What's new

Pakistan Economy - News & Updates - Archive

Status
Not open for further replies.
Mega launch of Pak-China Investment Co. on Dec 17, 27

ISLAMABAD: The Investment Division and Board of Investment, in collaboration with Pak-China Investment Company Limited (PCICL) are organizing a ‘mega launch’ of the investment company in Karachi and Lahore on 17th and 27th Dec. 07, respectively.

The PCICL is being established in Pakistan to help various sectors including financial, industrial and agricultural groups of Pakistan to seek Chinese investment.

The establishment of the company is an initiative undertaken under the “Pak-China Five-Year Development Programme” in financial sector cooperation.

Both the events would be of grandeur in nature, as the venue of the events are the Governor Houses and the Governors of respective provinces would be presiding over the launching ceremonies, while Dr. Salman Shah, Minister for Finance and Economic Affairs/Chairman PCICL would be the chief guest. The events would be participated by senior government officials and dignitaries including Governor, State Bank of Pakistan (SBP).

Daily Times - Leading News Resource of Pakistan
 
.
City Council approves Master Plan-2020: opposition stages walkout

KARACHI (December 16 2007): After a weeklong heated debate, the City Council on Saturday finally approved the Karachi Strategic Development Plan-2020 (KSDP-2020) making it a legal document. The opposition staged a walkout in protest when their longstanding demand for delaying passage of the KSDP-2020 for at least a month was put in non-compliance by Senior Presiding Officer Ahsan Siddiqui.

The City Council session was held here in the City Council Hall, Old KMC Building, M.A. Jinnah Road. The convenor, in the opening remarks appeared critical of the opposition members, who had been demanding time to make the plan more participatory and mandatory, came up with only 31 suggestions on Master Plan-2020 by December 14, 2007. The convenor, who remained unable to regulate the house throughout the proceeding, said the suggestions would be sent to the Master Plan Committee of the City District Government Karachi (CDGK) government.

The Master Plan would remain open for future inputs the existing suggestions tabled by the council members would be brought in the shape of a resolution in the house for approval, said the convenor. Abdul Jalil and other treasury members supported the convenor's view and insisted on closure of the debate on the KSDP-2020 and put the document forward before the house for voting.

As soon as the session was resumed by the convenor, who remained failed to make the house focused on Master Plan-2020, leader of the house Asif Siddiqui criticised the opposition members for "conspiring" against the local government system in the garb of election campaign.

Leader of opposition Saeed Ghani of Awam Dost panel remained stick to his demand for more time to develop consensus on the so-called controversial document contending that many issues were still yet to be discussed in detail. He claimed that the Haq Parast dominated-house had been less wary of the opposition-backed issues and resolutions like the one condemning mass evacuation of the fishermen from the Bundal and Buddo Islands.

He said the City Council had approved a treasury-backed resolution on forming a "heritage committee" in a bid to save the city's heritage but the opposition-backed resolution was yet to be tabled in the council. Ghani also demanded of the convenor to bring the submitted suggestions before the house. Amid an ear-splitting outcry and ultimate walkout by the opposition the treasury members adopted a resolution to send the 31 suggestions to the Master Plan Committee in the absence of their opponents in the house.

The convenor presented the document for voting when a resolution seeking approval of the KSDP-2020 came from Syed Absarul Hasan, chairman, Master Plan Committee. Rafiq Ahmad of Al-Khidmat panel criticised the Haq Parast members for placing an incomplete document in the City Council Secretariat, which he claimed, was lacking 'terms of reference' and a "copy of the agreement signed between the city government and the consultant".

An opposition member, Zahid Saeed showed a "complete" copy of the KSDP-2020 to the house, which, he said, had included tables, graphs, figures and maps. Asif Siddiqi agreed with Zahid on his argument on an incomplete plan provided to the opposition, saying that the copy was lacking some of the maps.

Jumman Darwan claimed that though 80 to 90 percent uplift projects under the KSDP-2020 were proposed by the City District Government Karachi, but all of them were lacking any protection for residents of the rural towns like Keamari, Gadap, and Bin Qasim. In reply to Darwan's claim Absarul Hassan said the CDGK was paying extraordinary attention to the development of the aforementioned towns. The session was adjourned for an indefinite period.

Business Recorder [Pakistan's First Financial Daily]
 
.
Sindh chief minister calls for strategy to utilise coal reserves

KARACHI (December 16 2007): Caretaker Sindh Chief Minister Justice (former) Abdul Qadir Halepota has said that Sindh has world's largest coal reserves and practical steps would be taken for their exploitation for power generation and other industrial needs.

