain said many of the activities mentioned were already in full gear and the board had been able to help 125 local companies achieve ISO and CMMI certifications.

He said in addition to tangible benefits like higher revenue and growth, certified companies can also look forward to enjoying intangible benefits including as improved customer confidence, greater employee satisfaction and an increase in shareholder value.

He said the board has also launched apprenticeship and internship programmes for the development of human resource required by the industry and more than 2,500 students have already benefited from the programme.

He said that another area in which the board was aggressively working on was the setting up of IT parks in all major urban centres, including Islamabad, Lahore and Karachi.

He said the PSEB had over 900 member companies and many of them have benefited from various PSEB initiatives, attracting international clients.

The other speakers including Michel Sengakis spoke on software asset management, ‘find, use and share information’ and Microsoft technology vision.

http://www.dailytimes.com.pk/default.asp?page=2007\06\08\story_8-6-2007_pg5_7

 

[Neo]

Friday, June 08, 2007

Rs 1.874 trillion ‘no new tax’ budget

* Rs 15bn earmarked for health, Rs 24bn for education and Rs 275bn for defence
* Analysts see ‘election focus’ in tomorrow’s budget

ISLAMABAD: Omar Ayub Khan, state minister for finance, will present a federal budget of Rs 1.874 trillion for the fiscal year 2007-08 in the National Assembly tomorrow (Saturday) at 5pm, Online reported.

Official sources said the education and health sectors would get Rs 24 billion and Rs 15 billon respectively, whereas the defence budget would be increased from last year’s Rs 250 billion to Rs 275 billion.

They said no new tax would be levied in the budget, which would be the first-ever such budget by the Prime Minister Shaukat Aziz-led government.

They said that government employees were likely to get a 15 percent increase in salaries and retried civil servants would get a 15 to 20 percent increase in their pensions.

Locally manufactured 800cc vehicles will be exempted from tax, while 15 percent tax will be imposed on imported cars. 500 more utility stores would be set up in the country, sources added.

A considerable increase in the provinces’ annual development programmes has also been proposed. Rs 520 billion will be given for the federal annual development programme out of which Rs 150 billion would be given to the provinces and Rs 35 billion for development in the quake-hit areas, the sources said, adding that Rs 500 million had been set aside for the construction of Basha Dam and Rs 40 billion for other large dams.

There will be no tax on import of agricultural, marble, medical, engineering and textile machinery, the sources said.

Analysts said the budget would be aimed at winning support for the government in elections due late this year or early in 2008, Reuters reported.

“This budget will largely be an election-focused budget and is expected to include subsidies and measures such as an increase in salaries and pensions,” said independent economist Kaiser Bengali.

Bengali said the government might announce new development programmes to win support, but added that could have a negative impact on inflation. “The best way to avoid inflationary pressures is to curtail non-development spending, such as on defence and the government’s own expenditures, and direct those funds towards development,” he said.

Rising prices are already a challenge. Average inflation is likely to be close to 7.7-7.9 percent for the 2006/07 fiscal year, against a target of 6.5 percent.

The budget allocation for public sector spending in 2007/08 is expected to be Rs 720 billion, including a Public Sector Development Programme of Rs 520 billion – nearly 20 percent higher than this fiscal year, officials said. Out of this, Rs 35 billion would be spent on reconstruction in areas hit by a 2005 earthquake, while the remainder would be spent equally on infrastructure development and the social sector, officials said. The government says the economy is expected to grow by 7.02 percent in 2006/07 and the target for the next fiscal year is 7.20 percent.

Salman Shah, adviser on finance to Prime Minister Shaukat Aziz, said the government would achieve the fiscal deficit target of 4.2 percent of GDP for 2006/07, while the target for the next fiscal year will be about 4.0 percent. Some analysts say that could be tough.

“One potential area of concern next year would be fiscal discipline,” said Sakib Sherani, chief economist at ABN Amro bank. The government will have to make an extra effort to generate healthy tax revenue if it wants to maintain fiscal discipline, given the huge development spending envisaged for 2007/08, he said.

The government says it will set a revenue target of more than Rs 1.0 trillion for next year. It expects to collect Rs 830 billion this year.

