Pakistan Economy - News & Updates - Archive

[Neo]

ADB points to poor governance: Pakistan’s social indicators among worst in Asia​

ISLAMABAD, Aug 14: The Asian Development Bank (ADB) in a special evaluation on Pakistan’s 60th independence anniversary describes it as a country with “poor governance, endemic corruption and social indicators that are among the worst in Asia”.

In the first evaluation report in 22 years ‘Learning Curves: What role for ADB in Pakistan?’, the bank says that ‘Pakistan has provided a challenging context in which to implement a programme of development assistance’, although it was a major client of the bank.

Wars and cross-border conflicts with its neighbours, strong ethnic and cultural divisions, continued existence of feudal social relations in some parts and a complex structure of government comprising federal, provincial, district, tehsil or taluka and union levels, each with an elected body since 2002 have marked Pakistan’s modern history.

The bank plans to reduce the number of sectors and sub-sectors in which it is involved on the basis of a detailed Country Assistance Programme Evaluation (CAPE). This restructuring, however, is not because the country did not fare well but for the reason that ADB’s public sector loan portfolio was unfocused and its staff overburdened.

The Asian Bank says that three periods of military rules, 10 changes in the leadership of civilian governments during 1988-1999, erratic economic growth, with periods of faster growth neither sustained nor translated into better social outcomes, rising poverty rates throughout the 1990s were important developments in Pakistan over the years.

The report said the ADB’s performance in none of the ten sectors was rated ‘highly successful’ while the programmes in health, nutrition and social protection, water supply, sanitation and waste management were rated ‘unsuccessful’.

Only two sectors -- energy and transport -- were rated as ‘successful’ and in agriculture and natural resources, education, finance, law, economic management and public policy the performance was ranked ‘partly successful’.

The evaluation concluded that the ADB has too many loans in too many sectors and sub-sectors, given staff and technical resources and the requirement of its business processes.

The study recommended that in the absence of a major increase in the number assigned to support operation in Pakistan, the bank should reduce the number of sectors and sub-sectors it is involved in. An appropriate scenario would be four core lending and two core non-lending sectors with a more focused approach and hence the number of active public sector projects in the portfolio should be reduced.

The bank would consider a new approach towards preparation of a new country partnership strategy with key elements of sector prioritisation, pro-poor approaches, private sector operations, capacity building, delegation of authority, project processing and client perceptions.

The ADB said the balance would need to be adjusted between lending and economic, thematic work and policy dialogue.

The second element would be to ensure that operations are underpinned by more rigorous analysis and that it becomes recognised as a leading source of ideas in its sectors of core focus.

The study recommended that in addition to higher staff resources and analyst level support, greater authority should be devolved to Pakistan Resident Mission, with the country director empowered to act on most matters.

The report also says that to complement the within-project focus on corruption, the ADB should ensure that it understands the nature, extent and drivers of corruption in each sector in which it engages to ensure that project design and separate initiatives incorporate effective anti-corruption measures at the sector or country level.

The report also recommends that if the Asian Bank increases resident missions staff resources significantly, greater efforts are needed to ensure compliance with the policy for their full staff involvement in project processing.

Similarly, the delegation of project administration should be accelerated and projects should be delegated as soon as possible after approval before they run into implementation problems.

http://www.dawn.com/2007/08/15/top8.htm

 

[Neo]

WB likely to offer $500m for poverty alleviation​

ISLAMABAD, Aug 14: The World Bank is likely to offer $500 million funding to Pakistan for infrastructure development and poverty alleviation but has expressed its dissatisfaction over the government’s performance to reduce the poverty during the last five years, Dawn has learnt.

Sources said a World Bank mission that visited Pakistan in November last year had proposed the funding for poverty alleviation.

They say that the bank wants Pakistan government to work out comprehensive programme to improve the infrastructure through the new funding, especially for attracting sizable local and foreign investment. The bank has stressed the need for reducing poverty level, they added.The sources claim that bank authorities do not agree with the government’s claim of remarkable reduction in poverty and believe that fruits of improved economy, especially during last seven years, have not reached to people.

They say the bank authorities have expressed concern over the reports of misuse of funds.