In a meeting with Provincial Secretary Minderals and Mineral Development at Chief Minister House, Justice Halepota said that Allah had blessed Sindh province with mineral resources and both federal and provincial governments would make efforts to benefit from the same.

He said it would be seen as to why not a strategy was chalked out so far to bring those world's biggest reserves under use, and directed the secretary to examine the progress achieved in respect of memorandum of understanding (MoUs) signed so far.

He asked him to form a delegation comprising representatives of Chamber of Commerce and other concerned organisations to talk to Caretaker Prime Minister Mohammedmian Soomro so that full advantage of those reserves was taken.

Business Recorder [Pakistan's First Financial Daily]
 
.
Privatisation of forests

By Shoukat Ali, M. Arif Wattoo and Mazhar H. Ranjha

THE community of plants, predominantly of trees, shrubs and herbs, occupying an extensive area of land is called forest. The forests are classified into seven general types recognised from the nine major ecological zones.

These general types include: Alpine forests (northern districts of Chitral, Swat, Dir and Kohistan), coniferous forests (Swat, Dir, Malakand, Mansehra, Abbottabad, and Rawalpindi districts and Balochistan hills), sub-tropical forests (Attock, Rawalpindi, Jhelum, Gujrat, Mansehra, Abbottabad, Mardan, Peshawar and Kohat districts, and the Sulaiman mountains), tropical thorn forests (Panjab plains, southern Sindh and western Balochistan), irrigated plantations (artificial: Changa Manga), riverain forests (Sindh and to some extent in the Punjab) and mangrove/coastal forests (Indus delta). Most of the forests are in the northern part of the country.

Forests are rich sources of timber and other products. In timber products lumber and plywood are the most widely used materials in the construction industry and furniture. Timber provides raw material for paper, sports goods and match industry. Similarly a lot of product can be obtained from forests like honey, mushroom, pine nut, walnut, mulberry fruits, silk cocoon and medicinal products etc.

Forests are also rich source of chemicals produced by trees, which are used in tanning leather and in the manufacture of inks, medicines, dyes, and wood alcohol. In addition, forests protect the land against erosion, hurricanes, floods and subsequent drought. They also play a key role in regulating the global climate and ecosystem.

About 4.2 million hectares are covered with forests, equivalent to 4.8 per cent of the total land area, which is very small when compared with 30 per cent of the world land cover.

Deforestation and changing land use pattern has resulted in the loss of precious forests. Protected forests of northern Balochistan are reported to have been harvested for timber and energy purposes. Due to over-grazing, natural reforestation of the forests has been hindered. Large areas of riverain forests have been cleared for agriculture. Illegal and uncontrolled cutting of trees has further resulted in deforestation.

Similarly other forests are also under danger due to clearing he land for farming.. Due to the menace of deforestation, world wide 976 tree species are facing extinction. The species facing extinction in Malaysia are 197, in Indonesia 121, in India 48, in Brazil 38 and in Pakistan two tree species are facing extinction. This is in addition to loss of thousands of hectares of forests.

The major threat to the country’s forests is uncontrolled and unsustainable cutting. Reasons for unsustainable commercial harvesting in state forests are: lack of political will and commitment, unrealistic forest working plans and weak implementation of forest protection laws. Between 1990 and 2005, Pakistan lost 625,000 hectares of forests which constitute 24.7 per cent of its total forest cover.

This deforestation rate is four to six per cent per annum; the second highest reduction rate in the world. At this rate, the forecast is that the country’s entire woody biomass stock would be consumed by 2020.

Honey, collected from traditional domestic bee hives, is an important source of income of local people. In addition to this, people also extract honey from the forests. Livestock keeping is an important income generating activity for the local people as they harvest fodder from the forests. People also collect edible mushrooms and morals for market purpose. Similarly they collect nuts and fruits to sale out, as an additional source of income. People also collect valuable medicinal plants from the forests for the cure of many diseases by ethno-botanic methods or sell them in the market.

From the branches of trees, the artisans make a number of valuable household items and various types of products, like baskets, trays, grain bins and decoration items, which are attractive to national and international tourists. These economic activities depict miserable living standards of the people living nearby forests.

Therefore, forests are in urgent need of protection, not only to secure the livelihood assets of the indigenous people but also to explore the resources to improve their living standards.

Forest related activities have been supervised and monitored under the umbrella of public sector. In 1955, the government declared the first national forest policy followed by the national forest policies of 1962, 1975, 1980, 1988 as part of the National Agricultural Policy, 1991, and later on the latest one in 2001.

