Pakistan Economy - News & Updates - Archive

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Strategy to be evolved to check inflation, price hike: Prime Minister ​

LAHORE (August 21 2007): Infrastructure development, especially the construction of roads, provision of potable water, electricity and gas supply, have brought about a positive change in the lifestyle of the people of rural areas. Prime Minister Shaukat Aziz said this while talking to Punjab Chief Minister Pervaiz Elahi who called on him here at Governor's House on Monday.

Development strategy in the province, reforms process, political affairs as well as organisational matters of Pakistan Muslim League came under discussion during the meeting. The Chief Minister also apprised the Prime Minister about the pace of implementation of ongoing mega projects in the province.

He said that President Pervez Musharraf would contest the presidential election between September 15 and October 15 in accordance with the constitutional provisions and his re-election would ensure political stability and economic prosperity in the country.

"Continuity in government policies would bring about economic development apart from further strengthening democratic institutions. Pakistan needs consistent progress in all the fields as it is the only guarantee for the sovereignty of the country," he added.

Terming the increased political activity in the country as a healthy sign, he said that democracy was being strengthened and people were taking interest in the political affairs. He said the ongoing developmental projects in Punjab were leaving a positive impact not only in the province but also on the overall economic situation of the country.

He said that projects of development and uplift of the people have started yielding encouraging results and the standard of living of the masses has improved. He said that national internship programme is being promoted in an effective manner in Punjab which will result in improving professional skills of youth for availing job opportunities.

The Prime Minister also appreciated the development strategy and reforms process in the province and expressed satisfaction over the pace of implementation of development projects. He said that local governments have undertaken commendable development activities, which is a proof of the fact that the devolution of powers has proved very useful.

The Chief Minister said that collective efforts of provincial and federal governments were resulting in relief to the masses due to which PML would achieve a thumping victory in the forthcoming general elections. He said that a burn centre was being set up at Jinnah Hospital at a cost of Rs 860 million. He thanked the Prime Minister for bearing 50 percent cost by the federal government on the setting up of the burn centre.

He said that reforms programme in education, health and other sectors of development and execution of development projects have resulted in considerable decrease in poverty. He added that infrastructure is being improved in the province under a comprehensive programme and substantial resources are being utilised on the improvement of means of communication.

He said that Punjab government has initiated a programme for rehabilitation of the families living below poverty line and an amount of Rs 500 per month would be given to such families. He said that 4.3 million members of 600,000 destitute families would benefit from this programme.

Talking to Punjab Governor Khalid Maqbool during a meeting, Prime Minister Shaukat Aziz said that the government has devised a comprehensive strategy to check inflation and price hike. The government, he said, was taking appropriate measures to ensure that prices should remain stable during the holy month of Ramazan.

The rising demand and improved buying power of the people was one of the factors for inflation, which would be checked through adequate supply of items of daily use at reasonable rates, the PM added.

"The people of Pakistan are generally religious, peaceful and hardworking. However, certain elements profess such tendencies which are inconsistent with socio-cultural and religious beliefs of people. As such, they occasionally attempt to create law and order situation which causes embarrassment not only to the country but to the people also. The government was fully capable of handling such elements and protecting lives of the citizens," he said.

Khalid appreciated the policies of the government and hoped that this would bring a positive change in the lives of the people. He also apprised the Prime Minister of various development projects initiated by the Punjab government.

Business Recorder [Pakistan's First Financial Daily]

 

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President stresses need for political stability: 'Vision 2030' launched ​

ISLAMABAD (August 22 2007): President General Pervez Musharraf on Tuesday urged the political power holders in the country to maintain a stable political environment for continuity and sustainability of development policies, and to make the 'Vision 2030' a reality.

"We have to have a stable political environment," he said at the launching ceremony of 'Vision 2030' programme, held at Aiwan-e-Sadr. The 'Vision' envisages a roadmap for future development in key areas of national importance.

The gathering being addressed by the President comprised National Assembly Speaker Amir Hussain, Governors and Chief Ministers of NWFP and Balochistan, federal ministers, parliamentarians, federal secretaries, diplomats and senior government officials.

