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Trade ties with Pakistan to grow further: Iranian CG

KARACHI (December 06 2007): The Iranian Commercial Attache, Iranian Consulate General at Karachi Ahmed Fasihi has said that the trade volume between Iran and Pakistan are expanding following the preferential trade agreement signed by two Islamic countries.

Talking to UPP here today he said that following the agreement between Iran and Pakistan the trade volume and value had increased. He said that his office had received one thousand eight hundred calls from Pakistani businessmen, traders and industrialists showing keen interest to promote and expand trade and bilateral exchanges between the Islamic Republic of Iran and Pakistan.

He said that as per plan chalked out many more Pakistani trade groups would be visiting Iran while more delegations of businessmen, traders and industrialists would be visiting Pakistan from Islamic Republic of Iran to realise the full potential of the trade and economic exchanges between the two countries.

Iranian Commercial Attache Ahmed Fasihi also pointed out that Islamic Republic of Iran provided equal opportunities for middle level enterprises to establish businesses and joint projects in the preferential trade zones of Iran on lines similar to those in the UAE. In fact Iran offered very competitive environment and incentives for establishment of joint ventures by Pakistan with Iranian partners.

Business Recorder [Pakistan's First Financial Daily]
 
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Fall in exports to Kabul disturbing

ISLAMABAD (December 08 2007): Islamabad is disturbed over about 20 percent decline in exports to Kabul due to imposition of export duty and enhanced share of other countries in the Afghanistan market, sources told Business Recorder here on Friday.

"Pakistan's exports to Afghanistan, which stood at $1.2 billion last year, have gone down by $250 million due to a number of factors," they said. A businessman from Peshawar had raised the issue with President Pervez Musharraf during the program 'Aiwan-i-Sadr say' on Thursday, that Pakistan's exports to Afghanistan had dropped to $450 million, from $1.2 billion, due to imposition of 50 percent duty on Pakistani products, which stunned the President.

He further said that Afghanistan has discriminated Pakistan as compared to other countries while imposing duty. The President said that he was unaware of this development, and if on ground the situation was the same, he would take up the issue with Afghanistan. Sources said that the Trade Development Authority of Pakistan (TDAP) had analysed the factors which led to decline in exports to Afghanistan. They added that the issue had already been taken up with Kabul.

Another reason, according to TDAP, was enhancement in exports of other regional countries, which dented the market share of Pakistan. They said that two reasons of decline in exports to Kabul were imposition of Regulatory Duty (RD) on steel products by Federal Board of Revenue (FBR), and a dispute with Pakistan Vanaspati Manufacturers Association (PVMA) regarding duty on edible oil/ghee being exported to Afghanistan.

Sources said that Kabul may have imposed duty on goods, including marble products, which are being re-exported to Central Asian States. According to another official, Afghanistan had asked Pakistan to remove export barriers, which was not entertained as per Kabul's aspirations.

Kabul may have imposed duty on Pakistan products as punitive action, after not receiving positive gesture on its proposal, the official said. It is pertinent to note that Pakistan's cement and flour exports to Afghanistan are in full swing.

Business Recorder [Pakistan's First Financial Daily]
 
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Pakistan's foreign exchange reserves down to $15.764 billion

KARACHI (December 08 2007): Pakistan's foreign exchange reserves were lower by 343 million to $15.764 billion in the week ending on December 1, the central bank said on Friday. Reserves held by the State Bank of Pakistan fell to $13.557 billion from $13.896 billion from a week earlier, while those held by commercial banks were $2.207 billion from $2.211 billion, the central bank said in a statement.

Pakistan's foreign exchange reserves have grown steadily over the past few months because of rising foreign investment inflows and higher remittances from Pakistani abroad. Reserves hit an all-time high of $16.388 billion in the week ending on November 10. However, in the past three weeks, foreign reserves fell because of outflows from the stock market after President Pervez Musharraf imposed emergency on November 3.

Business Recorder [Pakistan's First Financial Daily]
 
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World Bank to provide $75 million for poverty alleviation

ISLAMABAD (December 08 2007): The World Bank will provide $75 million loan to Pakistan for additional financing for the second Poverty Alleviation Fund project to support participatory development through social mobilisation under an agreement signed here on Friday.

The agreement was signed by Akram Malik, Secretary, Economic Affairs Division, on behalf of the Government of Pakistan, Yusupha B Crookes, Country Director, World Bank, and Kamal Hayat, Chief Executive Officer, Pakistan Poverty Alleviation Fund (PPAF).

Akram told Business Recorder that the IDA credit would be provided in two portions: (a) an amount equivalent to $49.7 million @ 4.2 percent annual interest and repayable in 35 years with a grace period of 10 years, and (b) $25.3 million, which would have standard IDA terms ie repayable in 35 years including a grace period of 10 years.

He said the main objective of the project is social mobilisation of about one million rural poor households in more than 50,000 multifunctional and sustainable community organisations in rural areas of 25 poorest districts of the country.

He said these funds would be used through reputed nongovernmental organisations (NGOs) like Pakistan Poverty Alleviation Fund, headed by Hussain Dawood, to alleviate poverty by improving access of the rural and urban poor to economic resources and services.

He said the project would strengthen the mobilisation of existing community organisation to form federations at the Union Council level to form local support organisations to enhance communities access to public and private sector resources and services and to link organised communities more effectively with local governments.

Business Recorder [Pakistan's First Financial Daily]
 
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136MW power project to be inaugurated on Monday

Saturday, December 08, 2007

KARACHI: Pakistan Power Resources’ (PPR) 136MW power plant at Bhikhi, Sheikhupura, Punjab, is being inaugurated on Monday.