The central concern of these policies was to extend, protect, conserve and explore the potential of forest on sustainable basis. But the picture of last decades poses a very disappointed picture as it exposes the failure of “forest reforms” to produce desired outcome, On December 7, 2007, the World Forest Day was observed and an international call was given to foster public-private partnership in the forest sector. All international donor agencies and policy maker institutions envisaged the partnership as a tool, for efficient and sustainable utilisation of the forests. In the country, the issue is also being debated..

The NWFP Forest Policy 1999 has focused on the need to encourage the private sector. The NWFP Ordinance 2002, specifically, mentions the power to lease out to the private sector the reserved and protected forest as well as waste lands for plantations, agro-forestry and soil forestry.

Scientists, experts and policy makers are speaking and writing about public-private partnership as a suggested remedy. A policy is likely to be formulated which, in near future, would ensure the participation of private agencies in forest sector. No doubt, there are great business opportunities in the forests which have never been fully exploited, and private sector may have lucrative offer from government side for investment. But the benefits should also be extended to the local people who are living in a miserable condition and have ancestral rights over these resources.

The private sector is profit-driven and works for more and more benefits. In privatisation, it should be ensured that private sector does not deplete the forest resources in the name of sustainable utilisation of forests and does not further marginalise the local communities in the name of development.

One has to look at the experience of the privatisation of agricultural advisory services. A recent study shows that private sector provides agricultural advisory services to the big farmers and landlords and leaves the small farmers ignorant about the latest agricultural technologies. So in privatisation of the forest sector, it is important see whether it is designed to help the commercial enterprises or to help the indigenous communities for their better living standards.

Privatisation of forests -DAWN - Business; December 17, 2007
 
.
Snags in real estate business

A sizeable part of the rising remittances is finding its way into real estate investment. There are several reasons for this including very high risks in other sectors such as trading or manufacturing, absence of advice and information on parallel opportunities, aggressive marketing by realtors and the preference for property investments.

Given the current boom in land and property enterprises across the country, the trend of investment is likely to remain stable. However, efficiency in the real estate market is constrained by some basic handicaps. An element of doubt lurks behind the validity of transactions. Complicated documentation procedures, corrupt practices, weak legal safeguards and above all, limited access to information are some barriers that adversely affect the performance of real estate market.

While the sector is in dire need of a reform, few basics have to be improved without any delay. The creation of an efficient and scientifically structured real estate information system is the first step in the proposed process of improvement.

First, a political mandate is necessary to initiate this task. History is replete with half-hearted attempts to launch projects for structuring a database of urban properties. In 1990, the erstwhile Karachi Metropolitan Corporation (KMC) undertook an urban land management study with the assistance of local and Australian consultants. The objective was to take stock of land utilisation patterns, available land reserves, identification of vacant/unutilised land parcels and potential of future land development.

The documentation was aimed to scientifically predict the trends of construction and real estate development. The study had also recommended the creation of a centralised database with a view to serve multiple clients. Unfortunately, not much could be undertaken afterwards.

In 2003, an attempt was made to computerise the records of registered properties by the Excise and Taxation Department of the Sindh government. The initiative had an active start but could not continue at the desirable pace to complete data about the properties in the planned settlements. While individual land management agencies do possess records of ownership and other variables, they are reluctant to share it for the fear of losing control over them.

At times, some of these agencies fall prey to clandestine pressure which results in non-transparent transactions. The construction of a residential settlement for high ranking military personnel next to National Stadium Karachi; construction of the head office of National Highway Authority on land owned by Pakistan Railways and the construction of a high profile tower on Railways land by a consortium of realtors indicate a state of affairs that can only be streamlined through better information systems.

The recent proposal of converting 60,000 acres of Karachi’s coast into “sugar land city” – a fancy real estate programme – is still fresh in one’s memory. The fear of the revival of this concept plan by powerful realtors is still lurking around us.

The real estate sector has many overt and covert stakeholders. These include international investors of various backgrounds and their front men, defence agencies, local investors, brokers, builders, personnel of land management agencies, infrastructure development units, bankers, contractors, legal practitioners and individual owners and users.

As obvious, the status quo suits the interests of many of them. But the pre-requisites of good governance demand an effective legal and administrative framework to end manipulators and create a level-playing field for all.

All interest groups should have the choice to avail benefits. The law should facilitate a mechanism of transparency.

The next step is to collect, examine and verify land ownership records. It is an extremely complex task. The handicaps are many and varied like multiple formats and procedures of ownership, wilful tempering, concealing and destruction of some records, poor record -keeping and corruption.