“I think both corporate profitability and imports are currently at their peak, and hence it could be difficult to achieve 20 percent growth in revenue collection next year,” said Sherani.

A likely increase in the minimum wage would also put pressure on the profitability of industries and could thus hamper revenue growth, analysts said. They also see a need to broaden the tax base – only about 1.36 million people are registered as taxpayers out of a population of 160 million. agencies

http://www.dailytimes.com.pk/default.asp?page=2007\06\08\story_8-6-2007_pg7_20

 

[Neo]

June 08, 2007 Friday
Rs398bn deficit likely in new budget

ISLAMABAD, June 7: The government will present a Rs1.874 trillion federal budget for 2007-8 in the National Assembly on Saturday, envisaging revenue target of Rs1.025 trillion, defence spending of Rs275 billion and fiscal deficit of Rs398 billion, amounting to more than 21 per cent of the outlay.

According to sources, the budgetary outlay is almost 25 per cent higher than the current year’s estimate of Rs1.5 trillion. The budget deficit is estimated to be about 6.5 per cent higher than the current year’s estimate of Rs374 billion.

To be presented by Minister of State for Finance Omar Ayub Khan, the budget has been prepared keeping in mind the upcoming election season with populist steps offering subsidies and benefits to the working class.

New pensioner would get an increase of about 15 per cent, while a few pensioners who retired before 1980 would get about 20 per cent raise.

The CBR’s tax revenue target at Rs1.025 trillion will be almost 22 per cent higher that the current year’s original estimates of Rs841 billion. The defence spending will increase was about 10 per cent against that of the current year.

A critical feature of the budget would be a staggering 54 per cent increase in current expenditure, projected at Rs1.353 trillion, against Rs880 billion of the current year, said the sources.

The centre is projected to transfer about Rs465 billion to the provinces as their share in the federal divisible pool and grants, including subvention, against Rs398 billion during the current year, showing an increase of about 17 per cent.

The Public Sector Development Programme (PSDP) has been estimated at Rs520 billion, compared with Rs415 billion of the current year, showing an increase of about 25 per cent.

The source said a 15 per cent duty on imported and four per cent on locally manufactured cars had been proposed but there would be no new levy on up to 800cc cars. The capital value tax on cars is being removed. Measures in this regard will be approved by the cabinet on Saturday morning.

The Central Board of Revenue is expected to rationalise about 800 tariff lines in the budget, including some zero-rate slab for the industrial sector, including textiles.

A new zero-rate regime will be introduced to promote export of marble, granite and some other precious minerals, medical equipment and engineering goods.

The duties on industrial raw material not manufactured locally will be reduced.

Some of the other populist measures will include, expansion of Utility Stores services; reduction in the prices of pulses, rice, sugar, ghee and some other essential items; 15 per cent increase in government salaries; improvement in the Food Support Programme; increase in Workers’ Welfare Fund payouts by 40 per cent and raise in Employees’ Old Age Benefit Institution-based pensions.

http://www.dawn.com/2007/06/08/top2.htm

 

[Neo]

Export and inflation target unlikely to be achieved: Economic Survey report

ISLAMABAD: Pakistan's economy has grown at an average rate of almost 7.0 percent per annum during the last five years and real GDP grew strongly at 7.0 percent in 2006-07 as against the revised estimates of 6.6percent for last year and 7.0 percent growth target for the year, the Economic Survey 2006-07 said.

However, the target of increasing exports and decreasing inflation could not be achieved.

Economic Survey - pre-budget document was released at a press conference jointly addressed by Advisor to the Prime Minister on Finance - Dr Salman Shah and Advisor to the Finance Ministry - Dr Ashfaq Hasan Khan here Friday.

According to the Economic Survey, growth of value addition in Commodity Producing Sector (CPS) is estimated to increase by 6.0% in 2006-07 as against 3.4% in 2005-06.

Within the CPS, agriculture and manufacturing grew by 5.0 percent and 8.4 percent, respectively.

Major crops witnessed an impressive growth of 7.6 percent as against a negative growth of 4.1 percent last year.

Livestock exhibited signs of moderation from its buoyant growth of 7.5percent last year to 4.3 percent in 2006-07.

Large-scale manufacturing registered a growth of 8.8% in 2006-07 against the target of 12.5.0% and last year's achievement of 10.7%.