The President spoke of the 'Vision' that looks for a "developed, industrialised, just and prosperous Pakistan through rapid and sustainable development in a resource-constrained economy by deploying knowledge inputs."

He called for a "balanced political approach" to allow the government, coming through a fair and transparent election, to continue for five years so that it can focus on the plans and achieve the objectives.

He said that in the run-up to the election, it was extremely important that "we develop national consensus on issues, challenges and threats. We have to generate political reconciliation to meet those [threats] and finally ensure good governance." The President said: "If we can meet these, Insha Allah, Pakistan has a very bright future ahead." He said that it was also vital that "we maintain harmony externally, peace within and peace without."

In this connection he referred to the efforts being made for peace with India and the approach to ensure that things stabilise in Afghanistan and on the borders within the Federally Administered Tribal Areas (FATA). "We have to achieve these targets so that our 'Vision 2030' continues moving unimpeded by these centrifugal forces that may harm it and may create obstacles."

The President said that it was the duty of every government to ensure security, progress and development of a nation and wellbeing of its people. He said that security of Pakistan was paramount, and stressed that it never could come from weakness, but from strength.

"Our potential to deal with external threat must remain always," the President said, and added that "at the same time, the government must be able to maintain security from internal threats".

He mentioned a series of challenges, like population growth, shortage of water resources, food and energy security, environmental issues, and globalisation, and said: "We have to surmount all these boldly, and cannot brush these under the carpet."

Otherwise, the President said, the challenges like power generation, scarcity of water, issue of construction of major water reservoirs, population growth and "the forces that are in conflict to our national harmony and integrity" would create obstructions at a later stage.

"They erupt as challenges ... we cannot do this anymore ... we must face these challenges boldly, confront them and defeat them and carry on going on the path of our future vision," the President said.

Musharraf said there was need to develop infrastructure and communication, and termed it vital for the country's development. He said that it was important to convert the railways tracks to standard gauge and to have faster trains to create linkages with Central Asian Republics and country's sea ports.

He talked about the need for larger water reservoirs to preserve the precious water resources, besides brick lined water courses and canals to irrigate larger areas.

The President referred to the country's large coal reserves and said that China was meeting 70 percent of its energy requirements by using coal. He said that Pakistan has huge untapped potential, including alternative sources for energy, which also needed to be exploited.

President Musharraf called for achieving greater food security through yield and area intensification. He said there was wide scope for growth in the livestock and dairy sectors where, with even little investment, good results could be achieved rapidly.

"The 'white revolution' must be pursued vigorously, bringing the rural areas at par with the developed areas," he said. He called for managing the population growth, besides protection of environment, countering deforestation and building road, rail, energy and pipeline links with the Central Asian Republics.

The President said that industrialisation was very vital for the country's progress and development, and added hat the government was offering numerous incentives to foreign and local investors.

He said that welfare of the people was at the centre of all developmental activities, and added that poverty had been reduced from 33 percent to 24.3 percent due to government efforts and pointed that still one person out of four was very poor, but vowed that "we cannot allow this to continue".

He pointed to the need for human resource development and improving the quality of the population. He said there was also need to concentrate on primary and secondary healthcare, besides having holistic approach towards education.

He stressed neesd for skill development as part of growing industrialisation and said that greater synchronisation between the universities, industry and vocational training was required.

He talked of the ambitious programme of establishing nine foreign universities in the country to impart quality education to the ypuths. Earlier, Prime Minister Shaukat Aziz presented the 'Vision 2030' documents to the President.

Business Recorder [Pakistan's First Financial Daily]

 

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Little risk to Pakistan's economy ​

KARACHI (August 22 2007): On August 7, 2007, US central bank policy makers came up with a declaration that inflation remained their primary target. In other words, it also meant that Federal Reserve's monetary stance would remain tight until they succeed in containing inflation.

Surprisingly, the announcement was made despite strong signs emerging from the US market of Subprime mortgage market collapse. Estimates suggest that total asset investment in Subprime, the 10th largest loan provider in the US,debt this year could be $300 billion.