The $80 million project took about six months to be completed and is currently producing up to 80MW of electricity. The principal sponsor of the project is Lahore-based Associated Group (AG), also Pakistan’s largest LPG producer.

“The power plant symbolises enduring and abiding investor confidence in Pakistan and its economy,” said AG spokesman Fasih Ahmed in a statement issued here. He said the project company, PPR, is based in Oklahoma and is co-sponsored by the US state’s former governor.

PPR power plant is the second of the two fast-track rental power plants that were awarded by the government through a competitive bidding process and which have been set up in the current calendar year.

AG is also going to be taking charge of the 3x50MW Lakhra power plant for a 20-year period. The rehabilitation of the Lakhra project, Pakistan’s only coal-fired power plant, should encourage investors to tap indigenous coal for power generation, said Ahmed. US-based Wood Group is the O and M operator of the Bhikhi Plant and has hired and trained Pakistanis who will run the plant at all times.

136MW power project to be inaugurated on Monday
 
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Pakistan ranked 32 out of 43 markets

KARACHI: Pakistan was ranked 32 in a survey that measured the extent to which governments in 43 markets provide key payment services on electronic platforms.

The Visa International conducted the Government e-Payments Adoption Ranking (GEAR) survey. The GEAR study conducted independently by the Economist Intelligence Unit ranked Canada as the world’s leading nation for government electronic payments (with a score of 92.4 out of 100), because of the government’s comprehensive electronic administration procedures.

The 43 markets were chosen to represent all regions, many cultures and political systems, and broad levels of economic development as they account for approximately 83 percent of the total human population and approximately 91 percent of global economic output. The adoption rankings were based on 31 indicators grouped into six payment categories, including consumer-to-government; government-to-consumer; business-to-government; and government-to-business.

Pakistan ranked within the top 25 in three of the six categories: consumer-to-government, government-to-consumer, and government-to-business. Pakistan also received good indicator scores in the areas of income tax payments; automotive costs; toll roads, bridges, zones, fines, tickets etc.; income tax refunds and sales/VAT tax payments.

Amer Pasha, Visa country manager for Pakistan said: “Pakistanis are beginning to see how electronic payments can benefit government and their citizens by streamlining procurement and travel payments, improving financial transparency and citizens’ relations, and fostering economic growth and financial responsibility.”

“The GEAR study provides Visa and our client financial institutions with valuable insights into the government payments sector, helping us generate new ideas to meet governments’ needs through safe and reliable electronic payments alternatives,” said Pasha.

Daily Times - Leading News Resource of Pakistan
 
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SAARC Development Fund

Pakistan, India to contribute $170m

Sunday, December 09, 2007

ISLAMABAD: Pakistan and India will contribute $70 million and $100 million respectively to newly-established SAARC Development Fund (SDF) for meeting infrastructure, social and economic sectors’ requirements of member states, it is learnt.

Earlier, New Delhi and Islamabad had remained at loggerheads for almost one and a half years on some of the crucial operational issues related to the fund but finally an inter-governmental meeting held recently in Kathmandu helped to iron out differences between the two nuclear-armed neighbours within the SAARC fold.

A major portion of the funding under the umbrella of SDF, having allocated amount of $300 million, will be spent in the least developed countries (LDCs) within the ranks of the SAARC states. Public-private partnership (PPP) will also be utilised for providing funds to member states through the SDF.

Out of total allocated amount of $300 million for SDF establishment, Pakistan and India will be the major donors. “Finally, both the countries have been able to overcome their differences during the fourth meeting of the member states, held a month ago, at Kathmandu for establishing a fund to meet various sector requirements of member states,” said a diplomatic source in an exclusive talk with The News here on Saturday.

Sources said the inter-governmental committee of SAARC states also decided to allocate one billion Special Drawing Rights (SDR) to the SDF in accordance with the formula adopted by the International Monetary Fund (IMF). The contribution of member states to the SDF was decided in accordance with their share in the budget of the SAARC secretariat.

The initial commitment of $300 million (or 225 million SDR) would be stretched up to one billion SDR for the SDF in coming years, the sources added. So New Delhi and Islamabad will be the major contributors of seed money for the SDF by providing $100 million and $70 million respectively and the remaining $130 million will be shared by all other member states of the SAARC.

The South Asian Development Fund (SADF) was created in 1996 with the merger of SAARC Fund for Regional Projects (SFRP) and SAARC Regional Fund. SADF started with a base of US$5 million under SFRP contributed on pro rata basis by the SAARC member states. It has a fund of about $6.6 million.

In the last few years, the SAARC has been considering proposals like Poverty Alleviation Fund, Infrastructure Fund, South Asian Development Bank, Media Development Fund and Voluntary Fund, in addition to the SADF.

The meeting of financial experts, amongst others, agreed that proliferation of financing mechanisms would pose administrative, financial and operational difficulties, including the question of fund mobilisation and management. It recommended that the SADF be reconstituted into the SAARC Development Fund (SDF), with a permanent Secretariat, with three windows: social, economic and infrastructure.

The thirteenth SAARC summit decided to reconstitute the SADF into SDF to serve as the umbrella financial institution for all SAARC projects and programmes. The leaders directed the finance ministers to look into the operational modalities of the fund.

The second meeting of the financial experts recommended an initial $300 million for the social window. It agreed on the broad principles and essential functional elements for the SDF. The social window would primarily focus on poverty alleviation and social development projects.