As a result of structural transformation, the share of agriculture in GDP has declined by 3.2 percentage points in the last 6 years alone and the share of the manufacturing sector has increased by 3.1 percentage points in the same period.

Construction registered a massive growth of 17.2 percent in 2006-07 as against 5.7 percent last year mainly because of reconstruction work in quake affected areas, higher PSDP and pick-up in private housing market.

The services sector grew by 8.5% in 2004-05, by 9.6% in 2005-06 and by 8.0% in 2006-07.

Finance and insurance sector spearheaded the growth in the services sector and registered stellar growth of 18.2 percent during the current fiscal year 2006-07, which is slightly lower than 33.0 percent of last year.

Value added in the wholesale and retail trade sector increased by 7.1% in 2006-07 compared to 8.6% growth in 2005-06. Value added in the transport, storage and communications sector grew by 5.7% from the previous year compared to 6.9% growth in 2005-06.

Public administration and defense posted a growth of 7.0 percent while ownership of dwellings grew by 3.5 percent and social services sector improved its growth performance to 8.5 percent from 6.3 percent last year.

Pakistan's per capita real GDP has risen at a faster pace during the last four years (5.1% per annum on average in rupee terms) leading to a rise in average income of the people.

Such increases in real per capita income have led to a sharp increase in consumer spending during the last three years.

The per capita income in dollar term has grown at an average rate of 13.0 percent per annum during the last five years rising from $ 586 in 2002-03 to $ 833 in 2005-06 and further to $ 925 in 2006-07.

The main factor responsible for the sharp rise in per capita income include acceleration in real GDP growth, stable exchange rate and four fold increase in the inflows of workers remittances.

As opposed to an average annual increase of 1.4 percent during 2000-2003, real private consumption expenditure grew by 12.1 percent in 2004-05 but declined in the subsequent two years to 3.3 percent in 2005-06 and 4.1 percent in 2006-07.

The commodity producing sectors (agriculture and industry) has contributed 30.2 percent or 2.9 percentage points to this year's growth while the remaining59.8 percent or 4.2 percentage point's contribution came from services sector.

Within the CPS, agriculture contributed 1.1 percentage points or 15.1 percent to overall growth while industry contributed 1.8 percentage points or 22.7 percent.

The contribution of wholesale and retail trade has increased to 19.4 percent or 1.4 percentage points to GDP growth in 2006-07.

Finance and insurance has also contributed 13 percent or 0.9 percentage points to this year's growth.

Consumption accounted for 49.8 percent or 3.2 percentage points to economic growth in 2006-07 while investment accounted for 52.7 percent or 3.4 percentage points to the growth.

The Economic Survey 2006-07 said that the overall developments in the money and credit sector during the fiscal year 2006-07 have been satisfactory and werei n line with the Credit Plan Target.

During July-May 12, 2006-07, money supply (M2) grew by 14 percent against the annual target of 13.46 percent and last year expansion of 12.1 percent for the same period.

Net domestic assets have increased to 389.6 billion as compared to increase of Rs.314.4 billion in the same period of last year.

Net foreign assets have a record increase of Rs.88.2 billion against the increase of Rs.43.8 billion in the same period of last year.

Government borrowing for budgetary support has also recorded an in crease of Rs.212 billion as compared to Rs.73.4 in the same period of last year

Credit to private sector amounted to Rs.263.4 billion during July-May12, 2006-07 as compared to Rs.339.9 billion in the same period last year.

Credit to manufacturing sector recorded to be Rs.119 billion compared withRs.132 billion in the same period of last year.

There was a substantial decrease in personal loans amounting Rs.38.8 billion as compared to Rs.67.2 billion during Jul -May 12,2005-06 Weighted average lending and deposit rates increased to 10.6 percent and3.9 percent in March 2007 while weighted average yields on 6 months T-bill increased to 8.9 percent in April 2007.

The Khushali Bank (KB) now serves nearly 550,000 clients in 85 districts across the country. The KB has extended loans amounting to Rs.10 billion.

During the first eleven months of the current fiscal year, leading indicators of the stock market displayed positive growth. During July-May2006-07, the KSE 100-share index increased by 29.8 percent while SBP general Index of share prices increased by 14.8 percent.

