Pakistan Economy - News & Updates - Archive

[Contrarian]

You were never the second fastest alone mate, when you averaged 8.4% if i remember correctly, India managed that as well. And Pakistan's base is so small, its not a major economy, as Happyfeet said. Do you expect the world to celebrate when Pakistan gets an 8.4 once?

 

[Contrarian]

Incidentally, happy feet, why have you stopped posting in the Indian economy section? Please continue your old method, Neo only asked you to mellow down the posting rate, and you stopped completely!

 

[Moin91]

Current account deficit at $917m in July

Sunday, August 26, 2007
By Israr Khan

ISLAMABAD: Pakistan’s economy kicked off the new fiscal 2007-08 with a hefty $0.917 billion in current account deficit (CAD), which has already been termed by multinational donors a ‘grey area’.

Despite a strong build-up in current transfers, the burgeoning trade deficit pushed CAD (excluding official transfers) to $917 million during the first month (July) of the new fiscal year. However, it is about 14.85 per cent less than what was recorded in July 2006-07.

During the month under review, current transfers were $905 million, but the $1.538 billion trade gap in goods and services turned the current account into deficit, the central bank’s data revealed on Saturday.

Net current transfers rose to $905 million during July 2007, from $765 million in the corresponding month of the last fiscal.

Current transfers went up as Pakistan received $495 million in remittances from overseas Pakistanis, up from $377 million a year ago.

Likewise, during the month under review, the resident deposit holders deposited more in foreign currency accounts (FCA). In July 2007, there were about $33 million in these accounts against only $19 million deposited during the corresponding month of the last fiscal.

During 2005-06, the deficit rose to $5.7 billion against $1.784 billion in 2004-05. As per GDP percentage, it rose from 1.6 to 4.4, the highest level in last nine years. In fiscal year 2006-07, it further inched up to a record high $7.016 billion surpassing the annual target of $6.3 billion by $716 million.

The SBP data revealed that Pakistan witnessed this imbalance due to trade deficit (in goods and services sector).

Trade deficit (in goods) during July stood at $1.002 billion with imports $2.45 billion and exports of $1.448 billion. Trade deficit figures are estimated using the freight-on-board value of imports and exports.

The services account also witnessed a large imbalance of $536 million, as inflows under this account stood at $219 million whereas outflows totalled $755 million. Thus on balance total trade deficit (goods and services) stood at $1.538 billion.

The data reveals that factors responsible for this huge deficit include a higher outflow on account of transportation, travel, insurance, royalties and licence fees.

Pakistan had to spend $283 million on transportation account whereas its earning under this head was only $96 million. Thus, the net deficit in the service account due to chartering of vessels for imports and exports was $187 million.

Another factor responsible for services’ account deficit was the net outflow of about 100 million dollars on account of overseas travelling.

Pakistan had to spend $113 million to finance personal and business-related travel abroad of individuals and groups whereas it earned only $13 million under this head.

The same applies for expenses on insurance, royalties and licence fees paid to international organisations and their employees operating in Pakistan


Current account deficit at $917m in July

 

[Neo]

Low-income group hard hit by price hike ​

ISLAMABAD (August 25 2007): The SPI-based inflation was 7.21 percent up on week ending August 23 over the same period of last year, with wheat flour dearer by 11.55 percent and cooking oil by 30.84 percent. The inflation of the majority of salaried class was recorded 8.68 percent as compared to 5.21 percent for the working class earning over and above Rs 12,000 per month.

The data released by the Federal Bureau of Statistics on Friday showed that there had been regular increase in prices of essential kitchen items from last couple of months. As a result there was no sign of relief for the poor as perpetual escalation in the prices of food items was eating up the whole budget of those having monthly income between Rs 3000 to Rs 5000.

Cooking oil was 30.84 percent dearer over last year; wheat 9.20 percent, vegetable ghee 30.51 percent, and wheat flour was all-time high by 11.55 percent. The regular increase in the prices of core food items, such as wheat, cooking oil, pulses and milk, has been disturbing the budget of the poor.

What was more painful and unfortunate was that there had been no check on prices varying from market to market in some places.