However, the only way to begin this exercise is to consult all the institutional stakeholders. After completion of pre-development phase of ownership records, a process of reconciliation needs to be structured. This can remove the anomalies and complete the left- out information. A reconciliation exercise essentially requires legal cover to make it efficient and effective for a worthwhile database preparation.

The more crucial phase arises at the stage of development based information on land. This stage pertains to the variables such as development permissions, amortisation of land uses, disputes, violations, penalties, conversions, regularisations and related information. Experience has shown that this information cannot be collected without well-organised field surveys by teams of competent professionals. It is a continuous task as properties and land development schemes increase periodically.

The records available with building control authorities and related departments are also important to be scrutinised and made available for public access. Public agencies and departments, some of which are owners and managers of large tracts of high value land assets, need to be advised to prepare and publish authenticated versions of their land holdings. This measure alone can remove many corrupt practices and illegal transactions. It will also be useful for different planning assignments such as demarcation of ecological assets, establishing right-of-ways for different proposed modes of transit, densification of certain identified neighbourhoods and protection of sensitive properties.

A sound and user-friendly information system in real estate is essential to help people in their choices and transactions of properties. Much of these transactions take place in an informal manner. It usually harms those weak and simple folks who fall prey to shrewd brokers.

A well-managed information system will also help identify important pending assignments such as property registration procedures/revisions, property taxation systems, land and property acquisition for development projects as well as the administrative measures of managing vacant property assets.

Snags in real estate business -DAWN - Business; December 17, 2007
 
.
Five-year development scheme approved: PSDC to be established

HYDERABAD (December 17 2007): Government of Sindh has approved a 5-year development scheme under which Professional Skill Development Centre (PSDC) will be established aimed at training in-service agriculture field assistants and growers to up date their technical knowledge.

Besides, training in the fields of administration and finance will also be provided to the newly promoted District officers of the Agriculture Extension wing before their postings.

This was informed by Director Training Agriculture Extension Sindh, Ghulam Hussain Laghari while addressing the participants of the in service training at the Agriculture Training Institute Sakrand, Sindh Horticulture Research Institute Mirpurkhas and Rice Research Institute Dokri

He said that the government was considering to further strengthen the Sakrand and Jacobabad agriculture training institutes to produce highly trained field assistants and live stock assistants for bringing green revolution in agriculture and live stock sectors. Laghari said that the directorate of training has already trained 400 agriculture officers, 600 field assistants and 160 gardeners under two different development schemes during last 2 years.

Business Recorder [Pakistan's First Financial Daily]
 
.
UAE Group shows interest in IT sector

KARACHI (December 14 2007): Sindh Governor, Dr Ishrat-ul-Ibad Khan has said that land record throughout Sindh is being computerised, while government is paying full attention on promotion of information technology in every field to make its fruits reach the common man.

He was talking to a delegation of UAE's Al_Bawardi Executive Management Team, led by Mansoor Al-Alami at Governor House here Thursday. The delegation showed interest in making investment in the field of Information Technology in Pakistan and particularly in Sindh.

Assuring the delegation of his full cooperation, the Governor pointed to vast opportunities of investment that exist in every sector. There had been an increase in the investment opportunities in every sector because of the government's investment-friendly policies, rules and regulations and infrastructure improvement.

Particularly because of foreign investment in the financial sector and improvement in other related sectors, there had been an increase in the IT related demands, he added.

Pointing out that IT serves as a catalyst for every field, the Governor said Pakistan has rich talented human resource and particularly there is higher ratio of the youth here whose talents are being polished and stress being laid on the attainment of desired objectives. The present government, he informed, strengthened the institutions to ensure continuity of its reforms program and policies.

He told the delegation that government is working on poverty alleviation, bringing improvement in the rural and urban conditions and availability of jobs on priority basis.

Business Recorder [Pakistan's First Financial Daily]
 
.
Intel Pakistan, IT department NWFP sign MoU

PESHAWAR (December 06 2007): The Intel Pakistan Corporation and Department of Information Technology, NWFP, on Tuesday signed a Memorandum of Understanding for promotion of computer education at school and college levels in the province. The memorandum was signed by the representatives of Intel Pakistan Corporation and the Department of IT NWFP at a simple ceremony at a local hotel.

Caretaker Provincial Minister for Information, Information Technology Syed Imtiaz Gilani and Provincial Minister for Education Iftikharud Din Chamkani were also present during the signing ceremony.