KSE share index reached to an all time highest figure of 12961 points on May 31, 2007. Market capitalization has increased by a massive of Rs 980 billion, from Rs 2801 billion in June 2006 to Rs 3781 billion in May 2007.

Nine out of 12 major trading groups in the stock market have recorded growth in their share indices, ranging from 2.0 percent to 44.7 percent.

Large-scale merger of banks and a telecom company (Paktel) along with continued momentum of privatization programme have promoted growth of Pakistan's stock markets during the current fiscal year. Over the past few years, the Securities & Exchange Commission of Pakistan (SECP) has taken measures to restore confidence of both foreign and domestic investors.

In the current fiscal year the SECP in consultation with the stock exchanges, has introduced significant capital market reforms in the fields of risk management, governance, transparency and investor protection.

The fiscal year 2006-07 has witnessed concerted foreign investors interest in Pakistan's stock markets as highest ever inflow of portfolio investment ($1.82billion) was recorded during July-April 2006-07.

The inflation rate as measured by the changes in Consumer Price Index (CPI) stood at 7.9 percent during the first ten months (July-April) of the current fiscal year, 2006-07, as against 8.0 percent in the comparable period of last year.

The food inflation is estimated at 10.2 percent and non-food 6.2 percent, against 6.9 percent and 8.8 percent in the corresponding period of last year.

The Wholesale Price Index (WPI) during July-April, 2006.07 have increased by 6.9 percent, as against 10.3 percent of last year.

The Sensitive Price Indicator (SPI) has recorded an increase of 11.1percent during July-April, 2006-07, as against 6.7 percent of last year.

The increase in inflation rate during the current year 2006-07 as against last year is attributable to the increase in food price inflation which has been due to increase in prices of edible oil, pulses, rice, milk, poultry, meat, wheat, wheat flour, fresh vegetables and fruits.

Exports during the first ten months (July-April) of the current fiscal year are up by 3.4 percent - rising from $ 13457.0 million to $ 13909.0 million in the same period last year. Despite improvements in the international trading environment.

Pakistan's export growth witnessed abrupt and sharp deceleration to less than 4.0 percent in the first ten months (July-April) of the current fiscal year after growing at an impressive rate of 16.0 percent per annum in recent years.

What has happened to Pakistan's export in 2006-07? Attempt is made to review the situation and suggests measures to revive its glory of recent years.

Pakistan's imports grew by 8.9 percent or $ 24993.1 million in the first ten months of the current fiscal year.

After growing at an average rate of 29percent per annum during 2003-2006 Pakistan's import growth slowed to a moderate level in the current fiscal year.

As expected, growth in import decelerated to 8.9 percent during the first ten months (July-April) of the current fiscal year as against hefty increase of40.4 percent in the same period last year.

The deceleration in import growth is caused by several factors which include: the pursuance of tight monetary policy to shave off excess demand, softening of international price of oil, decline in imports of cars as a result of change in policy, decline in the imports of fertilizer because of large carryover stock of last year, and decline in the imports of iron & steel as Pakistan Steel coming back to its normal production level. Exchange rate remained more or less stable during the FY07.

However, rupee depreciated only marginally (0.7%) from Rs.60.2138 per dollars as at end June 2006 to Rs.60.6684 as of end April 2007.

In the open market, rupee traded at 60.655 to a dollar, which is at a discount of 0.02 percent as at end-April 2007.

http://www.thenews.com.pk/updates.asp?id=23995

 

[Neo]

IT to transform lives of millions: Awais

ISLAMABAD: Federal Minister for Information Technology Awais Ahmad Khan Leghari has said that Information Technology (IT) is a tool which can be used to transform the lives of people, especially those belonging to the lower income groups.

Speaking to a group of students from the Department of Mass Communication Studies, Fatima Jinnah Womens University, Rawalpindi on Thursday he said, “We believe that IT is the only tool, we can use in this age of communication, to transform the lives of people still living in poverty.”

Briefing them about government’s steps in IT sector, the minister said production of top-quality human resources, introduction of a paperless economy and massive proliferation of broadband services are some of the key areas which would be focussed in the coming months.

He said that reformation of IT and telecom sector was done in light of President’s seven-point agenda within a span of a few years.