The infrastructure window would cover projects in areas such as energy, power, transportation, telecommunications, environment, tourism and others. The economic window would primarily be devoted to non-infrastructural funding. Subsequently, the SDF Board has been constituted. The first meeting of the SDF board considered the inputs developed through studies undertaken on legal architecture and mobilisation/generation of funds and other essential operational issues.

The meeting deliberated on various aspects of creating the SDF as a legal entity. Besides other projects of physical connectivity, air connectivity of Male-New Delhi and Islamabad-New Delhi would be established with the help of the SDF.

SAARC Development Fund
 
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PR to engage private sector in freight operations

Sunday, December 09, 2007

ISLAMABAD: Caretaker Minister for Railways Mansoor Tariq said on Saturday that the Pakistan Railways (PR) would encourage the private sector to invest in freight operations for generating more revenues and bringing efficiency in freight logistics.

He was talking to delegations comprising officials of the National Logistic Cell (NLC) and a Dubai-based business group.

The NLC in collaboration with the Dubai based group, which is involved in freight handling all over the world, has offered the PR to operate their own container coaches between Karachi and Lahore in cargo operations.

The minister urged the delegation to avail of the Open Track Policy initiated by the PR where the private parties can operate their own rolling stock while paying track access charges to railways.

Mansoor Tariq also pushed the delegation for getting these container wagons manufactured at Pakistan Carriage Factory and Moghulpura Workshop.

He said this would not only save the foreign exchange but also provide financial gains to railways, which is already involved in manufacturing of such wagons in line with international standards.

The minister said introduction of private partnership into the freight logistics would enable the PR bring efficiency and promptness in such business activities.

As the economy has grown tremendously over the last decade due to consistent and business-friendly policies of the government, there is a dire need to expand the network of freight handling, he said.

He said the government has provided a level playing field to the private sector as it brings investment and creates job opportunities. Despite holistic efforts made by the PR over the last few years, it could manage to handle only 4 per cent of the total freight business activity, he said.

The minister said there is a tremendous scope for business related activities besides having lots of opportunities as the country is going to serve as a business hub for Europe and Central and Middle East in the coming years, he added.

Mansoor Tariq said that the volume of business can be doubled as there is a great demand from the business community to increase the number of fast cargo wagons from Karachi downwards.

The minister told delegation that a number of steps have recently been taken to improve the performance of freight segment.

He said high capacity express container trains have been introduced, which operate on daily basis between Karachi and Lahore, reducing the travel time from 56 to 28 hours.

PR to engage private sector in freight operations
 
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PR to engage private sector in freight operations

Sunday, December 09, 2007

ISLAMABAD: Caretaker Minister for Railways Mansoor Tariq said on Saturday that the Pakistan Railways (PR) would encourage the private sector to invest in freight operations for generating more revenues and bringing efficiency in freight logistics.

He was talking to delegations comprising officials of the National Logistic Cell (NLC) and a Dubai-based business group.

The NLC in collaboration with the Dubai based group, which is involved in freight handling all over the world, has offered the PR to operate their own container coaches between Karachi and Lahore in cargo operations.

The minister urged the delegation to avail of the Open Track Policy initiated by the PR where the private parties can operate their own rolling stock while paying track access charges to railways.

Mansoor Tariq also pushed the delegation for getting these container wagons manufactured at Pakistan Carriage Factory and Moghulpura Workshop.

He said this would not only save the foreign exchange but also provide financial gains to railways, which is already involved in manufacturing of such wagons in line with international standards.

The minister said introduction of private partnership into the freight logistics would enable the PR bring efficiency and promptness in such business activities.

As the economy has grown tremendously over the last decade due to consistent and business-friendly policies of the government, there is a dire need to expand the network of freight handling, he said.

He said the government has provided a level playing field to the private sector as it brings investment and creates job opportunities. Despite holistic efforts made by the PR over the last few years, it could manage to handle only 4 per cent of the total freight business activity, he said.

The minister said there is a tremendous scope for business related activities besides having lots of opportunities as the country is going to serve as a business hub for Europe and Central and Middle East in the coming years, he added.

Mansoor Tariq said that the volume of business can be doubled as there is a great demand from the business community to increase the number of fast cargo wagons from Karachi downwards.

The minister told delegation that a number of steps have recently been taken to improve the performance of freight segment.

He said high capacity express container trains have been introduced, which operate on daily basis between Karachi and Lahore, reducing the travel time from 56 to 28 hours.

PR to engage private sector in freight operations

this is awesome news for Pakistan...
I don't know why Indian Govt doesn't privatise our railways..though the 5bn$ profit per annum is a detterent yet the investment required to make it world class requires a 100bn$ investment impossible without private participation..
 
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12 percent rise in November exports

ISLAMABAD (December 10 2007): There are indications that exports have done well in November 2007. Preliminary estimates suggest that exports in the month grew by over 12 percent as compared November 2006.

In an update on Pakistan's economy, Special Secretary, Ministry of Finance, Dr Ashfaque Hasan Khan told Business Recorder that exports (on fob) had grown at an average rate of 10.8 percent during the first four months (July-October) of the current financial year, amounting to $5997 million, against 4.1 percent in the same period of last year.

He said that growth of 10.8 percent in exports was certainly an encouraging trend as the trade and current account deficits continued to register improvement for the second consecutive month of the current fiscal year. He said tat imports, on the other hand, grew at a modest rate of 4.3 percent, amounting to $9530 million, against a growth of 14.5 percent in the same period of last year.