The SPI inflation was recorded 159.22 percent on August 23 with 0.29 percent increase over 156.62 percent of past week. The low-income group was hit hard by the price hike, as inflation was recorded at 8.68 percent for monthly income of Rs 3000, against 5.21 of above Rs 12000 earning bracket.

The week under review showed that price hike was 8.68 percent for people earning Rs 3000 to Rs 5000 and 7.66 for those earning between Rs 5001 and Rs 12000. The SPI bulletin, based on data collected for about 53 items from 17 centres, showed that 22 items registered increase, 7 declined, while the tag on 24 remained unchanged.

Further analysis of the data showed that 18 items were dearer by double digits over last year. These included masoor pulse washed 31.70 percent, red chillies 81.72 percent, milk powdered 30.06 percent, mustard oil 32.45 percent, veg ghee tin 30.51 percent, cooking oil tin 30.84 percent, onion 20.18 percent, chicken farm 21.03 percent, veg ghee loose 36.52 percent, and milk fresh 13.29 percent.

The eggs were 21.03 percent dearer over last year, wheat flour 11.55 percent, rice basmati 55.40 percent, curd 12.91 percent, rice Irri 41.70 percent and sandal gents Bata 25.06 percent.

Among these items, in a short span of one week, the prices of onion went up by 7.53 percent, egg farm 4.56 percent, chicken 4.20 percent, bread plain medium size and potatoes 2.48 percent and cooking oil and ghee 1.31 and 1.26 percent respectively.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Loans to poor have created positive impact on income: World Bank ​

ISLAMABAD (August 27 2007): A dramatic increase in the number of loans issued to poor people in Pakistan has had a positive impact on personal income, key food item consumption, productive asset acquisition, household repair and utilities expenditure, and social status, World Bank said.

According to the Bank's statement, community infrastructure projects have reached roughly 1.5 million households with efforts ranging from safe water to irrigation, roads, flood protection and micro hydroelectricity projects.

The Bank said that prior to PPAF, the market had provided about 100,000 loans to the poor. Between April 2000 and June 2007, PPAF provided over 1.3 million loans--55 percent of these to women.

It said that 13,000 community infrastructure projects had been completed, over half of which to provide safe drinking water or access to safe sanitation, touching the lives of over 2.5 million persons in about 5,000 villages.

Besides improving the rural environment and other social benefits, these projects saved $7.5 million a year in health related expenses.

The World Bank said that the PPAF model is designed to ensure a sense of ownership and projects are implemented on cost sharing basis with over $9 million so far from the communities. The PPAF-supported projects are also labour-intensive, generating $12 million in wages.

A PPAF Water Management Centre focuses on drought mitigation and flood relief projects and efficient water use. Around 2,600 households in pilot projects are seeing increased availability of irrigation water, reduced use of fertiliser and pesticides and increased crop yields.

The pilot health and education projects are experimenting with model school and health facilities established, staffed and managed by communities.

So far, 69 schools and 22 health facilities are benefiting, mostly women (70 percent of the health facility beneficiaries are women and 80 percent of the students are girls). The PPAF's mandate--and the trust it has established--has enabled it to respond to crises like the October 2005 earthquake.

Its network allowed PPAF to reach the most vulnerable people in remote areas of the country with relief and later reconstruction support. The PPAF is involved in about 20 percent of the 600,000 houses being reconstructed. The IDA provided $90 million out of $107 million for the first phase of PPAF.

Total project cost for PPAF-II is $368 million: $238 million from IDA; $13 million from communities; $10 million from the government of Pakistan; and $107 million sub-borrowers.

Additional funding of $100 million has also been provided to PPAF by IDA for its earthquake reconstruction program. The PPAF has also leveraged funding from USAID of $6 million; US Department of Agriculture of $25 million; IFAD of $52 million; Germany $17 million; and from the Committee to Encourage Corporate Philanthropy, USA of $12 million.

The IDA's assistance to PPAF has contributed significantly to the strength of other development actors--in particular civil ociety--who had been previously ignored, or received limited support, in Pakistan.

When the impacts of the first project became evident through early assessments, IDA responded with even greater support, allowing PPAF to increase its scale in a short period of time. It now operates in 27,281 villages where 65,000 community organisations have been formed. The World Bank statement added that IDA's support to PPAF had created institutionalised retail capacity and reformed the way the micro-finance sector operates.