The bank is expected to offer $250 million each for infrastructure development and poverty reduction during the next five year period.

Meanwhile, the Rome based UN International Fund for Agricultural Development has approved $30 million funding each for livestock support and assets building of the rural population of Pakistan, the sources said.

http://www.dawn.com/2007/08/15/top13.htm

 

[Neo]

Power breakdown and production losses​

A MAJOR power breakdown, following heavy rains last week, plunged many areas of Karachi into darkness for long periods, ranging from 10 to 24 hours or more. The critical power shortage and disruption of electric supplies and civic facilities resulted in huge production losses and halted much of the foreign shipment of export goods. Trade associations estimate that production fell on Thursday and Friday last by 50 per cent, reaching 70 per cent in some units, for which power failures were mainly responsible. They complain that they did not get steady power supplies to meet delivery deadlines for export goods — something they can ill-afford in a fiercely competitive international market.

The KESC’s fragile power generation, transmission and distribution system has long been vulnerable to the slightest external shock or internal mishandling. Whether it be service to the consumers or transmission and distribution losses, the utility’s performance since its privatisation has worsened. This deterioration over the years forced industry to set up its own power-generating capacity. Representatives of industrial associations estimate that 50-60 per cent of the city’s 2,500 units have installed standby diesel generators, which has increased their cost of electricity by 30 per cent more than the KESC tariff. Less than one per cent of the enterprises (big business houses) generate cheaper electricity from their own power plants. The medium- and small-size industries find it tougher to produce goods for exports at globally competitive prices.

Concerned over the energy crisis facing the country’s premier financial centre, a major manufacturing hub and a port city with a large urban population, the prime minister asked the KESC on Friday to honour its contractual obligations for power generation and supplies. Similar directives have also been issued from time to time by President Musharraf, the federal minister for power and the governor of Sindh. But nothing significant has happened to alter the situation. Perhaps, the fault lies with the way the KESC was privatised — a deviation from the successful mode adopted in the case of major commercial banks. The state-owned banks were made eligible for privatisation by downsizing, induction of professional managers and financial restructuring for a turnaround. Private investors do not risk big investments unless they are sure of good returns. The state-subsidised KESC was sold when it was facing daunting long- and short-term challenges in all spheres of its operations, the principal one being an archaic management and work culture.

The utility has been run for a very long time by the civil and military bureaucracy and must undergo a culture change to become a modern and efficient outfit. Given the failure of the KESC’s privatisation, the government also needs to review its policy on privatisation of strategic and sensitive assets like utility services. After having taken some short-term measures like installing 1,000 PMTs and 80 feeders to improve the supply position, the KESC now promises to add 80 MW by October and another 180 MW to its power-generating capacity by March next year. The existing capacity is planned to be enhanced by 1,500 MW by 2011 to overcome the power crisis. Until then, the industrial community and domestic consumers will suffer a great deal, unless the KESC recognises that consumers need to be served first before any effort to maximise its revenues.

http://www.dawn.com/2007/08/15/ed.htm#1

 

[Neo]

Public-private partnership aimed at: first SME Policy launched ​

ISLAMABAD (August 16 2007): The Minister for Industries Production and Special Initiatives, Jahangir Khan Tareen, formally launched here on Wednesday the first Small and Medium Enterprises (SME) Policy 2007 for development of the sector through public-private partnership by creating maximum job opportunities for poverty reduction and propelling the country''s exports.

Highlighting the salient features of the policy after the meeting of the National Committee on Small and Medium Enterprises (NCSME) here, the Minister said that the policy was approved, in principle, by Prime Minister Shaukat Aziz in May 2006 and was also approved by the Cabinet in January this year, and was notified in June.

"We are formally launching the SME Policy 2007 from today", the Minister told a press conference while flanked by Governor State Bank of Pakistan Dr Shamshad Akhtar, Secretary Industry Shahab Khawaja and Chief Executive Officer (CEO) Shahid Rashid.

Jahangir said that the policy aims at creating globally competitive SMEs by creating a hassle-free business environment, ensuring provision of modern infrastructure support and institutional support structure for access to resources and services.