He said tat as a result of the developments on exports and imports, trade deficit reduced by $191 million, from $3724 million to $3533 million. "Improvement in trade balance during the period under consideration is an encouraging development and will have salutary impact on the country's overall balance of payments" he said.

Dr Ashfaque said that private transfers also registered an improvement of 27.4 percent, rising from $2899 million to $3693 million, during four months. He said that remittances, a major component of private transfers, also grew by over 26.5 percent, to $2080 million, during his period.

He said that as a result of these developments the current account deficit in the first four months narrowed by $518 million, to $2996 million, which was 1.8 percent of projected GDP.

Business Recorder [Pakistan's First Financial Daily]
 
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Bank credit and the real economy

GONE are the days when investors could set up industrial projects involving an investment more than ten times the money they had with them at that time.

Amjad Rashid, Chairman of the Banking and Finance Credit Committee of the Federation of Pakistan Chambers of Commerce and Industry, recalled in the meeting of the Private Sector Credit Advisory Council (PSCAC) of the State Bank of Pakistan on December 3, how in 1983 small and new investors like him were helped by more than half a dozen development financial institutions and other agencies by way of bridge financing, fixed investment loan, working capital etc.

“Not so now’, he lamented and complained that banks at present were focusing more on speculative business of stocks, real estate and commodities rather than on real sectors—industry and agriculture.

“Many of the big industrial groups owe their present status to the liberal credit policies in the eighties which allowed new and small entrepreneurs to enter the industry and flourish’’, said Amjad Rashid, who now presides over an industrial and business group after having worked in a bank and then as a consultant for some time.

“The banks have closed their doors on new and small business groups,” he observed while asking “tell me how many new industrialists have come in the field in last 15 years?’’

A presentation on banking credit to trade and industry, agriculture, housing, consumer finance and small and medium enterprises at the Credit Council meeting by the Governor of State Bank of Pakistan, Dr Shamshad Akhtar, with the help of her directors failed to convince the representatives of business and agriculture on the central bank’s credit policies.

“Credit utilisation by the private sector has been reduced to Rs365.7 billion in 2007 from Rs401.8 billion in 2006’’, Mirza Ikhtiar Baig of FPCCI Credit Council, who participated in the meeting, said.

This reduction in credit utilisation is because of fall in industrial investment and slowing down of working capital loans, he added.

He pointed out that the growth in loans for large-scale manufacturing came down to eight per cent in 2007 from 18 per cent in 2004. There has been a drop of 37 per cent in import of textile machinery.

The business leaders blame the tight monetary policy for retarding industrial growth. The monetary policy has also failed to control inflation which now appears to be gathering more strength at the end of the current calendar year.

The State Bank shares the perception of a decline in credit utilisation but attributes it to lower demand by the corporate sector and a cautious lending policy by the banks.

Yet, it reveals a pick up in private sector’s demand for credit since September 22 that obviously corresponds to increasing demand from textile mills for cotton.

The private sector credit since last week of September stands at Rs123.5 billion - Rs20 billion more than that in the corresponding period last year.

A startling disclosure by the State Bank is a sharp fall in share of the state-run banks in private sector credit up to mid-November.

It has come down to 3.5 per cent from last year’s corresponding figure of 24 per cent. Private banks and the privatised banks continue to be major lenders and have provided 71 per cent of total loans in fiscal 2007 that has now gone up to 93 per cent in more than five months of the current fiscal year.

Foreign banks offered five per cent of the industrial credit during the last fiscal year. Up to mid-November this year, their share was only 1.1 per cent.

Till mid of November 2007, the private sector credit has expanded by Rs86.9 billion compared to Rs111.7 billion in the same period of last fiscal year.

The State Bank’s view is that the expansion in credit is in line with last three years’ comparable average growth.

The textile sector continues to get the lion’s share in the bank credit and received a total of Rs16.8 billion during July and mid - November as against Rs3 billion in the same period last year.

An analysis showed that textile sector got Rs28.2 billion working capital against the last year’s retirement of Rs1.6 billion(till mid-Nov). But Rs11.4 billion fixed investment loans were retired as against credit of Rs4.6 billion during the same period last fiscal year.

Construction is one area where bank credit is in much in demand. A total of Rs5.1 billion has been advanced so far as against Rs500 million in the corresponding period of last fiscal year.

Electrical machinery and electricity, gas and water are the other areas which received a little more credit so far this year.

But growth in credit expansion so far in agriculture is substantially lower at Rs7.3 billion as against the comparative figure of Rs12.2 billion of last year.

The State Bank findings show uneven geographical distribution of agriculture credit as bulk of it is going towards Punjab and the share of Sindh and Balochistan is constantly falling for the last five years.

For this, the responsibility, according to Syed Qamaruzzaman Shah, the President of Sindh Chamber of Agriculture, lies on the Sindh government.

The Punjab government has taken adequate measures to ensure that their farmers avail the maximum credit facility. The Punjab Provincial Co-operative Bank is functioning and helping farmers.

The Punjab Bank too contributes a lot to supplement credit of specialised and commercial banks.

The Punjab Board of Revenue did not waste a minute in circulating former Prime Minister Shaukat Aziz’s decision to increase the value of Production Index Unit (PIU) to Rs1,200 from Rs400 for collateral for bank loans.

In Sindh, the provincial co-operative bank was closed down 18 years ago on account of more than Rs1 billion loan default by big landlords.

More than 250,000 small farmers have not been issued passbooks. And the Board of Revenue is still to circulate the decision on increase value of PIU.