“Last year, we were awarded with the prestigious Country Leadership Award by the GSM Association which is represented by over 700 GSM players of the world”, he told students.

Awais said the telecom sector in Pakistan had come a long way, there was a time when the country had merely 2.8 per cent tele-density, today our tele-density is 40 per cent and our mobile phone subscriber base has gone beyond 55 million, he added.

He said it has encouraged the introduction of phone banking, which would further facilitate the subscribers in transferring their money.

http://www.thenews.com.pk/daily_detail.asp?id=59590

 

[Neo]

Pakistan records 7.0 percent growth

ISLAMABAD (AFP) - Pakistan recorded robust growth of 7.0 percent during its fiscal year ending June 30, the government said, ahead of a key budget for embattled President Pervez Musharraf.

The figure for the Islamic republic of 160 million people was up from the 6.6 growth recorded last year, according to an official economic survey released a day before the national budget.

The proportion of people living in poverty fell from one-third to less than one quarter while per capita income rose to 925 dollars from 847 dollars in 2005-6, the report said.

"The growth rate this year has been 7.0 percent and this is a strong growth performance," Salman Shah, finance advisor to Prime Minister Shaukat Aziz, told reporters as he unveiled the report.

The government has said its upcoming budget with an estimated outlay of 33 billion dollars will focus on welfare and the promotion of economic growth.
It will be watched closely as Musharraf remains embroiled in the biggest crisis of his eight years in power since suspending the country's independent-minded chief justice on March 9.

The survey said inflation stood at 7.9 percent for the first 10 months of the fiscal year, down from last year's figure of 8.0 percent but still above the target for this year of 6.5 percent.

"It is essential for us to bring it down to 6.5 percent next year and 5.0 percent in the next few years," Shah said.

The government is wary of the inflation figure because of pressure from the public over rising prices for food and other essentials.

Shah said exports during the first 10 months of the fiscal year were up 3.4 percent, rising from 13.4 billion dollars to 13.9 billion dollars against the same period last year.

Pakistan's imports grew by 8.9 percent to 24.9 billion.

The country's foreign exchange reserves, which have been high ever since Musharraf joined the US-led "war on terror" after the 9/11 attacks, stood at 13.7 billion, compared with 13.1 billion at the same time last year, it said.

http://news.yahoo.com/s/afp/20070608/wl_sthasia_afp/pakistaneconomygrowth_070608124720

 

[Neo]

Improvement in trade deficit to nine percent of GDP expected

ISLAMABAD (June 09 2007): The government is expecting improvement in trade deficit to 9 percent of the GDP in the current fiscal as against 9.5 percent of last year. However, the government is reviewing the factors that led to sharp deceleration in exports during the first ten months of current fiscal.

According to Economic Survey 2006-07, Pakistan has recorded laudable export performance during the last several years, with exports growing at an average rate of almost 16 percent per annum over the last four years (2002-03 to 2005-06).

Despite improvement in the international trade environment, Pakistan's export growth witnessed abrupt and sharp deceleration to less than 4.0 percent in the first ten months (July-April) of the current fiscal year after growing at an impressive rate of 16 percent per annum in recent years.

Exports were targeted at $18.6 billion or 12.9 percent higher than last year but during the first ten months of the current fiscal they were up by 3.4 percent - rising from $13457.0 million to $13909.0 million in the same period last year.

Exports of food group declined by 3.5 percent of which the share of rice and fruits was 2.6 and 14.3 percent, respectively. Rice export declined due to lesser production caused by adverse weather conditions which kept the domestic price higher and it was more profitable to sell within the country than export. Exports of textile manufacturing grew by 6.2 percent, however, export of raw cotton, cotton cloth and bed wear, on the other hand, registered a decline.

The rise in prima cotton price (genetically modified version) which is imported from the USA and is a critical input for producing high quality bed wear and fabrics, has made these items less competitive in the global market.

Further, the discriminating anti-dumping duty on the bed linen export to the EU also adversely affected Pakistan's competitiveness. Raw cotton declined due to lower production as well as increased domestic prices. Poor quality of cotton on account of contaminated issue is adversely affecting the exports of spinning industry.