He added that the government would take measures for promoting women entrepreneurship, clusters development, and would also focus on neglected/untapped sectors of the economy. The Minister said that strengthening the industry academia linkages would also be a key feature of the policy.

He said that SMEs'' access to finance would be ensured and the government would extend every possible support to the sector for its growth. He added that the SME sector employs 80 percent of the country''s workforce and is a source of income for a large population.

He said that under the policy credit information centres are being established across the country for development of the SME sector and is also establishing a data development bank to facilitate the sector.

He said that workshops in every city of the country would be organised to inform the people about the importance of SME sector for their own benefit and for the betterment of the country.

He said that costs of the utilities for the industry are lowest as compared to other countries. State Bank Governor Dr Shamshad Akhtar said there is no limit on private sector credit as opposed to the target-oriented credits to the sector in the 1970s.

She said that banks are following prudential regulations for provision of loans to the SME sector. She said that in the SBP, SME consultative committee has been established to facilitate the SME sector which is represented by the Presidents of the banks. She added that credit enhancement to SME sector would help reduce lending rates to the sector.

http://www.brecorder.com/index.php?id=605993&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

Exports fetch $1.4 billion in July: imports down by 2.59 percent ​

ISLAMABAD (August 16 2007): The country's exports have shown 10.73 percent growth in July as compared to the same month of last year. According to the provisional foreign trade figures released by the Federal Bureau of Statistics (FBS) on Wednesday, that exports in July attracted $1.486 billion against $1.342 billion in the same month of previous year.

Imports took away $2.575 billion against $2.46 billion last fiscal showing an increase of 4.64 percent. In July, trade deficit remained $1.089 billion against $1.118 billion in the same month of last year, showing an increase of 2.59 percent.

However, exports showed 4.6 percent negative growth when we compare foreign trade figures of July and June 2006, as exports in June were $1.5577 billion. Imports also showed 7.93 percent negative growth when figures of June and July are compared.

It may be mentioned here that the government had fixed $19.2 billion exports target for the fiscal 2007-08 after failing to achieve the target of $18.6 billion last year.

According to Commerce Ministry main reasons for decline in the growth rate of exports during 2006-07 were tough competition in the international market for textile products, greater competition from China and India, low crop of Basmati rice, capacity constraints in other manufacturing sectors due to obsolete technology and lower productivity of manpower.

Official documents made available to Business Recorder suggest that Prime Minister Shaukat Aziz has stressed for making aggressive efforts in identification of new markets and introduce products such as Information Technology (IT) products, granite stones and other value added items.

Prime Minister was also of the view that trade with China must be reviewed and immediate steps be taken to enhance trade relationship with special reference to Free Trade Agreement (FTA). "Exports, the domain of the private sector, the government is to carry out trade diplomacy for the identification of markets exporters," the sources quoted the Prime Minister as saying.

Aziz also advised that special attention be given to bring down cost of doing business, enhance managerial capacity and labour productivity through skill development so that the country is able to compete with other stakeholders in the international market, the sources conclude.

http://www.brecorder.com/index.php?id=605969&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

Government striving to alleviate poverty: Jadoon ​

ISLAMABAD (August 16 2007): Federal Minister for Petroleum and Natural Resources Ammanullaha Khan Jadoon on Wednesday said that government was striving to alleviate poverty from far flung areas of the country and Pakistan Poverty Alleviation Fund (PPAF) programme was playing a significant role in this regard.

He stated this in a function organised by PPAF in Hazara division. The Minister said that the government was according high priority to develop the remote areas by involving the large number of masses in the race of development.

He said that government in PPAF had allocated an amount of Rs 250 billion in the current fiscal year for completion of public sector development projects to revolutionise the rural life style. Chief operation Officer PPAF Kamran Akbar, speaking on the occasion said that PPAF had provided small loans to 1.3 million people in 110 districts of the country, adding that the loans ranged from Rs 12,000 to 30,000.

http://www.brecorder.com/index.php?id=606056&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

'Industries from urban areas being shifted' ​

LAHORE (August 16 2007): Provincial Minister for Industries, Muhammad Ajmal Cheema has said that industries spreading pollution are being gradually shifted from urban areas and such industries will be forced to implement the laws regarding environment pollution.