In the Credit Council meeting last Monday, a lady officer from the Sindh government had to cut a sorry figure when she remarked that her province was being given unfair treatment as regards agriculture credit.

“I am also from Sindh and want farmers to get their due share in the credit”, she said. The State Bank Governor promptly asked her to advise her government to take necessary steps to facilitate farmers to avail agriculture credit.

Mr Shah wants compulsory insurance cover for all bank loans to the farmers in Sindh as was being done in some parts of Punjab. He said that a premium rate of 1.5 to 2 per cent being offered by the government-owned National Insurance Company was acceptable to the farmers.

“In Sindh the banks are auctioning small farmers’ lands because of default,’’ he disclosed. He wants that farm insurance premium be shared by three stakeholders—farmer, government and the bank.

A State Bank report on agriculture credit found market distortions with lending at lower than market rate by the banks.

One of the participants of the Credit Council meeting said that bulk of the farm loans were being obtained by the influential landlords, commodity brokers and the middlemen.

Small farmers get credit from one of these three powerful segments of rural elite in the shape of inputs at almost double the cost of market rate and on more than 100 per cent interest by offering their crop as collateral. And hence the unending vicious cycle of borrowing and paying back that makes small farmers virtually bonded labour of the rural elite.

Bank credit and the real economy -DAWN - Business; December 10, 2007
 
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Industry eyeing Indian cotton, man-made fibres

The crisis ridden textile industry has renewed its effort to push the caretaker government for dismantling the barriers in the way of import of raw materials – cotton and man-made fibres, from neighbouring India in order to cut down its input costs.

The initiative, led by the spinners, signifies a break from the past as the industry is now focused more on convincing the government to provide easier access to cheaper raw materials rather than seeking cash subsidy. The caretakers – with their limited mandate to hold a free and transparent vote next month, however remain elusive even on the demand although it does not entail any additional financial burden on the exchequer.

“We met textile minister Shahzada Alam Monnoo (in the last week of November), but failed to get any firm commitment from him,” says All Pakistan Textile Mills Association (Aptma-Punjab) chairman-elect Akber Sheikh. The Aptma delegation focused on the provision of a level playing field to the textile industry and the removal of the anomalies in the stated official policy that seeks to encourage free trade in the textile raw materials from and into the country. The industry is currently seeking free import of all types of cotton from India by road via Wagha – so far the government permits the import of long staple fibre from the neighbouring country and that too by rail or sea –.and abolition of 6.5 per cent duty on imported polyester staple fibre (PSF) and 5 per cent duty on viscose imposed to protect the local manufacturers. In addition, it is also asking for permission to import man-made fibres from India.

“We aren’t asking for any subsidy. We are just calling for giving us a level playing field by zero rating import of raw materials for the textile industry in line with the free market economic policy being pursued by the government,” says Sheikh. According to him, the industry is spending an extra cost of Rs20-25 billion on the purchase of raw materials because of the restrictions on free import of cotton from India and the protective duty on the imported man-made fibres.

“If the government wishes to protect the growers or the local synthetic fibre producers, it should do so from its own pocket instead of putting huge financial burden on the industry,” he insists. All Pakistan Textile Association (APTA) chairman Adil Mahmood says the Indian government is ready to export cotton by road through Wagha. “But the government is not allowing it to happen,” he says, adding Islamabad should encourage containerised trade of cotton by road in order to facilitate the domestic industry. He says the customs have sufficient area at the Wagha border to allow containerised import and carry out fumigation of the natural fibre. He says the industry would save Rs150-200 per maund on import of cotton from Indian Punjab via Wagha.

The entire chain of the textile industry is reeling under the rising production costs for over two years owing mainly to a sharp surge in energy rates, credit price and multiple taxes. It says the huge subsidies given by its regional competitors – India, China and Bangladesh, have made it uncompetitive in the global markets. The recent increase in the raw materials on account of short cotton crop and high petroleum prices has further eroded its comparative advantage in the world markets.

The cotton crop size is estimated to remain 11-12.8 million bales against the target of over 14 million bales and the industry’s requirements of close to 16 million bales leading to a hike in the lint market. The man-made fibres have also become expensive because of the surging oil prices. The industry says some 100 mills had already shut down their operations while many others were operating far below their capacity due to high prices of raw materials.

Although the government has given around Rs30 billion to the value added textiles in the form of research & development (R&D) facility and reduction in interest payment on the outstanding loans to the entire chain over the last two years to bail it out, it has failed to lift the country’s exports. The industry, according to official statistics, has increased its exports only by one per cent in the first four months (July-October) of the current fiscal year. Many attribute this meagre growth in textile exports to appreciation in the value of Indian and Chinese currencies rather than any effort on the part of the industry. Indian rupee has appreciated by 10 per cent while Chinese yuan has gained 6 per cent against the American dollar. The situation has given rise to fears that the textile exports could remain far below the target of $12.2 billion for the year.

“It is not correct to say that the government’s bail-out plan has fallen flat. Had the industry not received the official assistance in the form of cash subsidy and reduction in interest rates, the situation would have been far worse than it is now,” says a leading knitwear exporter M.I. Khurram. He says the exporters had a hard time selling their products in wake of travel advisories issued by the United States and European Union countries as well as the months-long political turmoil in the country. “The rising cost of production has already thrown us out competition in the international markets.” “If the situation persists for long, the textile exports could dip further,” says Khurram and adds the salvation of the industry lies in substantial reduction in the cost of production. “We are around 10-12 per cent more expensive than India and 15 per cent than China. How can we attract buyers in such a situation when political uncertainty is also stopping them from placing orders with us,” he says. He too believes that the opening of Wagha for import of cotton from India and duty free import of man-made fibres could help the industry reduce its costs in the short- run and become more competitive in the global markets.