After growing at an average rate of 29 percent per annum during 2003-2006 Pakistan's import growth slowed to a moderate level during the current fiscal. Pakistan's imports grew by 8.9 percent or to $2047 million in the first ten months of the current fiscal. Imports were targeted to decline by 2.1 percent in 2006-07 to $28.0 billion from last year's level of $28.6 billion. As expected, growth in import decelerated to 8.9 percent during the first ten months (July-April) of the current fiscal year as against hefty increase of 40.4 percent in the same period last year.

The deceleration in import growth is caused by several factors which include: the pursuance of tight monetary policy to shave off excess demand, softening of international price of oil, decline in imports of cars as a result of change in policy, decline in the imports of fertiliser because of large carryover stock of last year, and decline in the imports of iron and steel as Pakistan Steel's coming back to its normal production level.

Almost 31 percent contribution alone came from petroleum group, mainly on account of the surge in imports of petroleum products both in value and quantity. Imports of machinery contributed almost 30 percent to this year' rise in imports bills.

This is followed by imports of telecom, which accounted for 13 percent to the overall rise in imports. Almost three-fourth contribution came from three categories (machinery, petroleum and telecom) to this year's rise in imports. Interestingly, consumer durables' contribution was negative (-1.8 percent) mainly on account of a decline in the imports of cars. Therefore, contrary to the general perception, the contribution of consumer durables was negative.

http://www.brecorder.com/index.php?id=575063&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

Pakistan to miss textile export target

KARACHI (June 09 2007): Pakistan will miss its annual textile export target of $11.85 billion by $1.2 billion due to stiff competition in the world market with the regional players. High cost of production is said to be one of the major reasons.

Official statistics revealed that the country's textile exports registered 6.2 percent growth in the first ten months of the current fiscal against the growth target of 18 percent. Keeping in view the pace of current textile exports, experts reckon that the country is likely to fall short of the target in the current fiscal.

With 18 percent growth, the government set textile export target of $11.857 billion for the current fiscal against $10.046 billion during the last fiscal However it is expected that at the end of the current fiscal textile exports can not be higher than $10.650 billion, sources said.

"Yes, the country is going to fall short of textile export target and growth in textile exports will not be higher than 6 percent against the target of 18 percent in the current fiscal," confirmed federal minister for textile Mushtaq Ahmed Cheema to Business Recorder.

He said that rising high cost of doing business and poor infrastructure have posted low textile export growth in the current fiscal. However, he is confident that in the next fiscal, textile sector will perform better as the government has recently evolved a special textile package to promote exports.

"I am confident that the textile package will be helpful to make country's export strong and enable it to compete with other regional competitors like India and China," he said.

Official figures show that the country's textile exports stood at $8.866 billion during the ten months of the current fiscal against the target of $11.857 billion for the fiscal year 2006-07.

Exporters believe that the rising costs of production have made the domestic industry incompetitive and textile export orders have been diverted to other regional competitors. "Special incentive to Bangladesh and China's export-oriented textile industry by their governments has explored a number of avenues in the world market, as both are competitive as compared to Pakistan," said an office-bearer of Pakistan Readymade Garments Association.

He said that presently capacity utilisation of textile industry stands at 50 percent. This must be raised close to 100 percent, he said, adding that if the government wished to give a boost to exports and bring it to $23 billion by 2015, it must give level playing field to the investors.

The ministry of commerce has not focused marketing of the textile exports in the international market, which is also a major reason of the declining growth, he added. "The government should make a road map to boost textile exports and should adopt strong marketing policy," recommended a member of the Prime Minister's task force on textile. He said that exports including textile would rise in the next fiscal as Indian and Chinese governments have withdrawn some incentives.

Giving example he said that from July 1, 2007 China would become a complete member of the World Trade Organisation (WTO) after that some incentives would automatically be abolished. It may be mentioned here that textile exports have over 65 percent share in the total export of Pakistan, while the country's textile industry employs 40 percent of the workforce and contributes 11 percent towards the GDP. It is not only paying a number of taxes and hidden costs, but is facing an acute shortage of skilled workers, human resource and infrastructure that further aggravates the situation.

http://www.brecorder.com/index.php?id=575090&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

Government upbeat on per capita income rise

ISLAMABAD (June 09 2007): The government appears upbeat on per capita income set to cross $1,000 mark next fiscal year but plays down the fact that around a quarter of population still lingers beneath poverty line, reflecting unequal distribution of wealth.