The PPAF is working with 70 partner organisations in 111 out of 120 districts in Pakistan.

PPAF has entered into collaborative arrangements with UNDP, WWF, WFP, ILO, UN Habitat, and CGAP as well as local and international corporate firms in Pakistan. PPAF is a strategic partner of the Prince of Wales International Business Leaders Forum, and the Citigroup Foundation (NY) is partnering with PPAF for sponsoring the Global Micro-entrepreneurship Awards 2006. PPAF is in research collaboration with Pakistan Institute of Development Economics, Gallup (Pakistan) and DECRG (World Bank).

PPAF's long term strategy for the next 10 to 15 years is to cover all villages and hamlets of Pakistan through a comprehensive range of activities. There will be a major effort to provide occupational skills training, leading to exponential growth of micro-enterprises.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Govt focus on infrastructure development​

KARACHI, Aug 24: The government has embarked on a programme of structural public private partnership to accelerate the pace of infrastructure development for achieving sustained economic growth.

This was stated by CEO of Infrastructure Project Development Facility (IPDF), Ministry of Finance, Aijaz Ahmad at a seminar on ‘Draft Public Private Partnership Standardised Contractual Provisions’ here on Friday.

The seminar was organised by the IPFD under the consultative process initiated by the government between the public and private sector stakeholders for finalising a framework for Public-Private Partnership (PPP).

He said that work on several PPP initiatives were already underway, including Lahore Mass Transit project, Islamabad-Rawalpindi Mass Transit project, Environment Friendly Public Transport (CNG buses) Service, Islamabad IT Park, Multipurpose Water Reservoirs, CBR Automation Project, Kalinger Water Supply and Charsadda Solid Waste Management.

Some other projects proposed to be implemented under the PPP modality, include: Karachi Circular Rail, Bus Rapid Transit System Karachi, Intra-City Bus Terminal Facilities Karachi, Hyderabad-Mirpurkhas Road (Dualisation & Tolling), Sindh Coastal Highway (Expansion & Rehabilitation), Karachi Desalination Plant, Rawalpindi Solid Waste Management, Lahore Solid Waste Management, Low Cost Housing Hyderabad, Car Park Garages Karachi etc.

Dr Asad Ali Shah, Member (Infrastructure) Planning Commission, said the government was looking to the private sector’s active participation in the national development effort.

Govt focus on infrastructure development -DAWN - Business; August 25, 2007

 

[Neo]

'Record uplift work underway in Karachi' ​

KARACHI (August 27 2007): A record development work is being carried out in Karachi, which is unprecedented in the history of the metropolis. This was stated by the Sindh Minister for Local Government, Muhammad Hussain. He was performing the inauguration of Afza Altaf Park in Gulshan-i-Iqbal Town's UC 9 here, says a statement on Sunday.

The minister pointed out that the construction of parks and playgrounds are aimed at fostering a healthy atmosphere and promoting healthy activities. He informed that development projects worth Rs 55 billion are being carried out in the metropolis.

Muhammad Hussain said that roads, bridges and expressways are being constructed in the city with a view to improve the infrastructure. Speaking on the occasion, Town Nazim Muhammad Wasay Jalil informed that the park spreading over an area of 4,000 square yards has been constructed at a cost of Rs 3.3 million. It has been equipped with swings for children, jogging tracks as well as wash rooms for men and women.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

China swaps lists for services trade​

ISLAMABAD, Aug 25: Pakistan and China have exchanged list of areas to be offered for services providers under the aegis of the already operational free trade agreement (FTA).

A senior official told Dawn on Saturday that these lists were exchanged during the second round of negotiations on the services chapter of the FTA held recently in Beijing at a technical level.

Under the trade on services, both countries would have to identify areas for trade in the positive list. However, both sides also requested for market access in the services sector and also agreed on revised list to be exchanged within a month.

The official said Pakistan had requested for market access for local banks in China and had also asked for technology transfer and on job training of locally-hired human resources as well as training of labour.

It is expected that the next round on the services sector will be held by end of the current calendar year and negotiations will be wrapped up in the next couple of meetings.