The size of the US market for mortgage is said to be a little over $2 trillion industry. In July, disclosure made by Bear Sterns head fund of its Subprime debt holdings rocked the financial market. But announcement by BNP Paribas on August 9 that the bank had decided to freeze withdrawal on three investment funds with assets of euros two billion ($2.7 billion) added fuel to fire, leading to the current turmoil.

Soon after 9/11, the Fed decided to ease its credit stance and funds started rolling into the economy, finding way into equity, bonds, housing and commercial paper. US money market fund is said to be a $2.6 trillion industry, while estimates suggest hedge fund is under $2 trillion market.

Banks regularly hedge their exposure by means of derivatives. The size of derivative market is believed to be around $20 trillion. But funds such as short-term commercial paper, which has a $1.1 trillion market, CD's and US treasury bills, which are $2 trillion industries, are not hedged.

How quickly things change. Fed, which never stops thinking about inflation, has suddenly stopped talking about inflation. In a short span of 10 days, ie on August 17, the turmoil in the global financial market forced Fed to lower its discount rate by 1/2 percentage to 5.75 percent in an effort to provide liquidity after failing to lift the market, despite injection of $350 billion (approximately) by the global Central Bank.

Fed's discount window will provide 30 days loan facility to all home mortgages and its related assets. Generally, banks avoid using this facility as the market perception is that if a financial institution approaches the Fed discount window, it is seen in trouble.

During the Gulf war in the early 1990s, overnight Fed fund rates soared to 90 percent, yet couple of banks were said to have preferred borrowing from the market rather than approaching the Fed window.

Is it not very strange that frequent interventions by Central Bank are quite contrary to the general perception of a free market economy? When a Central Bank steps in to intervene in an underdeveloped country, such market is called an unregulated market.

Hence, it is not considered a free economy and the so-called experts make a lot of hue and cry. But in the present circumstances, the so-called financial gurus must be full of praise for the Central Bank's act. If the turmoil further aggravates, they will be looking for more such support in future.

Apparently, it looks as if the market is moving towards stability. This could be temporary, but it may not be very encouraging until the market is aware of the US financial market fiasco. It is likely to witness more volatility before getting back to normal.

Big names such as Citibank, J.P. Morgan, BOA, BNP Paribas, UBS, Credit Suisse and a large number of other good banks and financial institutions have been badly hit and the damage is intensive, which has spilled over to big parts of Europe, Canada, Australia, Japan and South Asian economies.

It is a worrisome news to know that French President Sarkozy in an urgent letter addressed to German Chancellor Merkel has shown his concern about the financial market turmoil and has questioned the rating agencies failure to issue warning against a state of great anxiety and confusion in the market.

Creditworthiness of the two rating agencies Standard and Poor's and Moody's Investors Service has been badly damaged for giving credit derivatives Triple-A ratings, which indicated that they were as safe as US Treasuries.

So far it has lost 30 percent of its value. This year, the share prices of two rating agencies, Moody's and S&P, too, have declined by 28 percent and 24 percent respectively.

SUBPRIME'S IMPACT ON PAKISTAN'S ECONOMY Subprime mortgage may have a global impact, but direct risk to the Pakistan's financial market is minimal.

Except for the 1st Sukook bond worth $600 million issued by the Government of Pakistan on January 27 2005, which was agreed on a six-month floating rate basis, which has to bear the price volatility due to rising US interest rate, and now due to global liquidity crunch, the LIBOR rates have been pushed higher. But discount rate cut of 50 basis points suggests that Fed could ease its Fed fund rate either before or by September 18 when FOMC meets. Any slash in US interest rates usually favours borrowing cost.

While, the remaining of the euro bonds floated by Pakistan are fixed and therefore will have no negative financial impact, the holders of bonds are nevertheless the risk takers. The turmoil pushed bond yields substantially. As of August 15, Pakistan's Euro bond with coupon rate of 6.75 percent that matures on February 19, 2009, rose by 1.806 percent to 8.556 percent.