Adil says the government must consider putting in place bankruptcy laws based on the principle of limited liability for the textile manufacturers if it is not in a mood help the industry. “At least we deserve an honourable exit strategy,” he says. Sheikh endorses his views and adds the government should encourage mergers and acquisitions of smaller units with the larger units by allowing tax incentives to the latter. He says mergers and acquisitions will prevent large-scale closures of the mills.

With the caretaker government having a limited mandate, and life, there is hardly a chance for the textile industry to get itself heard.

Industry eyeing Indian cotton, man-made fibres -DAWN - Business; December 10, 2007
 
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Akhori dam and the Tarbela links

By Engr Akram Khan



The proposed Akhori dam project will store about 8.6 billion cubic metres (seven million acres feet) of surplus Indus River water that is spilled after filling Tarbela reservoir during the monsoon season.

The stored water will be released for mitigating irrigation shortages during the dry season. The project is quite simple and includes a gated intake structure, a 37-km long water conveyance channel, a reservoir, a hydropower station, a spillway, dams and ancillary works.

The reservoir, called Akhori reservoir, will be developed by constructing dams across a valley near Akhori village. The valley is situated between Attock and Fatehjang towns, on the left bank of the Haro River at an approximate distance of 40 kilometres west of Islamabad. Detailed feasibility studies of the project have confirmed its technical and economic viability.

The intake structure will be designed for supplying the water from Tarbela to Akhori reservoir and it will be constructed on the southern periphery of Tarbela reservoir. The intake will function as an additional spillway of Tarbela that will release the water into the conveyance channel for delivering to and storing in Akhori reservoir.

The invert or sill of the intake structure will be at the same level as the crest of two existing spillways of Tarbela. The hydropower station will be designed for harnessing the hydro energy of the stored water before it is released from Akhori reservoir into the Haro River. The released water will join the Indus River downstream of Ghazi Barotha hydropower station.

It is believed that the raised intake sill can divert to Akhori reservoir sediment free water that is near the top surface of the full Tarbela reservoir. This can prevent sedimentation of Akhori reservoir and thus ensure its sustainability. But ultimately the sedimentation of Tarbela is expected to put an end to the availability the sediment free water which can jeopardise the said sustainability.

It is expected that Tarbela reservoir will stop the supply of the sediment free water to Akhori as soon as the accumulated sediment depletes the storage below Tarbela spillways. The annual sediment inflow (the sediment entering Tarbela reservoir) will become equal to sediment outflow (the sediment leaving the reservoir), that is the sediment equilibrium will be established, sometime after the storage below the spillways is depleted.

That eventuality will make Tarbela a run of river hydropower project and it will commence releasing the sediment laden water from all of its outlets, including the future intake structure meant for supplying water to Akhori dam project.

That is how the sedimentation of Tarbela will ultimately affect the sustainability of Akhori reservoir. That eventuality can be avoided only by preventing the accumulation of the sediment in Tarbela reservoir or by establishing the sediment equilibrium before the storage below Tarbela spillways is depleted.

Fortunately, the earlier sediment equilibrium can be established by returning to and releasing from Tarbela during the dry season the water stored in Akhori reservoir.

The release of the returned water during the dry season from Tarbela can scour and flush out increasingly larger portions of new sediment entering the reservoir every year and consequently it can establish the earlier sediment equilibrium. In principle lower the water level in Tarbela more the quantity of the sediment flushed out by the returned water.

Therefore, by rigorously monitoring the sediment and by prudently managing the release of water, a substantial remaining storage capability of Tarbela below its spillways can be saved permanently.

Apparently, there is no immitigable disadvantage of storing the Indus water in Akhori and releasing that water from Tarbela during the dry season. Even the previous sediment management studies indicated that the sedimentation of Tarbela can be mitigated by releasing additional water when Tarbela is at its lowest level.

Therefore, the idea or concept of returning the water from Akhori to Tarbela deserves a detailed investigation because it offers major benefits without affecting the anticipated benefits of Akhori dam project.

Akhori dam and the Tarbela links -DAWN - Business; December 10, 2007
 
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Rising potato production and export potential

By Khawar Jabran and Dr Ehsan Ullah

POTATO is a tasty, nutritive and highly digestible vegetable with 75 per cent water contents. One hundred grams of potato possesses 22g carbohydrate, two gram protein, 90 kilocalories energy, 13mg calcium, 17mg vitamin C, 11mg riboflavin 1.2 mg niacin and traces of certain other minerals and fibre.

Potato is eaten intensively in a variety of forms such as boiled, baked, and cooked. As vegetable it is eaten alone as well as mixed with other vegetables, and as snacks, the most popular of them being the finger chips. It has medical significance.

It is free of cholesterol and also contains some antioxidants which are capable of protecting human beings against cancer and heart diseases.

It has potential to lower high blood pressures due to presence of a compound kukoamine. Potato mask can be employed for skin beauty especially on the pigmented ones.

Potato tubers if exposed to sunlight during growth become green in colour due to formation of poisonous alkaloid compounds solanine and chaconin which are injurious for humans as well as animals and can even cause death.

Potato was introduced to the subcontinent in the 16th century and at present it is being grown as cash crop.