While talking to a delegation of industrialists at his residence here on Wednesday, the minister said that industrial units would have to adopt environment friendly atmosphere keeping in view the new challenges of WTO. He said that all industries should have to eliminate the anti-environment procedures otherwise their products could not compete in the world market. Ajmal Cheema said that many multinational companies are interested to establish their projects in Pakistan, which had increased the foreign investment.

The minister said that separate zones being set up in every city for new industrial units and a comprehensive policy being formulated to shift the industries from urban areas. He said that separate land being allocated to industries outside the urban areas.-PR

http://www.brecorder.com/index.php?id=606078&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

Trade deficit shrinks in July​

ISLAMABAD, Aug 15: Pakistan’s trade deficit witnessed a modest decline of 2.59 per cent to $1.088 billion during the first month of the current fiscal year as against $1.117 billion over the same month of last year.

This showed that with a stronger base of monthly import bill last year, the starting month of July 2007 has recorded a very nominal increase in imports and exports grew at slightly higher rate during the month under review.

This trend, which is believed to be a sign of relief for economic managers, has resulted into bringing down the unexpected increase in trade deficit recorded during the last two years. Normally, the trade deficit remained within the range of $2 billion to $4 billion for the last three decades.

Under the trade policy 2007-08, the government for the first time had not projected any estimates for import bill for the year 2007-08 with an assumption that imports could not be estimated. The trade deficit recorded in the year 2006-07 was more than Rs13 billion as against the projected trade deficit of $9.4 billion for the same year.

Official figures released here by Federal Bureau of Statistics (FBS) here on Wednesday showed that the export proceeds stood at $1.485 billion in July as against $1.342 billion over the same month of the last year, indicating a growth of 10.73 per cent.

This is an unexpected growth in exports as the average growth in export was around 3 per

cent during the whole year of 2006-07. The government has projected a target of $19.2

billion for the year 2007-08.

Analysts said that the government had already missed two consecutive years’ exports targets mainly because of dismal performance of the textile sector and decline in export of traditional products.

Another major setback is the steady decline in the production of large scale manufacturing sector and heavy reliance on few industries.

This year target would again depend on performance of textile sector as government has again announced a hefty package of subsidies and financial assistance for the sector with a hope to record a double digit growth as against the six per cent growth last year.

Imports climbed by 4.67 per cent to $2.574 billion in July 2007 as against $2.459 billion over the corresponding month of last year. The import bill was dominated by high oil prices that hit the economies of developing countries like Pakistan.

http://www.dawn.com/2007/08/16/ebr4.htm

 

[Neo]

Sponsors offer bank guarantee for project: Coal power plant​

KARACHI, Aug 15: The sponsors of $2 billion coal-based power project — Hasan Associates — offered on Wednesday a bank guarantee to signal the commencement of the implementation of what is being described the so far the biggest and innovative private sector industrial project.

“It is a small step towards implementation of a giant project,” Farooq Hasan said while talking to Dawn on Wednesday by telephone. He now expects to receive a letter of intent from the government, which would be the first such official letter to any investor.

This would pave the way for preparation of a bankable feasibility report by internationally reputed financial and technical consultants.

“If everything goes well and on schedule,” he expressed the hope that the project may be commissioned in next four years or else it may take five to seven years. The sponsors were given a go ahead signal for the project by the Private Power and Infra structure Board (PPIB) on May 8 last.

This project is being taken up on built, own and operate (BOO) basis and will need approximately 6m tons of coal every year.

Both the president and the prime minister were given a detailed presentation on Thar coal and on the project by federal secretary of petroleum and natural resources and the Sindh minister of mineral development in third week of July.

The president is understood to have been dismayed by lack of coordination between the federal and provincial governments on the issue of Thar coal exploitation. Officials quote the president as having advised both the governments to keep each other on board on all major initiatives.

A Thar Coal Company has already been set up for mining of the coal in the area. “Almost 80 per cent of the cost is to be borne by the federal government,” an official said. The top-level meeting between the president and the prime minister in third week of July decided in principle to appoint someone from the private sector as chairman of the coal company. The Energy adviser has been asked to review composition of a technical committee of the Task Force on Thar Coal and recommend its reconstitution and empowerment to make its decisions binding.