Euro bond with coupon rate of 7.125 percent, maturing on March 31, 2016, was up by 2.769 percent to 9.894 percent. Bond maturing on June 1, 2017, with coupon rate 6.875 percent jumped up by 2.27 percent to 9.145 percent and 30-year Euro bond maturing on March 31, 2036, was up by 1.663 percent to 9.538 percent.

The spike in short term yield is in line of demand in the international market arising from short dated funds. In real terms, Pakistan is currently better placed by floating $800 million Euro bond in March 2007 and presently is a net gainer by over 100 basis points (approximately).

Pakistan may not enjoy the same type of spread if it decides to float Euro bond, since the rating agency S&P has shifted Pakistan's outlook from positive to stable, (positive means possibility of upward revision to high whereas stable stands for neutral outlook).

Some risk could be seen in Pakistan's equity market, which out of $1.2 billion SCRA funds could have 25 percent to 30 percent hot money. With Pakistan's forex reserves comfortably hovering around $12 billion, it should not be a matter concern.

Banks could be sitting with small risk, as available funds in F.E. 25 is Rs 2.3 billion, which is a residual quantity of liquidity for overseas investments, but these funds are invested with the financial institutions, so risk could be minimal.

GLOBAL CONCERNS AND REMEDY Since the ongoing global financial turmoil is not over, nervousness still prevails in the market. The US short term Treasury bills yield tumbled on Monday. This is a much sharper fall than stock market crash in October 1987.

The Fed would be watching the market carefully until its next FOMC policy meeting due on September 18. Stability would be the key factor for easing of Fed rate. In 1997, when the issue of Long Term Capital Management rose, Fed cut its rate by 25 basis points on three occasions.

European Central Bank's President Jean-Claude Trichet is said to be reconsidering ECB's rate policy. European rate is currently 4 percent. While ECB is alert to take further steps to avert credit squeeze and to stem the turmoil, it would be interesting to note if the European Central Bank follows in Fed's footsteps to ensure stability.

Another tool available with the Central Bank is that Fed could do a currency swap with Europe to provide liquidity to the market. Euro could still be the currency of choice due to healthy interest rate spread and wide corporate profit in Europe. This could push euro to 1.4350 against the dollar.

Meanwhile, Japanese yen, which gained sharply on unwinding of carry trade, is taking a breather. There is a huge risk of unwinding of carry trade positions that could further strengthen yen to 107 per dollar by year-end.

However, the big question that remains to be answered is that how the world would know that the global financial crisis is over, as the turmoil in the credit market still looks far from over? The true consequences of global financial turmoil will only be known several months or years hence.

Business Recorder [Pakistan's First Financial Daily]

 

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‘Pakistan to sustain growth in foreign investment’​

ISLAMABAD: Pakistan will sustain the growing momentum of foreign investment and privatisation proceeds, which performed tremendously well and attracted record amounts of $8.4 billion and $2 billion, respectively during the year 2006-07.

Mr Zahid Hamid, federal minister for privatisation and investment stated this during a meeting with Mr Asif Ahmed, Director Asia Pacific for UK Trade & Investment who called on him along with UK’s Deputy High Commissioner here on Monday.

He informed that two GDR transactions of Oil & Gas Development Company Limited (OGDCL) and United Bank Limited (UBL), attracted $811 million and $650 million respectively on their listing at the London Stock Exchange.

The investment conferences and road shows held within Pakistan and abroad have contributed significantly in the amazing increase in portfolio investment, he added.

Mr Hamid stated that the economic reforms introduced by the government would go a long way in the days to come.

GDRs of National Bank of Pakistan (NBP), Kot Aadu Power Company (KAPCO), Habib Bank Limited (HBL) and others were proceeding according to their tentative time frame.

The Minister lauded the interest of UK and US investors in the economic activity of Pakistan while terming it encouraging and assured the visiting guests that Pakistan was in the process of further improving its competitiveness and facilitation arrangements for the foreign investors.

Mr Asif Ahmed appreciated the support being extended by the Pakistan High Commission in Britain to British investors and hoped the exchange of investors’ delegations of both the countries would help a lot to improve the existing trade and investment relations.