According to the memorandum the Intel Pakistan Corporation would provide training to the students and teachers at school and college levels in various subjects to boost their skills imperative for facing the challenges of 21st century.

The Intel Education initiative is a sustained commitment to prepare students with the skills required to thrive in the knowledge economy. Intel collaborates with local governments and educators across the world to help promote professional development programmes and resources for elementary and secondary educators.

Intel Tech Programme is a proven, world wide that has been driving systematic changes in teaching and learning. Under this programme over 135,000 teachers have been imparted training across the country.

Speaking briefly on this occasion the NWFP Caretaker Minister for Information and Information Technology Syed Imtaiz Hussain Gilani said that IT and Computer are just tools which could be utilised for the betterment and development of the nation.

Emphasising the need of information technology he added that without advancement in science and technology no progress could be achieved. He asked the entrepreneurs to come forward and invest in the country for achieving heights in the field of science and technology as no other nation was ready to invest here for our own development.

Business Recorder [Pakistan's First Financial Daily]
 
.
'Pakistan surplus in milk production'

HYDERABAD (December 17 2007): The Vice Chancellor Sindh Agriculture University Tando Jam Professor Dr Bashir Ahmed Sheikh expressed his views during a training course on milk preservation processing and value added product manufacturing technologies applicable to small rural milk producers organised by the department of animal product technologies.

Dr Sheikh presided over the function and said that milk in the traditional diet has important place. Milk and dairy products are rich source of protein lactose fat and minerals and probably the most complex natural food available to man. Due to its complex nature it has a very limited shelf life if not handled properly. Pakistan with a milk production of 32 billion liters per annum from 35 million dairy animals is the 3rd largest milk producer in the world.

Dr Bashir said Pakistan is surplus in milk production but it is least commercialised enterprises due to lack of proper planning collection, transportation and distribution facilities. A major portion of the production is wasted in the far flung areas as result of this we are importing 25, 000 tons of powder milk annually to meet the demand of urban areas at a cost of 300 million dollar per annum.

This training will help the one of the most vulnerable population group the farmers to enough knowledge and technology in milk handling and preservation. This training is being organised by the Department of Animal product technologies under the HEC funded project of development of animal product technology, milk and meat.

Dr Sheikh said that Sindh Agriculture University shall establish a Farmers Radio station at the campus where information regarding livestock agriculture and other related information to be disseminated to the farming community. Besides this the institute of food sciences technology will develop mobile food laboratory through which services will be provided to the farmers on their doorsteps in the far flung areas.

Dr Abdul Qadir Ansari, Rector Alkhair University Islamabad expressed his views as a chief guest and showed great interest. He said that training can enhance the skills of the farmers and he hoped that Sindh Agriculture University should continue to organise such training to the rural women also.

Business Recorder [Pakistan's First Financial Daily]
 
.
Mechanised irrigation, corporate farming to help propel agriculture productivity

ISLAMABAD (December 17 2007): Mechanised irrigation system and corporate farming would help propel agricultural productivity besides realising the long-term ambitious goals of achieving food self-sufficiency in this sector.

Agriculture sector the backbone of economy has been accorded top priority in the major policy initiatives taken by the government, said sources at the Agriculture Ministry.

The Federal government under the patronage of the President has already provided Rs 120 billion to all provinces with the help of World Bank (WB) for lining of canals and watercourses and using concrete parabolic to save valuable water from seepage, added the sources.

In line with the policy carved out for the agri-sector, the Sindh government has awarded a project to Dewan Group for providing state of the art mechanised irrigation system for water conservation and productivity enhancement. An accord is expected to be inked shortly between the Sindh government and Dewan Group.

The project has been awarded after open biding in which 15 companies participated. Dewan Group is pioneer in bringing and setting up various modernised industrial projects in the country the largest polyester project Dewan Sulman Fiber.

Mechanised irrigation technologies application will greatly help and lead the country on the path of achieving food self-sufficiency observed the sources.

With the application of mechanised irrigation systems and the development of corporate farming projects, Pakistan will not only achieve self-reliance but also reposition itself to export food to Middle East and South East Asian countries.

The Dewan Group also participated in a mega event sponsored by the Ministry of Food, Agriculture and Livestock (Minfal) for introducing high efficiency irrigation systems for water conservation and productivity enhancement this year.

It is worth mentioning the government has allocated over Rs 18 billion under subsidiary programme for five years to facilitate farmers adopting latest irrigation systems and techniques.

They informed Pakistan has the world's largest canal irrigation network, which irrigate about 36 million acres land to produce all major and minor crops including wheat, rice, cotton, sugarcane, maize and pulses to meet domestic consumption as well as to export.