During the year 2006-07 the area under potato was 0.131 million hectares (ha) with a total production of 2.6 million tons which was 67.2 per cent more than the preceding year’s production of 1.5 million tons.

Punjab, NWFP, Sindh and Balochistan contribute 83, nine, one, and seven per cent respectively to the total potato production.

Average price of potato in the country increased from approximately Rs250 per 40kg in 2000-01 to Rs550 per 40kg in 2005-06. Exports of potato either chilled or fresh during the year 2005-06 were 15.39 million kg earning a foreign exchange worth Rs173.2 million which was lower than the previous year’s export of 20.76 million kg earning a foreign exchange equal to Rs183.99 million. Sri Lanka, Afghanistan and Malaysia are the major markets of Pakistani potato.

Although there was considerable increase over the time in area and production of the crop in the country, however, the average yield is still lower than the potential.

Various factors accountable for low potato yields include lack of knowledge among farmers about growing techniques, costly seed, diseases, weeds and insect pests, mismanagement of fertiliser and irrigation, and damages caused to potato tubers during harvesting, packing, transport and storage.

Potato can be grown from sea level to 3,000m altitude. The major potato growing districts in Pakistan are Kalat, Pishin and Killa in Balochistan; Sialkot, Okara, Sahiwal, Jhang, Kasur and Gujranwala in Punjab; and Dir, Nowshehra and Mansehra in NWFP.

Three potato crops can be grown in the country in one year, two in plains including autumn and spring and one in hilly areas during the summer season.

The time for plantation of autumn crop, which contributes more than 70 per cent of the total yield, starts in early October and ends in mid November.

Spring crop contributing less than 10 per cent to the total yield, can be sown from mid- December to mid -February while the summer crop contributing more than 15 per cent is sown in early April up to mid- May.

Red and white skin potato varieties are cultivated in the country. The white skin varieties are Sante, Multa, Diamant, Ajax and Patrones while the red skin varieties include Lala Faisal, Ultimas, Desiree, Cardinal, Oscar and Symphonia.

Deep, fertile, well-drained, well-aerated, loose-textured, sandy loam, silt loam and peat soils with a neutral pH are best suited for potato cultivation.

Optimum temperature for germination, vegetative growth and tuber formation in potato is 25°C, 20°C and 16-24°C respectively.

Well decomposed farm yard manure at 20-25 tons per ha is recommended to be incorporated in the soil before land preparation. Field is given a soaking irrigation nearly two weeks before sowing to provide seed tubers with ample moisture for germination.

Field is ploughed 3-4 times using a mould board plough followed by two harrowing to prepare a fine seedbed.

Potato is propagated vegetatively. For acquiring optimal potato yield certified, healthy, vigorous and disease-free seed tubers are indispensable. Seed tubers must be of uniform size and shape without any sign of infection.

One potato tuber can be cut into pieces before sowing but the weight of each piece must be nearly 50g possessing 2-3 eyes. However, the cut pieces are more vulnerable to diseases.

Seed rate is variable depending on the size of the tubers, however 800-1000kg potato tubers are recommended for cultivation of one hectare. Sowing of sprouted seed is preferred which results in higher yields than the un-sprouted ones.

Potato tubers about one week before sowing are taken out of cold storage and spread at a cool and ventilated place usually under the shade of a tree. They start germinating in 7-9 days and are sown when the sprouts are 1cm long.

Potato seed remains dormant for 12-16 weeks so the tubers obtained from autumn crop can not be used to plant spring crop. Seed tubers are treated with fungicides like dithane-M, captan or benlate to protect them from fungal infections.

Potato tubers can be planted either on flat beds, in the furrows or on the ridges; however, ridge sowing is the most preferred method.

Ridges are 30cm high and 60cm wide. Ridges are marked at 60-75cm apart and the seed tubers are kept at 15-20cm distance and at the end the ridges are made using a tractor drawn ridger to cover the seed with soil.

Potato accomplishes its growth very speedily and has high nutrient requirements.

Recommended NPK per ha is 175kg, 125kg and 125kg respectively. All P, K and half N are added at the time of sowing as band placement along with the seed tubers while the remaining N is given 30-40 days after sowing.

Contact between the fertiliser and seed is avoided as it results in deterioration of seed tubers. Zinc sulphate 25 per cent is added at 25kg per ha to cure zinc deficiency.

Potato is irrigated 5-7 days after planting or even earlier and the subsequent irrigations are applied depending on the soil, crop and environmental conditions usually with 7-10 days interval.

Over irrigation causes the water to reach the top of ridges to harden the soil surface and resultantly impede soil aeration, so care must be taken to keep water below the apex.

Severe damages caused to potato crop due to frost in the month of December can be evaded by irrigating the fields.

More or less 15 fungal, bacterial and viral diseases are known to harm potato crop.

Major fungal diseases of potato include early and late blight, wilts, powdery scab, common scab and black scurf while leaf roll, virus Y and mycoplasma are the common viral diseases of potato.

Potato cyst and root knot are caused by nematodes while black leg and hollow heart common bacterial diseases.

Disease management in potato include sowing of healthy, disease free seed, destroying plant debris after harvesting, cultivating crop on well drained soils and raised beds or ridges, controlling insects, proper crop rotation and rouging of infected plants.

Most of fungal diseases can be controlled or at least prevented by following the above mentioned practices along with application of fungicides like dithane-M, benlate and bordeaux mixture.

Aphids, jassids, leaf hoppers, and the cut worms are most damaging insects of potato. Aphid also acts as vector for spread of viral diseases.