Daily Times - Leading News Resource of Pakistan

 

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150 villages selected to supply water through solar electrification ​

ISLAMABAD (August 22 2007): Pakistan Alternative Energy Development Board (AEDB) has selected 150 villages in Tharparkar district of Sindh province to supply water under the framework of solar electrification of remote villages.

The project titled 'Sustainable Development of Utility Scale Wind Power Production' is being initiated in collaboration with United Nations Development Programme.

The villages selected in first phase for the feasibility study in Sindh are located in talukas of Chachro, Diplo, Nangarparkar and Mithi. "The feasibility study of the project would be launched within next few weeks and work on the project is expected to get underway in the first quarter of 2008," an official of the AEDB told APP on Tuesday.

He said that after completion of feasibility report the local communities would be involved to identify their water needs. "Each water supply point will be set up at maximum distance of half kilometer from the target houses," he elaborated.

It has been proposed that minimum quantity of 25 liters water per person will be provided in a day. "The quality of water would be maintained as per standards set by World Health Organisation (WHO)," he added.

Business Recorder [Pakistan's First Financial Daily]

 

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Pak-German trade rises to $2bn per annum​

KARACHI: Bilateral trade between Pakistan and Germany has now risen to about $2 billion per annum and is likely to grow further.

Pakistan’s economic indicators are healthy and we will encourage more trade and investment with Germany. At present German exports to Pakistan were valued at $1.2 billion and Pakistan’s exports to Germany $700 million annually, said Ambassador of Pakistan designate to Germany Shahid Kamal.

Speaking at a lunch hosted on Monday by the President Pakistan-German Business Forum Qazi Sajid Ali that was attended by leading industrialists and businessmen of both countries including KCCI President Majyd Aziz.

Shahid Kamal said that a high level German parliamentary delegation would visit Pakistan next week.

“The intensity of ties between the two countries is quite strong and growing. I will make efforts to change mindset of Germans towards Pakistan.,” he added.

Qazi Sajid said that Germans’ interest in making more investment in Pakistan is growing due to the efforts of the German Embassy, Consulate and their companies. He called for more interaction at governmental, parliamentary, educational, and cultural and NGO level between the two countries in order to create a soft image of Pakistan. ppi

Daily Times - Leading News Resource of Pakistan

 

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Saudi group wants to invest in mega projects ​

KARACHI (August 22 2007): A delegation from Saudi Arabia, led by Sheikh Abdul Razzak, Chairman Bindawood Group, called on Sindh Chief Minister Dr Arbab Ghulam Rahim at Chief Minister House here on Tuesday and showed their interest for making investment in mega projects.

Senior member board of revenue, IG Sindh, Secretary (LU), Secretary to C.M, Chairman CM Inspection Team, prominent businessmen and other senior government officials were also present on the occasion. Later at simple ceremony, a MoU related to proposed projects was signed. The ceremony was attended by provincial secretaries and other guests.

Addressing the ceremony, the Chief Minister said that both Pakistan and Saudi Arabia are brotherly Muslim countries bound together with fraternal ties and these will continue to grow in all fields including business and trade. The Chief Minister appreciated the objectives of MoU. Bindawood Group, he observed, is a prestigious group with a very vast network carrying out score of projects in the entire Kingdom.

Some of these included the largest Mall, chain of "A" class Hotels, top of the line residential and office plazas, full range of Super Markets etc. He pointed out that Bindawood Group has shown keen interest in investing in similar kind of projects in Sindh in the first phase.

Business Recorder [Pakistan's First Financial Daily]

 

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Rs 167.8 million schemes in Jhelum near completion ​

JHELUM (August 22 2007): Federal Minister for Population, Chaudhry Shahbaz Hussain had approved several development schemes of Rs 167.8 million for his constituency NA-62 Jhelum-I last year, which have been completed, while rest of the project would be completed in the upcoming few weeks.

These development schemes include power supply to the far-flung areas, road infrastructure, supply of Sui gas, installation of new telephone exchange, upgradation of filters and provision of clean drinking water.