There are about 1,700,00 water courses with a total length of about 1.6 million kilometers, which distribute water with 44 canal system spread over 56073 kilometers, they added.

It is very encouraging that participation of private sector group like Dewan directly entering into the projects of prime national interest, which would ensure success of public sectors, the sources said.

Business Recorder [Pakistan's First Financial Daily]
 
.
Punjab government to build 10 small dams: minister

RAWALPINDI (December 16 2007): Punjab government has planned to construct 10 small dams in four districts of the Potohar region including Chrah Dam with the cost of Rs 550 million, said Dilawar Abbas, Provincial Minister for Irrigation.

"These 10 dams would store more than 25,000 acre ft water, which would help in agriculture development of the region", the minister said during a briefing at under construction Jamal Small Dam in Manghot village of Gujjar Khan.

The minister said that construction of Chrah Dam would help improve water supply to Rawalpindi city as this would have storage capacity both for irrigation and drinking purposes.

Dilawar Abbas said that these reservoirs would help irrigate more than 15,000 acre land in the region and improve the living standard of the people besides adding to economic stability of the country. He said that with completion of the small dams project a new era of economic growth would start in this region. This, he said would help eradicate poverty and unemployment as well.

Giving details of the ten small dams, the minister said that out of ten dams seven dams would be constructed in Chakwal district, two in Attock and one in Jhelum.

Dams to be constructed in Chakwal district are Chrah Dam, Dhok Hum Dam, Mandi Dam, Dhok Jhang Dam, Lakhwal Atwal Dam, Khabir Dam and Taja Bar Dam, while Saddarpal Dam and Shahbazpur Dam would be constructed in Attock and Agham Dam in Jhelum.

Business Recorder [Pakistan's First Financial Daily]
 
.
SBP releases Financial Stability Review 2006

Financial sector grows to Rs6.9 trillion​

Tuesday, December 18, 2007

KARACHI: The overall size of financial sector of Pakistan grew by 15 percent to Rs6864.2 billion during first half of calendar year 2007 which was recorded Rs5966.3 billion in calendar 2006.

The State Bank of Pakistan (SBP) stated this in its new annual publication Financial Stability Review (FSR) 2006, issued on Monday. “FSR offers an exhaustive overview of the financial institutions and markets and in publishing first FSR, SBP has joined the league of central banks around the globe that analyse and comment on financial stability issues on a periodic basis, with the objective of highlighting the strengths as well as potential triggers for systemic risk,” the SBP commented.

Financial markets in Pakistan comprise of fairly developed money market, foreign exchange market and capital markets, while the derivative market is still in a nascent stage of development.

The report said that the financial sector of the country grew substantially both in size and qualitative terms in recent years and the reform process was paving the way for a more diversified financial sector, equipped to facilitate the economic growth process.

However, central bank admitted in FSR that outreach of the financial sector was slow but said that it continued to gain ground with the expanding network of commercial banks, microfinance institutions and Islamic banks in all parts of the country.

The report said that banks with a share of 72.1 percent in total assets continued to dominate the asset base of the financial sector, followed by Central Directorate of National Savings (CDNS) with 14.6 percent, Non Banking Financial Institutions (NBFIs) 9 percent, Insurance 4.1 percent and Micro Finance Banks (MFBs) 0.2 percent.

The FSR is being launched at time when the global financial system is undergoing a severe liquidity crunch and as a result global risk appetite has deteriorated substantially, leading to widening of credit spreads.

It further said that on-going mergers and acquisitions (M&As) exerted a profound impact on the ownership structure of the financial sector. The financial sector is predominantly led by the private sector, constituting of both domestic and foreign financial institutions, controlling 64.9 percent of overall banking assets. Within the banking sector, private ownership grew to 78 percent of assets and entry of foreign banks, Islamic Banks and microfinance banks were adding depth to the financial sector. In terms of asset holdings, the insurance sector is still dominated by public sector entities and lacks dynamism.

“In the last three years, commercial banks operated on a sound capital base with an enviable record of financial performance. The quality of the risk-based capital provides further comfort as the share of core capital in the overall risk-based capital has reached 80.3 percent by June 2007, compared to 73.7 percent in CY05, the changes in the capital adequacy ratio, together with the improved quality of capital, have enhanced the resilience of the banking sector to withstand unexpected shocks.”