The official said Pakistan would seek more commitments in maximum sectors to gain more market access for Pakistani services suppliers. “We would also be seeking foreign investment from China under the services sector negotiations,” the official added.

The potential areas for services liberalisation include finance, telecom, tourism, health, education, transportation, road, energy distribution services. However, Pakistani services providers could get maximum benefits only in case China train local Pakistani employees.

China swaps lists for services trade -DAWN - Business; August 26, 2007

 

[Neo]

Arbab lays foundation stone of coastal highway ​

THATTA (August 27 2007): Sindh Chief Minister, Dr Arbab Ghulam Rahim Sunday laid the foundation stone for construction of Coastal Highway at Dhabeji near Thatta. Speaking on the occasion, he said on completion the project would bring about revolutionary changes in the socio-economic standard of the people of lower Sindh.

The Chief Minister said the Coastal Highway would be 278.6 kilometres long and completed at a cost of Rs 7500 million. He said construction work on a portion of the highway measuring 90 kilometres has been started in the first phase at a cost of Rs 2407 million. The project would be completed in three years, he added.

He said a road has been constructed from Umerkot to Zero Point while the Coastal Highway would be built from Dhabeji to Ali Bunder. Construction of another road will be undertaken from Karachi to Tando Muhammad Khan besides a road from Super Highway to Gorakh Hill, Johi which will also help promote tourism.

A livestock and a dairy farm are being established on an area of 8000 acres at Ghaghar Phatak while dairy farms will be set up in 23 districts of the province, he informed.

Meanwhile, addressing a public gathering at Police Lines DR Arbab said that the continuity of the present system and government under the leadership of President General Pervez Musharraf was essential for Pakistan because remarkable development had taken place during his tenure. He said President General Pervez Musharraf would l be re-elected as president for the next term.

He said that he had initiated the election campaign from Thatta, which has become a fort of Pakistan Muslim League (PML) during his tenure. He said a proposal has been initiated to construct a dam at Ran Pathiani where train track was damaged during the last heavy rains.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

PIA asked to adopt modern techniques ​

ISLAMABAD: Prime Minister Shaukat Aziz on Friday underscored the need to adopt latest techniques in management, marketing and fleet management to establish PIA as a brand name and to make it a profitable organisation.

He was chairing a high level meeting regarding PIA affairs here at the Prime Minister House. The prime minister said that PIA is a national asset and has to play its role as Pakistan’s premier flag carrier. He said that the airline must adopt best practices prevalent in other international airlines and also benchmark its performance with comparable competing airlines in order to improve both its service and profitability.

He underlined the need to hire qualified people and improve skills of the existing staff so that they could be better equipped to meet the challenges.

He said PIA must focus on generating more revenue by improving its service and attracting more customers in order to overcome its financial problems. He said PIA must do route-to-route analysis and operate flights to those destinations having acceptable profitability. The government would provide all necessary assistance in this regard, he added.

Earlier, PIA Chairman Zafar Ahmad Khan highlighted short and long term measures to deal with the challenges being faced by PIA and updated the meeting about the financial situation of the organisation.

He said PIA has planned to phase out its ageing fleet replacing it with the new ones, strengthening its infrastructure, changing the working culture, improving governance structure, engaging and empowering employees and stepping up training facilities to increase organisation’s effectiveness.

The chairman also apprised the meeting of the steps needed to reduce losses through route rationalisation, better revenue management, financial restructuring and planning to address restrictions imposed by the European Union.

He expressed the hope that through these measures PIA would improve its financial position and become a profitable organization despite high fuel prices.

The meeting was attended by the Senior Minister for Defence, Rao Sikandar Iqbal, Minister of State for Defence, Ali Asjad Malhi, Parliamentary Secretary for Defence, Tanveer Hussain Syed, Secretary Defence and senior officials.

http://www.thenews.com.pk/arc_news.asp?id=3

 

[Neo]

220KV transformer manufacturing facility soon ​

KARACHI (August 27 2007): The 220 KV power transformer manufacturing facility will be inaugurated at the premises of Siemens Pakistan here on September 3. Sindh Governor, Dr Ishrat-ul-Ebad Khan will be the chief guest on the occasion. Managing Director and Chief Executive Officer of Siemens Pakistan Engineering Company, Sohail Wajahat H Siddiqui, will present the welcome address.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Overseas Pakistanis remit over $5.5bn ​

ISLAMABAD: Prime Minister Shaukat Aziz said Overseas Pakistanis are excellent ambassadors of the country and help Pakistan by remitting over US$5.5 billion per year.