Chaudhry Shahbaz Hussain, in a press release here, said that he had obtained funds of Rs 40 million under the Khushhaal Pakistan Programme-II, while amount of Rs 127.8 million under the Khushhaal Pakistan Programme.

While describing the details of development schemes, he said that 82 villages of Constituency NA-62 Jhelum-I had so far been provided electricity from February to August 2007, while the work on the 15 other schemes being underway.

More than 30 links roads have been constructed while several villages have been provided Sui gas. The capacities of telephone connection have also been increased in 28 telephone exchanges. Similarly, he said that the process of installation of water supply plant is in initial stages and it would be completed by the end of current year, he added.

Business Recorder [Pakistan's First Financial Daily]

 

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Singapore and Brunei may recruit Pakistani workers ​

KARACHI (August 22 2007): Singapore and Brunei are willing to recruit workers, both skilled and unskilled, from Pakistan, said an official of Overseas Employment Corporation (OEC) on Tuesday. The official also revealed that Federal Minister for Labour Ghulam Sarwar Khan and OEC Managing Director S M Junaid were presently visiting these countries.

During their visits, they held talks with the concerned people and apprised them about the quality of Pakistani manpower, which could help enhance image of Pakistani labour abroad, he said. He further said that the OEC was safeguarding the interest of both the employers and the employees by adhering to moral principles and high ethical values.

Legal support was provided to every registered Pakistani workers and the OEC helped the employees understand the working conditions before going abroad. He said that the government would start training programmes for unskilled manpower, which sought foreign jobs.

Majority of technical institutes were teaching outdated courses and using old equipment to enhance technical know how, he added. He said that Pakistan's technical manpower was well-trained and diversified, having experience of working abroad in fields of medicine, engineering, education, science, agriculture, manufacturing, shipping, etc. He said the government would formulate a policy to utilise the experience of returning Pakistanis as was done in Japan and Korea.

These countries used to send their manpower abroad only to polish their skills in advanced working conditions and thereafter utilised their professional experience for the growth of the country's economy.

Business Recorder [Pakistan's First Financial Daily]

 

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Pakistan, South Africa agree to boost economic ties​

ISLAMABAD, Aug 21: South Africa and Pakistan have agreed to increase economic cooperation in all fields particularly in mining, steel, auto, chemical and plastics, engineering and technology.

This understanding was reached during a meeting held here on Tuesday between officials of Engineering Development Board (EDB) and the visiting six-member South African delegation led by Willem van der Spuy, Director Department of Trade and Industry, Bilateral Trade Relations – Asia.

An official announcement said the delegation underlined the importance of specific work programme in these sectors so that the relationship could be built on sustainable basis.

The delegation assured that South Africa was keen to build partnership with Pakistan on the basis of South-South cooperation policy of the country and would like to increase interactions between the two governments and business communities.

The South African delegation was visiting Pakistan after eight years’ gap.

EDB General Manger Zahid J. Yaqub gave a detailed presentation covering macroeconomic indicators, investment environment, efficiency improvement initiatives, production trend in automotive products, export processing zones and potential sectors for enhancing cooperation.

He informed the delegation that a steel policy was under preparation covering incentives to investors for steel-making at different parts of the country and requested for South African help in steel production.

He added that Pakistan had learnt a lot from South Africa in auto sector and formulated its new auto development programme based on pre-announced tariff policy, successfully implemented by South Africa along with other incentives.

The meeting was informed that Pakistan had prepared an aggressive African initiative policy for increasing its export to the region. As a first step, Pakistan will attend Nairobi Fair scheduled in October 2007 so that its products could be promoted in African countries.

Pakistan, South Africa agree to boost economic ties -DAWN - Business; August 22, 2007

 

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200 megawatts power plant: Sindh decides to annul MoU ​

KARACHI (August 23 2007): The Sindh government has decided to terminate the Memorandum of Understanding (MoU) signed with Dadabhoy Group for setting up a coal-based power plant in Sonda-Jherruk, following the Group's failure in executing works on time.

Sources in Sindh Mines & Mineral Department told Business Recorder here on Wednesday that earlier a show-cause notice had been issued to the group but it failed to accelerate the work as per conditions of the MoU. Provincial government had served a notice on the Dadabhoy group for the delay in undertaking the 200 MW power project.