Officials said that the Sindh government proposed in the high-level meeting that the tariff of lignite-based power projects be decided upfront in consultation with National Electric Power Regulatory Authority (Nepra).

The Energy adviser is expected to prepare a schedule of tariffs for Thar based coal power projects of different sizes in consultation with the Nepra.

Tariff has proved to be the main stumbling block in investment and officials in the Sindh government are bitter on the treatment given to the state-run Chinese company Shenhua group, which was keen to set up a 600MW power project based on Thar coal at the mouth of a mine.

Since then a few others also showed interest in setting coal based power projects. However, none of them were encouraged by the federal government agencies’ approach towards fixing tariff structure.

Hasan Associates have been given this project and they claim with confidence of implanting the project in next four years, if everything goes well and according to schedule, and in next “five to seven years”, provided not so unusual and unexpected hurdles - that come in the way - are eventually removed.

On its part, the federal government has commenced work on development of necessary infrastructure in the area under the Thar Coal Infrastructure Development with a total outlay of Rs5 billion. The provincial government, too, is supplementing these efforts of the federal government with an investment of Rs2.20bn on construction of road network.

An additional amount of Rs1.30bn is being invested for developing many other facilities.

The Water and Power Development Authority (Wapda) has been assigned to a 500KV transmission line in the area at a cost of Rs5.50 billion.

With a proven reserve of 175 billion tons, experts estimate the value of raw coal at $7 trillion.

“You generate electricity from this coal and the value addition makes it worth $27 trillion,” an official said. He said that Thar has a potential to generate 100,000MW electricity for next 150 years from existing reserves.

http://www.dawn.com/2007/08/16/ebr5.htm

 

[Neo]

Pakistan to attend World Expo China 2010​

ISLAMABAD, Aug 15: Prime Minister Shaukat Aziz on Wednesday approved a proposal for Pakistan’s participation in the forthcoming “World Expo China 2010”.

Chairing a meeting, the prime minister said the participation in expo would not only reflect Pakistan’s close relations with China, but it would also promote the Pakistani brand and increase exports and possible investments.

An official announcement issued after the meeting said Pakistan’s active participation would further strengthen the economic ties between the two countries.

China is one of few countries with which Pakistan has an FTA and our business community needs to leverage and take advantage of this facility, he added.

Mr Aziz emphasised that the Trade Development Authority of Pakistan (TDAP) as a focal institution should ensure sizable and meaningful presence of Pakistan at the “World Expo China 2010”.

He stressed that the objective, theme and game plan of our participation should be focused and market-oriented. He further said that the Pakistan pavilion at the expo should help build the image of the country.

Earlier, TDAP Chief Executive Tariq Ikram made presentation on the proposed pavilion and said that services of professional firms would be hired to ensure proper presentation of our cultural and economic activities.

http://www.dawn.com/2007/08/16/ebr16.htm

 

[Neo]

Gwadar port may be fully operational next month​

ISLAMABAD, Aug 15: The Singapore Port Authority (SPA) which is to run the Gwadar Port has overcome its teething problems and the port is likely to be made fully operational from next month with three berths handling the arriving ships.

However, according to authorities, the port requires more berths to handle big ships.

Director-General of the Gwadar Development Authority (GDA) Ahmad Bakhash Lehri told Dawn that businessmen need more warehouses and other equipment to enhance the country’s foreign trade. He said that due to destruction of the coastal highway and floods, it had become difficult to make the port fully operational. “But this job is expected to be done by next month,” he said, adding that ships had started to arrive at the Gwadar port.

An Iranian ship carrying relief goods for flood victims in Balochistan had reached the port recently, he said. He expressed the hope that the SPA would be in a position to run Gwadar port by next month. Sources said the Singapore-based operators were told to expedite their work, especially after having received a 40-year tax holiday, despite concerns expressed by other investors and the World Bank and the Asian Development Bank (ADB).