The Prime minister said this while talking to Minister for Labour, Manpower and Overseas Pakistanis, Ghulam Sarwar Khan who called on him at the Prime Minister’s House on Friday afternoon.

The Prime Minister said that over seven million Pakistanis are living in different parts of the world including North America, Europe, Middle East and the Far East.

He said that these people are performing important tasks in their host countries and improving Pakistan’s image as well as improving their standard of living and that of their families by remitting money to the homeland.

The Prime Minister said that the government will encourage more Pakistanis to seek skilled jobs overseas and has launched several initiatives in this connection for vocational and technical training in several disciplines including construction, hotel management, manufacturing, engineering, teaching, agriculture, deep-sea fishing etc.

The Minister for Labour, Manpower and Overseas Pakistanis apprised the Prime Minister of various initiatives undertaken by his ministry to increase the flow of Pakistani skilled workers overseas and numerous labour reforms undertaken by the ministry to provide better facilities to workers in Pakistan. He told the PM that last year 184,000 Pakistanis went to work aboard and this year too, due to government efforts 250,000 workers would be facilitated in overseas jobs thus earning a better living for their families and in turn contributing to the nation in the form of remittances.

http://www.thenews.com.pk/arc_news.asp?id=3

 

[Neo]

Auto Industry: things go from bad to worse ​

ISLAMABAD (August 26 2007): There was hardly any increase in the production of cars during 2006-07 against the same period of previous year despite the fact that the government had accepted all demands of auto assemblers, including ban on import of five-year-old vehicles, in the long-term auto policy, designed to increase production.

Total production of cars was only 160,496 in 2006-07, 438 vehicles more than previous year's 160,058, which showed almost no growth. The government had given clear roadmap to the industry by unveiling five years' pre-announced tariff in its new auto policy so that the assemblers could raise their investment and enhance production capacities to meet the demand-supply gap.

But the production figures for 2006-07 paint an altogether different picture. The local assemblers have not only increased the prices of vehicles after the government, conceding the longstanding demand of assemblers, imposed ban on import of five-year-old cars in the budget 2006-07 which resulted in an increase in the premium known as 'own money', charged for delivery, which had almost finished after import of used cars was allowed.

The data showed that production and sale of Honda Atlas and Dewan Farooque declined during 2006-07 while those of Pak Suzuki and Indus Motors increased. The production and sale of Honda Civic and Honda City amounted to 5,610 and 6,513 vehicles, respectively, during 2006-07 over past year's 12,274 and 11,998 cars. The sale, production figures of Toyota Corolla for the period under review were, 35,762 and 35,036 respectively against previous year's 31,094 and 30,527 cars.

There has been substantial growth in the sale and production of almost all vehicles assembled by Pak Suzuki Motors. Among 1000cc the production of Suzuki Khyber/Cultus was around 29,880 vehicles against previous year's 21,342; Suzuki Alto 21,546 vehicles against 21,390, and 800cc Suzuki Mehran was 12,776 vehicles against 77883. An official in Engineering Development Board (EDB) said that production of vehicles during 2006-07 was not up to government expectations, but about increase in premium he referred to other sectors citing land and food as example. "Is food, the most essential commodity for human survival, free from black marketing?" he posed the question when asked why measures were not taken to discourage the heinous practice of premium on cars. He, however, admitted that the premium, known as 'own money' had gone up since the ban on import of five-year old cars, but said that the local industry could not be jeopardised to benefit the Japanese companies, expressing hope that local assemblers would realise and take measures to eliminate this abhorrent practice.

The 'own' on Cuore has gone up from Rs 5000 to Rs 8000; on Toyota Corolla to Rs 45,000 from Rs 8000-10,000; and on Corolla GLI from Rs 10,000 to Rs 50,000. Amongst Suzuki brands, the most used vehicles are Mehran, Cultus, Alto, Liana, Bolan Van and Ravi Pickup.