The capital markets continue to perform well and the KSE -100 Index depicting a growth of 38 percent over end-June 2006. The salient feature of the year was the volume of capital inflows, and of foreign investment in the equity market. Foreign participation as measured by SCRA flows reached a level of 6.8 percent of the market capitalization by end-June 2007. KSE continues to trade at a discount in comparison with regional economies (average P/E at 15.1x), which is a reflection of its growth potential.

The report highlights that Pakistan continues to be categorized among the low savers of the world. The analysis suggests that the financial system now needs to focus on providing innovative liability products to give the investor and saver various options to choose from, according to his own risk/return preference. The role of Private Pension Schemes is particularly important as an incentive to smooth out consumption patterns over the life cycle, by providing a forced saving mechanism aimed at overall social security.

The report pointed out diversification of bank credit in recent years evident in the rise in share of SME, agriculture and consumer finance in outstanding credit to 15.4, 5.8 and 14.3 percent respectively at end-June 2007.

FSR said that liquidity preference of depositors had a significant bearing on the level of banking spreads.

With SBP’s moral suasion, commercial banks have floated new high yielding deposits and Pakistan Banks’ Association introduced the Enhanced Savings Deposit in November 2007. In addition, the process of a gradual shift towards fixed deposits has already started, as evidenced by the gradual narrowing of banking spreads. These will generate more pronounced impact on curtailing banking spread.

As banks have made rapid inroads into business segments traditionally serviced by NBFIs, market share of NBFCs and Modarabas has eroded considerably, so much so that investment finance and discounting are likely to disappear as stand-alone activities in the non-bank financial sector while leasing and Modaraba sectors are faced with the dilemma of ‘diversify or die’. In addition, housing finance and venture capital industries have failed to take off despite significant demand potential. The success story among NBFIs is that of mutual funds.

The ownership structure of the insurance industry is in sharp contrast to the private sector-led nature of the rest of the financial sector. The insurance industry, comprising of 53 companies, is largely owned and operated by government-based entities. However, private sector entities in both the life and non-life insurance sector have a dominating share of the insurance business, with an 86.7 percent share of total premiums of the industry. Despite fewer companies in the life insurance sector, it accounts for 67 percent of total insurance assets. Concentration of business among the top 10 players, though still high, reduced by 9.0 percentage points in 2006, from 91.6 percent of gross premiums in 2005 to 82.6 percent in 2006.

SBP releases Financial Stability Review 2006
 
.
Great potential to enhance Pak-China trade to $15bn

Tuesday, December 18, 2007

KARACHI: Great potential existed to increase Pak-China trade volume from $5 billion to $15 billion within next five years.

This was stated by the caretaker Minister for Finance and Economic Affairs Dr Salman Shah while speaking at the launching of Pak-China Investment Company Ltd (PCICL) here on Monday.

He said that Pakistan and China have signed a free trade agreement and the five years development programme which will help in achieving this target. The minister said that 60 Chinese companies were involved in other projects in strategic manufacturing, construction, real estate development and telecommunication and services sectors.

He said that launching of PCICL is another milestone in economic relations as this company will play the role of a catalyst in promoting cooperation project specially in private sector. Dr Shah said that PCICL was a joint venture between China Development Bank and the Ministry of Finance with initial authorized capital of $200 million, making it a largest joint-venture company in Pakistan.

He said PCICL will invest in infrastructure development projects, establish subsidiary companies in various areas and serve as full service investment company. PCICL Vice Chairman and Managing Director and Managing Director China Development Bank Chen Jianbo said that Pakistan has tremendous potential for economic development as it was bestowed with great natural resources and its economy was growing rapidly. “It is high time for us to expand trade and business as China and Pakistan are excellent friends”, he noted.

Great potential to enhance Pak-China trade to $15bn
 
.
SPI inflation rises 8.83pc

Tuesday, December 18, 2007

ISLAMABAD: The weekly SPI-based inflation covering prices of 53 essential items from 17 cities stood alarmingly high at 8.83 per cent during the last week ending Dec 13 over the corresponding week of the previous fiscal, according to the data of the Federal Statistics Bureau released on Monday.

The more worrisome is that the rising general prices are going up and up further pushing the masses below the poverty line. Independent economists say that if the government was unable to contain inflation, it would increase the number of poor living below the line. The bulletin says that during the week under review, essential kitchen items’ prices stood sky high, especially, onions, wheat flour, tomatoes, chicken, wheat, vegetable ghee, cooking oil, rice, mustard oil and all types of pulses.