At the launch of a survey that revealed key economic data for fiscal year ending on June 30, a financial advisor to the Prime Minister attributed this sharp rise to a robust economic growth.

"Per capita is going up because the economy is growing at an impressive rate," Dr Salman Shah told a news conference here on Friday. He, however, did not agree with a questioner who asked if this growth was favouring only business elites and its impacts were not being transformed to poor segments.

Pakistan economy has been growing at a rate of over 7 percent on the average during past half a decade. Per capita incomes have jumped up from $586 in 2002-03 to $925 this financial year, depicting a 13.5 percent per annum growth.

But poverty is also still a threatening reality. According to official statistics, around 24 percent Pakistanis are poor. Independent think tanks including the World Bank put the figure at 28 percent. With the spending of more than a trillion rupees aid money in last five years, the government has been able to bring the poverty down only by 10 percent, from 33percent in 2002-03.

VIBRANT CORRUPTION Experts say corruption in the government departments, especially at the top level, is one of the reasons for poverty still very high.

According to a 2006 corruption perception index by a Berlin-based watchdog, Transparency International, Pakistan was among the most corrupt countries in the world.

There are many in Pakistan who attribute high incidence of poverty and unequal distribution of wealth to corruption. One can trace several high profile corruption incidents in the country's recent economic history. A Pakistan top court early this year rejected a privatisation deal by the government because it saw a hint of corruption in it.

In March 2005, a stock market crash deprived small investors of more than 100 billion rupees. Reports later suggested some top government officials manipulated the crash. But Dr Shah said the government's efforts were enough to bring poverty down to 16 percent by 2015.

According to Millennium Development Goals by the United Nations, developing nations are bound to halve poverty by 2015 from 1990 level. With the current pace, the achievement looks an uphill task for Pakistan.

http://www.brecorder.com/index.php?id=575106&currPageNo=2&query=&search=&term=&supDate=

 

[Introvert]

ICBC to invest in Pakistan

ISLAMABAD, Jun 8 (APP): Encouraged by the economic performance of Pakistan, Industrial and Commercial Bank of China (ICBC) is exploring possibilities of establishing its presence in Pakistan to provide financial support to the Chinese Companies investing in Pakistan and other development partners engaged in infrastructure development and financial business. This was disclosed by Jiang Jianqing, Chairman, Industrial and Commercial Bank of China who was leading a 10-member delegation in a meeting with Dr. Salman Shah, Advisor to the Prime Minister's on Finance here this morning.

Jiang further said that if Pakistan maintains the momentum of economic growth, it would become an economic power house in the region attracting substantial foreign investment.


He further said that ICBC was also exploring possibilities of establishing its branches and acquisition of Pakistani banks to provide financial services.


Dr. Salman Shah said that Pakistan under an institutionalized arrangement of Pakistan-China Joint Economic Forum was in the process of identifying infrastructure projects including development of hydro power and large dams.


Similarly, Pakistan has established a Joint Investment Company with China Development Bank to support Chinese firms who were establishing joint ventures with Pakistani companies and in large number of infrastructure projects in Pakistan .


Dr. Shah dilating on a vast investment canvas offered by Pakistan said that ICBC could explore possibilities of investing in Pakistan-China Special Economic Zone where most of the Chinese companies would set up their businesses for contract manufacturing to market their products in West Asia.


He also said that Pakistan would encourage role of ICBC to improve our awareness of the corporate sector of China and mutual funds industry in Pakistan.


He also offered Jiang projects in support of urban transport, logistic chains, mass transit and development of railways.


He said reforms in banking sector have inducted transparency and provided level playing field to both local and foreign investors. As a result, financial sector has significantly contributed in overall growth of economy. Pakistan 's improved international credit rating has inducted financial buoyancy in the policies of the government.


Recently, successful launching of Pakistan Sovereign Bond is a manifestation of investors' confidence in Pakistan 's policies.


The ICBC with net assets of RMB 311.8 billion is the second largest bank in the world and growing at 30% per annum.