Suzuki Cultus VXR 'own money' is Rs 25000, Cultus VXR CNG is around Rs 25,000. Suzuki Ravi pickup 'own money' is Rs 60,000 which is quite a high amount to be paid as own money. Similarly, Suzuki Bolan van own money is Rs 60,000. Previously there was no own money on Honda vehicles but now it is around Rs 10,000 to Rs 12,000.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Strategy to develop cottage, small industries in Punjab planned ​

SIALKOT (August 26 2007): Punjab government has worked out a comprehensive strategy for development of maximum cottage and small industries including agro-based industries in the province.

Official sources told Business Recorder here on Saturday that the government had set aside huge funds for the development of cottage and small-scale industries aimed at generating large number of employment opportunities for the jobless skilled and semi-skilled people in the Punjab.

The government has planned to establish agro-based industries in remote and neglected areas by giving incentives and concession to the interested persons for setting up such industries in their respective areas, they said.

The sources pointed that purpose of the programme was to generate employment opportunities for the skilled and semi-skilled persons, besides to discourage the rapid rural migration towards the cities of the Punjab. The proposed programme will also serve its dual role in broadening strong industrial base and ensure the development process in far-flung and neglected areas of the province.

"The concept of setting up maximum small-scale and cottage industries was to tackling the threats of unemployment as well as to further accelerate the pace of export activities," they said and added that the government was constantly stressing upon the business community to produce non-traditional products besides traditional products as well as to concentrate on bringing innovation in their products. The Punjab Small Industries Corporation (PSIC) would extend full guidance, assistance and loan facilities to the interested businessmen and newcomers for setting up and upgrading their industrial units in the Punjab.

Under the programme special focus was being accorded on the promotion of agro-based industries and interested persons would not only provide loan facility but also assisted for setting agro-based industries in the Punjab, the sources added.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Trade deficit climbs to $17.653b in 2006-07​

ISLAMABAD: Pakistan’s overall trade deficit in goods and services increased to $17.653 billion in the fiscal year 2006-07 as compared to the deficit of $16.558 billion in fiscal year 2005-06, projecting an increase of 6.6 percent.

Total exports of goods and services in 2006-07 stood at $21.225 billion, showing an increase of 5 percent when compared to the exports of $20.22 billion in the fiscal year 2005-06.

Similarly, total imports of goods and services stood at $38.790 billion in the fiscal year 2006-07 as compared to imports worth $36.778 in 2005-06, showing an increase of 5.47 percent.

The overall trade of goods and services in 2006-07, amounted to $60.015 billion as compared to $56.998 billion in the fiscal year 2005-06, showing an increase of 5.31 percent.

The surging gap between exports and imports during the recent past is a major area of concern for the economic managers of the country. To sustain a GDP growth rate of 7 to 8 percent in the next five years, the country requires 20 to 25 percent growth in its exports in the coming years.

Pakistan’s goods exports during the last fiscal year 2006-07 amounted to $17.011 billion as compared to $16.451 billion in the previous fiscal year 2005-06 showing an increase of just 3.6 percent.

The export target for fiscal year 2006-07 was set at $18.6 billion; however, this target was missed by $1.59 billion.

Imports of the country totalled $30.540 billion in the last fiscal year as against the imports of $28.580 billion in fiscal year 2005-06, projecting an increase of 6.85 percent.

The country suffered a trade deficit of $13.528 billion in trade of goods during the last fiscal year as compared to the deficit of $12.129 billion in the fiscal year 2005-06, indicating an increase of 11.53 percent.

In services sector the country exported services worth of $4.125 billion in the fiscal year 2006-07 as compared to the exports of services of $3.769 billion in the fiscal year 2005-06, projecting an increase of 9.44 percent. However, the imports of services were $8.250 billion in the fiscal year 2006-07 as against the imports of services of $8.198 billion in the fiscal year 2005-06 showing an increase of 0.63 percent.

Trade Deficit of services sector in fiscal year 2006-07 decreased by 6.87 percent with the value of $4.125 billion, as against the deficit of 4.429 billion in the fiscal year 2005-06.

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