In a span of one week onions prices went up by 8.27 per cent, wheat flour 5.97 per cent, wheat 5.93 per cent, tomatoes 4.43 per cent, eggs 1.96 per cent, bananas 1.9 per cent, kerosene 1.42 per cent and washing soap price up by 1.29 per cent over previous week. In such circumstances, it has become difficult for low, middle and fixed income groups to make ends meet, adding to the miseries of millions of people living below poverty line.

The SPI bulletin revealed 17 items registered increase, and 15 items recorded decline, while prices of 21 items remained unchanged. However, further analysis of the data revealed that on a year-on-year basis 11 items are dearer by double digits. These include basmati rice whose price went up by 58 per cent, mustard oil 56 per cent, wheat 41 per cent, wheat flour 35 per cent, vegetable ghee (tin) 34 per cent, cooking oil (tin) 33 per cent, masoor pulse 31 per cent, washing soap 17 per cent, plain bread 15 per cent, firewood 14 per cent and eggs by tomatoes whose prices shot up by 113 per cent, red chillies 46 per cent, rice IRRI-6 46 per cent, vegetable ghee loose 43 per cent, mustard oil 41 per cent, eggs 37 per cent, powdered milk 32 per cent, wheat and wheat flour 24 per cent, onions eight per cent, fresh milk 13 per cent and chicken was dearer by 10 per cent.

The figures further revealed that though prices of 25 items posted no change during the week, yet compared to the corresponding week of last year, several items are dearer ie vegetable ghee (tin) 29 per cent, cooking oil (tin) 29 per cent, match box 27 per cent, curd 13 per cent, fire wood 13 per cent and plain bread dearer by 12 per cent over the corresponding week of the last fiscal. Besides, basmati rice price increased by 60 per cent and LPG (11kg cylinder) price also shot up by 11 per cent over the corresponding week of the last fiscal. Prices of powder and fresh milk also up by 21 per cent and 12 per cent respectively.

It is unprecedented that the country produced a bumper wheat crop and in the same season, the government is importing it, as flour shortage continues to hit consumers. As a result, the price of the most important kitchen item has shot up from Rs13 per kg, and now it is being sold at Rs22 to 25 per kg. Similarly, there is no government check on the multinationals, which increase prices of their goods, including processed milk, milk powder, cream and a variety of cereals every now and then.

The latest example is that a multinational firm last week hiked prices of cereals by Rs20-25 per packet. It might be astonishing for many that these fleecing firms do not feel bound to display prices on their items. This gives undue benefit to a shopkeeper to charge at will from the hard-pressed consumers and the authorities miserably failed to keep a check on this. A total of 23.9 per cent of Pakistan’s 158 million people live in acute poverty.

SPI inflation rises 8.83pc
 
.
Falling dollar hits Pak export earnings

Tuesday, December 18, 2007

ISLAMABAD: Pakistan’s exports in real terms remained stagnant last month as increase shown in official figures was mainly due to depreciation of the US dollar.

Pakistan conducts 70 per cent of its export trade in US dollar, which is consistently falling against other major currencies in the international market. Other than the US, Pakistan’s major trade partners are the European Union, Japan and Gulf countries.

Pakistan’s exports in terms of volume remained static while in value they increased by more than nine per cent. The country compiles its trade figures in US dollar. “The exports have not increased but because of the weakening dollar the result in government documents is positive and encouraging,” a well-placed official told The News.

According to the Federal Bureau of Statistics (FBS), the country’s exports during November 2007 registered an increase of 9.56 per cent compared to exports in the previous month, which stood at $1.41 billion. The imports interestingly declined by 6.59 per cent from $3.38 billion recorded in October 2007.

With little surplus available for exports, the exporters were uncompetitive and unable to compete with their rivals, the official lamented and said “they always seek benefits to enhance their exports.”

They preferred to invest in the low value-added sectors and did not strive to take risk of venturing into high value-addition, the official said. Caretaker Commerce and Textile Minister Shahzada Alam Mannoo has called for increasing R&D support for boosting textile exports and is considering presenting a new case for providing more subsidy for the textile sector.

“It is a cause for concern that the exporters do not take advantage of the appreciating value of their competitors’ currencies, particularly the Indian rupee and Chinese yuan,” he deplored and said “our exporters always looked to the government for initiatives.”

In fiscal year 2006-07, the government missed its export target of $17 billion by a margin of $531 million while for 2007-08, the target has been set at $19.2 billion. “There is no foreign direct investment in manufacturing units and also no increase in the capacity of already existing manufacturing units, then how exports can be increased,” the official said.

Falling dollar hits Pak export earnings
 
.
Status
Not open for further replies.

Pakistan Defence Latest Posts

Pakistan Affairs Latest Posts

Back
Top Bottom