After serving the notice, a delegation of senior officials and technical experts of Mines & Mineral Department had visited the site. After detailed survey of the project site, they came to know that the reply submitted by the Group claiming that it had drilled over 250 holes was totally baseless. Not more than a dozen holes had been drilled for coal exploration at the project site contrary to the claims of company officials.

Following the visit and on the spot inspection of the site, officials of the department decided to terminate the MoU, sources said. About the chances of handing over the project to any other company, sources said that it was too early to say anything in this matter.

The Memorandum of Understanding (MoU) was signed on June 27, 2005. Sindh Minister for Mines and Mineral Development Irfanullah Khan Marwat had signed on behalf of Sindh Coal Authority and Amin Dadabhoy on behalf of Dadabhoy Hydrocarbon Limited.

According to project details, Dadabhoy group had planned to set up a 200 MW coal-based power plant at an estimated cost of $400 million in association with North China Power Energy Company Ltd.

Business Recorder [Pakistan's First Financial Daily]

 

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Bumper sugarcane crop expected this year ​

ISLAMABAD (August 23 2007): Pakistan is poised to get a bumper sugarcane crop this year, and if the mills agreed to start crushing in November, the government need not import sugar, sources told Business Recorder on Wednesday.

Sources said that the government has been pressing the sugar mills for starting the crushing in October in Sindh and in November in Punjab and NWFP. The government demand has not been accepted by the sugar industry. The government also acknowledges that the import of sugar could deprive the farmers from good return as the industry could use this option in a tit for tat response to the government decision of importing sugar, the sources said.

According to initial estimates, there are indications that the sugarcane production target of around 55 million tonnes from an area of 1.015 million hectares for this year will surpass, they added.

Some recent press reports suggest that the government was ready to use the option of sugar import for ensuring supply beyond November this year. According to these reports, the government was planning to import between 0.4 and 0.5 million tonnes of sugar for carryover stocks. However, this proposal was set aside due to the fear that farmers would not get good return, the sources said.

At the start of this month, the mills had 1.2 million tonnes of sugar and the Trading Corporation of Pakistan (TCP) had 0.3 million tonnes of sugar stocks, which at the rate of 0.350 million tonnes per month consumption can meet local demand till November.

The government and the sugar industry are at odds over the start of next crushing season. Both are poles apart on stocks lifting, availability, and the prices. The sugar industry blames the government for not honouring its commitment to keeping sugar prices at reasonable level to help them dispose of stocks and make the payments to the growers.

The sugar mills, according to the sources, are not satisfied with the government's mechanism of fixing the indicative price of sugarcane. The provincial governments fix the prices under their political compulsions.

Business Recorder [Pakistan's First Financial Daily]

 

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July foreign investment down 14.7 percent ​

KARACHI (August 23 2007): Country's net foreign investment witnessed a decline of 14.7 percent during the first month of current fiscal 2007-08 due to major dipped in the portfolio investment.

Central bank statistics shows that during July 2007 net foreign investment including portfolio and foreign direct investment (FDI) stood at $156.3 million as compared to $176.3 million during the same period of the last fiscal, depicting a decline of $26 million during July 2007.

Decline of 426 percent in the portfolio investment is the major reason behind the overall decline in the foreign investment, as portfolio investment in the last July 2006 stood at $11.5 million as compared to $-37.7 million during July this year.

FDI has increased by $23.2 million to $188 million as compared to $164.8 million during same period of the last fiscal. While, the portfolio investment witnessed a dipped of $500 million to $-37.7 million during July 2007 as compared to $11.5 million in the July 2006, as during July 2007 $12.3 million portfolio investment has witnessed against the outflows of $500 million.

It may be mentioned here that during last fiscal 87 percent upsurge witnessed in the net foreign investment and the net foreign investment for the first time reached at $8.42 billion as against $4.48 billion in the fiscal 2005-06.