“The government is already extending tax exemptions and tax holidays at various industrial zones and duty-free economic zones and that is why such a facility had been offered to Singapore port which is investing $550 million there,” a senior government official said. He said that export processing zones were also enjoying certain tax holidays and exemptions and there was nothing exceptional in the case of the SPA.

Gwadar port located at Balochistan is being considered as a future trading hub in the region due to its proximity with the Gulf region.

Initially, the port is expected to face competition from Port Salalah of Iran. But after completion of the Phase-II by 2010 at a cost of $840 million, it is likely to become one of the busiest ports in the region, providing warehousing, trans-shipment and industrial facilities for trade with over 20 countries, including Gulf countries, Iran, Central Asian States, India, China and East Africa. Phase-I of Gwadar port has cost $298 million.

The government also planned some other concessions at the proposed Export Processing Zone (EPZ) near Gwadar port for local and foreign investors. There will be tax exemption on customs, sales tax and excise duty in the EPZ with a view to promote substantial investment in Gwadar.

A number of foreign investors have shown interest to establish mega refineries, building storage capacity and undertaking other businesses in Gwadar to help expedite the process of industrialisation in Balochistan. With the completion of both phases of the Gwadar port, a Special Industrial Development Zone (SIDZ) with an area of 4,000 hectares will also be set up for various industries.

The SIDZ is located on the north of Gwadar town at a distance of about 30kms from the port. The federal government is also providing special Rs700 million funding to Balochistan to help meet 15 years water demand of the Gwadar Industrial Estate (GIE) through installation of a foreign assembled desalination plant.

The future demand of water supply will be met partly by recycling of waste water (irrigation and industrial cooling) and partly by addition to the desalination plant. At present, there is no water resource available in the area.

The Balochistan government has provided 3,000 acres through two separate allotment letters, out of which 20 acres will be made available free of cost through the GIE to set up water desalination plant, intake work, storage tanks and other facilities.

The total cost of water supply from the plant (including depreciation) will be Rs0.25 per gallon against the cost of water supplied by tankers at Rs0.76 per gallon.

There will be approximately 2,000 industrial units in the GIE providing employment to 30,000 workers. Most of the production will be export-oriented and will bring foreign exchange to the country.

http://www.dawn.com/2007/08/16/top5.htm

 

[Neo]

ADB plans $12-15bn package​

ISLAMABAD, Aug 15: The Asian Development Bank (ADB) has decided to provide $12-15 billion assistance to Pakistan over the next three years to improve infrastructure and utilities, deepen governance reforms and create better investment conditions.

The assistance package will be a combination of direct funding under which the bank will almost double its three-year country assistance programme to $6 billion and arrange another $7-9 billion co-financing from the private sector, Juan Miranda, the director general of ADB’s Central and West Asia Department told Dawn on Wednesday.

This is largest ever funding in Pakistan by any development bank. This does not include allocation for mega water projects like Kalabagh dam or Bhasha dam, for which separate funding would be provided whenever the government takes a decision to construct them. Under the current three-year programme (2005-08), the ADB has provided less than $3.6 billion, including $1.4 billion planned for the current year.

Mr Miranda who is currently in Islamabad as part of preparation of the three year (2008-10) country assistance programme said the bank would provide about $6 billion to Pakistan at the rate of $2 billion per annum. About $1 billion will come through soft-term ADB’s Development Fund (ADB) and remaining $5 billion commercial loans out of Ordinary Capital Resources (OCR).

He said the financing under ADF carried a maximum of one per cent interest and matures in 40 years. He said: “Its size has increased because Pakistan is doing one of the best in Asia in terms of performance based approach of 18 indicators that among other things includes governance”. The OCR was a normal commercial lending for 25 years that carried about six per cent interest, he said, adding that Pakistan was the most open country in Asia and this trend would continue in future.

Mr Miranda said Pakistan’s economic policy and direction at this stage were absolutely right to get Pakistan into the league of fast growing Asian economies and now it required higher level of investments for job creation through second generation reforms for further depth.

He said the development banks including the ADB did not see any risk to Pakistan’s economy even after elections.