It specializes in infrastructure finance, corporate banking, personal banking, cash management, asset management, internet banking and international banking.


It is also the leader in financial services and products innovation based on advance information technology, corporate governance and risk management.
The meeting among others was attended by the Chinese Ambassador to Pakistan , members of ICBC delegation and senior officers of Ministry of Finance.
http://www.app.com.pk/en/index.php?option=com_content&task=view&id=10437&Itemid=2

 

[Neo]

Declining exports blamed for trade deficit

ISLAMABAD: Sharp deceleration in exports is attributed to the trade deficit of $11.1 billion in the first ten months (July-April) of the current fiscal year; however, economic managers hoped that it would improve after less than satisfactory performance of exports.

The percentage of GDP to trade deficit is likely to remain at 9 per cent in 2006-07 as against 9.5 per cent last year, says an economic survey released here Friday.

Pakistan’s major exports, which include cotton, leather, rice, synthetic textiles and sports goods, registered a growth of 3.4 per cent but the unit value of its exports declined, as it was deprived of $563 million in export proceeds.

Exports of engineering goods showed an increase of 6.7 per cent whereas petroleum products along with products like carpets, rugs, mats, sports goods, leather products, and surgical equipment, chemical and pharmaceutical products registered a negative growth.

To enhance exports, the survey recommends that Pakistan need to diversify its exports not only in terms of commodities but also in terms of markets, as it can lead to instability.

Major reasons for the less than satisfactory export performance was that the export manufacturers low value addition, poor quality, obsolete use of machinery and technology, higher wastage of inputs adding to the cost of production low labour productivity, dismal investment on research and development, export houses lacking capacity to meet bulk orders, inability to meet requirements of consumers in terms of fashion and design and non-adherence to contracted quality and delivery schedule and a lack of marketing techniques, were identified by the survey.

As expected, growth in import decelerated to 8.9 per cent during the first ten months of the current fiscal year as against a hefty increase of 40.4 per cent in the same period of last year. Only consumer durables and raw materials showed a negative a growth of -2.2 per cent and 2.4 Percent respectively, whereas all other sector showed an increasing trend with machinery imports at the top, followed by the telecom sector showing 17 per cent growth in imports.

Pakistan also paid an additional bill of $294 million while importing soya bean oil, palm oil, petroleum products, petroleum crude, fertiliser, plastic material, medicinal products, iron and steel, due to an increase in prices of these imports.

http://www.thenews.com.pk/daily_detail.asp?id=59714

 

[Neo]

Major crops push agri growth to 7.6pc

ISLAMABAD: Output of major crops led the agriculture growth from its dismal performance of 1.6 to 7.6 per cent for 2006-07, whereas the performance of other sectors of the agriculture were not at par, says Economic Survey for 2006-07 released on Friday.

Two of the major crops and some minor corps had excellent yields while the rest were sluggish and could not contribute; causing GDP to slip from 21.5 to 20.9 percent.

Only wheat and sugarcane showed a growth of 10.5 per cent and 22.6 percent respectively while other major crops like cotton, rice and maize showed a negative trend.

Likewise minor crops showed a mixed trend, in contrast to major oilseed crops which showed growth in production while some of the minor crops like maize, onion and chillies registered a negative growth.

Agriculture credit disbursement both at the private and public banks showed a growth of 15 per cent but the economic survey did not reveal the number of creditors, who learnt to be shrinking. The survey did reveal that the share of private bank disbursements did increase.

Fertiliser, which is an important input for crops, showed a negative growth of 14 percent, as the total availability of the input, both domestically produced and imported slipped from 3.1 million tonnes to 2.6 million tonness in the first nine months of the current fiscal year, whereas off-take of fertiliser also registered a negative growth of 5.6 per cent when compared with the corresponding period.

The total contribution of livestock and dairy sector in GDP share of the agriculture has not been mentioned in the survey, but the survey emphasised the growth targets for milk, meat and livestock productivity are aligned with MTDF, achieving 6-8 pre cent annually.

Fisheries the most under exploited sector, only contributes 1.3 per cent to agricultural GDP as per capita consumption of fish is said to be a meagre 1.9 kg, which is one of the lowest in the world.

http://www.thenews.com.pk/daily_detail.asp?id=59715