Business Recorder [Pakistan's First Financial Daily]

 

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US firm wants to expand operations ​

LAHORE (August 23 2007): US-based Company 'AboutUs' has planned to bring in foreign investment in Pakistan, finding a country that has a significant potential of growth and talented human resource to compete in international market, Company Founder Raymond King told Business Recorder during his visit in Lahore.

"The AboutUs wiki was launched in August of 2006 and now, one year later, the site has seen very rapid growth of over 4 million unique visitors per month and thousands of user generated edits per day, he explained. To keep up with its growth, developers, content creators and community experts are needed quickly, he added.

When asked about his interest in opening operation in Pakistan, Raymond King said he was inspired by another US based company, Mentor Graphics, which was already functioning in Lahore for almost eight years with impressive achievements and decided to open a branch office in Lahore.

Talking about Mentor Graphics he said that Mentor Graphics Corporation's President, Greg Hinckley was a good friend of him, adding that he said that Mentor Graphics was able to find great talent in Pakistan, along with a culture of innovation and dedication.

He said 'AboutUs' started its operation in Lahore in April 2007 with only eight employees and now their figure has touched to 20, which is more than double within three months. He said Mohsen Gilani; a Pakistani expatriate who was instrumental in opening and establishing Mentor's office eight years ago now using his experience to help develop 'AboutUs.'

While small at present, AboutUs plans to grow the Lahore office to 120 people over the course of the next year, he revealed. To a question, he said that Pakistan is an emerging market with a blend of unique talent, good infrastructure and high level of tolerance.

"I believe our company will create a market in Pakistan with the support of Pakistani talent, who are fully capable to compete in the international market," he added. He also praised the Pakistan over its efforts to pave suitable ways for bringing in foreign investment. To another query, AboutUs founder said that his company already had invested a huge sum of amount and more investment is in the pipeline.

Mohsen Gilani, country manager of AboutUs said he was quite happy and satisfied with the offices' performance and his ultimate goal is to establish a sustainable operation in Pakistan and through this technology Pakistan would definitely gain a tremendous visibility among other developed nations. Gilani said Pakistan has the required talent, potential and effective educational system to become an offshore technology epicentre in the region.

Business Recorder [Pakistan's First Financial Daily]

 

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Import of power from Iran: authorities directed to remove bottlenecks ​

ISLAMABAD (August 23 2007): Federal Minister for Water and Power, Liaquat Ali Jatoi has said that import of cheap electricity from Iran to Balochistan would benefit both the countries and the consumers of the region. He directed the authorities concerned to remove bottlenecks in commissioning the project as early as possible.

The minister said that the import of 1,000 MW power from Central Asian states was also being actively pursued and presently a team was discussing the modalities for import at Montreal where Tajikistan, Kyrgystan and Afghanistan were also participating.

The minister said this while chairing a high level meeting to review the technical and financial aspects of import of power from Iran. The meeting was informed that presently 39 MW was being imported from Iran to meet demand of south-west Balochistan comprising Turbat, Gawadar and Panjgoor districts and the border towns of Mashkhail and Taftan.

Considering rapid development in and around Gawadar, another contract with M/s. TAVANIR for import of 100 MW had also been signed, it was told. During Pak-Iran joint economic commission in Islamabad, Wapda and TAVANIR agreed on a tariff of 6.25 cents/kwh for supply of additional 100 MW power to Gawadar by TAVANIR, which was approved by the ECC.

The meeting also discussed the proposal of laying 55 kilometer 220 KV transmission line inside Pakistan for which financial assistance was being given by the Iranian government. The Iranian company would bear the cost of 65km line in Iran to provide power to Pakistan at its border.

The meeting also discussed financing and other aspects of the project and decided to send a larger technical group including Finance Ministry's Representative to Iran to further clarify the terms and conditions and other modalities for quick implementation of the project. The minister stressed the need for expediting the efforts for early completion of the project for importing cheap electricity from Iran for Balochistan.

The meeting also discussed import of 1,000 MW power from Iran for which an MoU has already been signed by the two countries in April, 2007. The team will also finalise various aspects of the project with their counterparts in Iran shortly.

Business Recorder [Pakistan's First Financial Daily]