Mr Miranda said the ADB would also arrange $7-9 billion through co-financing with commercial banks, private equity groups, capital markets and sponsor groups.

http://www.dawn.com/2007/08/16/top16.htm

 

[Neo]

National Trade Corridor programme ​

Cohesiveness in public sector key to success

LAHORE: The success of Prime Minister’s National Trade Corridor is not only linked to the upgradation of infrastructure, but also to cohesive efficiency of related public institutions that still operate independently with varied degree of incompetence.

Among various factors that increase the cost of production in Pakistan, the delay in clearance and speedy transport of goods to and from upcountry to national ports has been identified as a major contributing factor. High inland freight charges on import and export goods are another cost increasing factor as freight charges on containers from Lahore to Karachi are higher than freight charges of containers from Karachi to Beijing.

The Prime Minister announced an ambitious plan to upgrade the sea ports, dry ports, and road and rail links in the country through the National Trade Corridor project. At the same time the government has planned to make institutions linked with facilitating trade more efficient.

The Customs ‘CARE’ clearance was introduced with this single aim in mind. The number of goods trains from Karachi port to upcountry has also been increased for this very purpose.

In fact the government desires to increase the efficiency of institutions like Customs, Railways and public sector transporters to global standards before any high expenditure infrastructure is built.

The performance and efficiency of all these institutions greatly impact the cost of doing business in the country.

A recent example of Railways delay in dispatch of goods to upcountry illustrates this fact. A Lahore based steel re-rolling mill imported 54 containers of steel, got them released from the customs on August 2, 2007 and booked them with the Railways on August 4, 2007 for onward delivery to Lahore.

The Railways failed to dispatch these containers to their intended destination upto the 13th of August - while four carriages remained stranded for repairs.

It is pertinent to mention here that it was mandatory on the importer to return the containers to the shipping company by the 13 of August after which the importer was liable to pay a penalty of Rs1000 per day on each container. When the delay in dispatch of these containers seemed imminent the importer and custom clearing agent requested the Railways to off-load the containers so that these could be sent through a licensed road transport.

The procedure for off-loading these containers too was cumbersome and lengthy and the authorities informed the importer that it would take another 6-7 days by which time the goods would eventually reach their destination by rail.

This story does not end here. One of the goods train carrying 38 containers was stopped at the Kotri Railway Station and is still stranded there while these lines are being penned, for reasons best known to the Railway authorities.

Four containers are still stuck in Karachi while the remaining have fortunately reached Lahore.

The importer is liable to pay a penalty on fifty four containers at the rate of Rs1000 per container for two days amounting to Rs108000. For the other thirty eight containers detained at Kotri and four stranded at Karachi the importer is liable to pay another Rs1000 per container till these reach Lahore and are then finally handed over to the shipping company.

The cost of business is thus increased due to inefficiency and inept state controlled institutions.

The Railways should have been responsible for arranging alternative road transport for these stranded containers or it should have at least off-loaded them promptly at the request of the importer to save the importer from being further penalised, but State institutions so far have never been penalised for their follies while the private sector industry and businessmen suffer and are forced to bear the brunt of mismanagement, ineptness and callousness on the part of staff.

http://www.thenews.com.pk/daily_detail.asp?id=68433

 

[Neo]

Country’s exports register growth of 10.73 percent​

* Trade deficit during July 2007 stood at $1.088 billion

By Sajid Chaudhry

ISLAMABAD: Exports of the country registered a double-digit growth of 10.73 percent in the first month of July of fiscal year 2007-08 against an overall growth of 3.4 percent in the last fiscal year 2006-07.

According to the trade figures released by Federal Bureau of Statistics (FBS) the exports of the country amounted to $1.486 billion in the month of July 2007 as compared with exports of $1.342 billion during the same period last year, projecting a growth of 10.73 percent.

However, the imports of the country witnessed an increase of 4.6 percent in July 2007 with total imports of $2.574 billion as against the imports of $2.459 billion in July 2006. The trade deficit during July 2007 stood at $1.088 billion as compared with the trade deficit of $1.117 billion in July 2006 showing a decrease in trade deficit of 2.59 percent.