Neem extract two per cent solution is effective to control aphids and jassids in potato crop. Cutworms incise young potato plants at ground level and feed on tubers.

They get suppressed by flooding of the field. Moreover, application of carbafuron 3G at 25kg per ha control cutworms and leaf hoppers in potato.

Weeds are serious threat to potato crop and may cause 20-30 per cent losses of the crop. Pre-emergence application of either of the herbicides pendimethalin 330E, gramaxone 20EC or sencor 70WP at 2.25L, 3.0L, 750g per ha respectively, effectively control potato weeds.

Potato crop matures in 100-120 days. Drying of vines, hardening of potato skin and yellowing of leaves are the indications that the tubers have gained maximum size and weight.

Potatoes are reaped either using a mechanical harvester or manually using spade for their digging.

Tubers if kept under shade for 2-3 days harden their skin to avoid its removal during grading and packaging. Tubers are graded for separate packaging of superior grade to get high prices.

Potato tubers which are uninjured, clean, dry and free from diseases are packed in clean, disinfected and unspoiled bags. Potatoes to be kept for seed purposes are stored at 3-4°C while the ones to be marketed after 2-3 months can be stored at 10-15°C.

Rising potato production and export potential -DAWN - Business; December 10, 2007
 
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Uplift strategy: providing level playing field for all

As an emerging market, Pakistan faces a growing intensity of income inequalities between its rural and urban and skilled and unskilled workforce. The immediate impact of the structural reforms and the worsening unemployment have further widened the income gap between the rich and poor.

The government’s initiatives to redress inequalities by providing subsidies, safety-nets, special schemes and allocations for disadvantaged population, continue to add to fiscal deficit and they are obviously in conflict with the market-driven path to economic growth.

No doubt, in the scenario of galloping food inflation and rise in core inflation, it is expected of government to increase subsidies and safety nets for economically deprived population.

Yet to achieve real economic growth, it is incumbent upon government to redress income inequalities by putting in place a permanent mechanism of enabling environment for the disadvantaged, giving them access to quality education, new technologies, preventive and health care for the development of a skilled and energetic workforce,

This has to be reinforced by the availability of institutional credit, market access and, of course, minimum safety nets at the initial stage to encourage the less fortunate to traverse entrepreneurial path. The approach should be for creating opportunities for the down- trodden rather than addressing their issues through ad- hoc solutions.

The have-nots have to be provided level playing field to purge inequalities and for that the government needs to divert all resources for human capital development, needed infrastructure to do business, institutional finance and marketing outlets. Providing subsidies and temporary financial and food assistance through Baitul Mal etc is not the answer to a complex problem.

Further, a person’s life prospects should not be influenced by his/her peculiar circumstances in which he/she lives. One’s area of birth, gender, race and family origin should never be a deciding factor for his/her capabilities. The outcome of providing enabling environment may differ substantially from individual to individual as a consequence of difference in efforts, talent and, of course, luck. It is essential that policies to create enabling environment should be area and community-specific.

The creation of the local government has proved helpful and likely to prove more effective if things are planned and implemented at the council level, keeping in view social, cultural norms and workers’ capabilities, natural resources and social strength of each tehsil/town/community.

In this context, infrastructure development initiatives by local governments, particularly construction of roads, motorways, flyovers and under passes, regular water supply arrangements at least in metropolitan cities have helped not only providing employment to thousands of skilled and unskilled workers, but also has eased the problem of supply of civic amenities to poorest of the poor.

For effective management of social sector, it is recommended that education up to secondary level and health care management be made a preserve of local governments to ensure proper monitoring and supervision.

The experience of all low income developing countries has shown that even foreign assistance received for alleviation of poverty has failed to bring desired results. The impulse to generate sustained development must come from within, not from outside. There should be state-led initiatives for developing such a growth strategy, which provides level playing field for all.

No doubt, the focus on labour-intensive industries provide immediate solution for creating employment opportunity. There is a need to promote small scale and micro-enterprises for acquiring the required infrastructure and a wider outreach of the specialised financial institutions like SME’ banks and micro finance banks. This will promote not only social justice, but will accelerate economic growth rate.

For arresting growing inequalities, there is also the need to expand access to justice, resources and assets for a just, free and fair market environment where cartels and monopolies do not exist. For that all ethics of good governance need to be observed.

In order to improve labour market by creating jobs for both skilled and unskilled labour, the labour laws providing job protection will have to be reviewed. An entrepreneur would not invest in a venture where he / she comes across a workforce where he feels that he/she has hired them for life and even in case of compelling circumstances, it will not be possible to lay off unwanted staff.

No doubt, there should be minimum safety nets available for workers to fall back upon if they loose the job. In other words, a proper mechanism should be in place to ensure labour market flexibility.

At the same time, there is need to design more conducive fiscal and monetary policies in order to provide room to private sector to carry on their business ventures smoothly,

Tax/tariff structure need to be modified, no doubt, according to needs of business class, but most importantly for promoting social justice.

In order to move towards market economy effectively, the feudal system will have to be curbed through effective land reforms. Political inequalities have impacted all spheres of social life.

Despite macro economic turnaround achieved in last eight years, benefits of a sustained high economic growth rate are being reaped by a privileged few, whereas a major chunk of population continues to live on an income less than a dollar per day.

Hence for creating enabling environment and level playing field for have-nots, the government will have to give disadvantaged segments access to legislative process.

Uplift strategy: providing level playing field for all -DAWN - Business; December 10, 2007
 
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