The export performance of the country in July 2007 as compared to June 2007 was not satisfactory. The exports in July registered a decline of 4.61 percent in the month of July 2007 with total exports of $1.486 billion as compared to the exports of $1.557 billion in June 2007. Similarly, imports of the country also witnessed a decline of 7.93 percent in July 2007 with total imports of $2.574 billion as compared to the imports of $2.796 billion in June 2007. Trade deficit also declined by 12.11 percent in July 2007 with total deficit of $1.088 billion as compared to trade deficit of $1.239 billion in June 2007.

Trade Policy 2007-08 approved by the government sets an export target of $19.2 billion and containing imports of the country at $32 billion with a projected trade deficit of $12.5 billion. The export target of 19.2 billion is 12.86 percent higher than the actual realised exports in last fiscal year 2006-07 of $17.01 billion.

To meet the projected export target set for the current fiscal year 2007-08 the country requires per month exports of $1.6 billion. However, the exports of July 2007 with a growth of 10.73 are seen as a good start towards the goal, an official at the commerce ministry said.

The measures announced for promotion of exports from country in the Trade Policy 2007-08 would definitely enhance the competitiveness of the exports of the country, and momentum of current export growth would be ensured with the help of private sector, he added.

According to the experts the higher growth levels of the economy can only be sustained by a rapid growth in exports, a 7percent to 8 percent GDP growth is only maintainable through a 20 percent to 25 percent annual export growth. For such growth, the country is dependent, in addition to textile and clothing, on Large Scale Manufacturing sector for generating exportable surpluses. However, the declining growth trend in the Large Scale Manufacturing sector during 2006-07, from 10.7 percent to 8.8 percent reduced our exportable surpluses.

The other challenges that the country would continue to face in the current fiscal year 2007-08 are low competitiveness, low labour force productivity, lack of productive capacity as a result of relatively low investment in new machinery, low quality products, export industries are still fragmented and informally organised, energy gap.

http://www.dailytimes.com.pk/default.asp?page=2007\08\16\story_16-8-2007_pg5_1

 

[Neo]

Services trade deficit narrows by 6.87 percent ​

* Export of services grows by 9.44% to $4.12 billion

By Tanveer Ahmed

KARACHI: The deficit in trade of services narrowed down by 6.87 percent during the financial year 2006-07 on the back of unprecedented growth in the month of June.

It came down to $4.12 billion in July-June 2006-07 from $4.42 billion in the previous year, updated statistics released by Federal Bureau of Statistics (FBS) showed on Wednesday.

The export of services registered 9.44 percent growth to $4.12 billion during the whole year as compared with $3.76 billion in the previous year.

On the other hand, the services import was static with just marginal growth of 0.63 percent to $8.25 billion in the year over $8.19 billion during last year.

The balance of services trade in June 2007 was in surplus with the marked rise in the export as the it stood at $102 million as compared to $338 million in last June, thus reducing by 130 percent during this period.

Whereas over the preceding month of May, it was further reduced by 124 percent when the deficit was $416 million.

Month-wise breakup of trade figures indicate that performance of export in the month of June was impressive as there was 91 percent growth in it to $811 million as against $424 million in the same month of last year as well as posting unprecedented growth of 224 percent over the preceding month of May 2007.

While imports fell during the month under review by posting 7.15 percent negative growth to $708 million as against $763 million in the corresponding month of last year, however it grew by 6.21 percent over the preceding month of May.

The impressive export performance has helped to curtail burgeoning deficit in services trade. The export of services remained volatile during the whole year with registering gains in few months and falling drastically in other months.

The country’s service export mainly relies on defence services, which make a bigger part of the overall exports, apart from construction, IT, banking, insurance and many others services.

“The export proceeds during the current financial year is not reflective of the potential country has in this sector due to a host of issues, confronting the sector,” an analyst noted. Share of the country in world services sector has remained around 0.23 percent over the years.

The country’s services export are confronted with a number of issues, which obstructed to tape the vast potential of the export in this sector like quality, acceptance of professional credentials, visa problems and the most importantly the image problem, which the country has been confronting since long.

http://www.dailytimes.com.pk/default.asp?page=2007\08\16\story_16-8-2007_pg5_2