Pakistan Economy - News & Updates - Archive

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Internet penetration to rise 16 percent in three years ​

KARACHI (January 24 2008): Pakistan's current internet penetration is around 7.5 percent. This was stated by Monis Rahman, Chief Executive Officer of Naseeb Networks, in a statement on Wednesday. He said that with over 500 million dollar recently invested here in broadband and Wimax infrastructure, they are projecting inter-net penetration to increase to around 16 percent over the next three years.

Naseeb Network, a leading provider of online recruitment, social networking, classifieds and related services in Pakistan, has announced that it has secured Series B financing from two pre-eminent silicon Valley venture capital firms, ePlanet Ventures (ePlanet) and Draper Fisher Jurvetson (DFJ).

Naseeb will use the funding to accelerate its growth and leadership position in target markets by investing in sales force and marketing expansion and enhancing its product portfolio.

"We have seen strong growth in user metrics and financial receipts across our portfolio of online services," said Monis Rahman, Founder and CEO of Naseeb Networks. This funding round provides growth capital and domain expertise from two clear leaders in global venture capital, which will enable us to further dominate our target markets and seize emerging market opportunities."

The round was led by ePlanet with DFJ participating, pursuant to which Ayaz-ul-Haque, Managing Director at ePlanet and Mohanjit Jolly, Director At DFJ have joined Naseeb's board of directors. "We're excited about the progress and momentum that Monis and his team have achieved in the market," said Haque.

"Naseeb Networks, though its portfolio of Internet properties and revenue generating brands including Naseeb.com Rozee PK and Ring Pakistan.com, is a leader in a market that is poised for considerable growth. Our investment in Naseeb will help the company build upon its commanding position." he said.

"The company's business model is consistent with ePlanet's global replication emphasis and represents a unique investment to capture the inflection point in Inter-net growth in Pakistan," he commented.

Commenting on DFJ's participation, Jolly said, "Naseeb Networks has done a phenomenal job of bootstrapping its way to a leadership position. DFJ is proud to be associated with the Naseeb team. This infusion will not only cement the leadership position for Naseeb in social media but also help further catalyse the market in Pakistan and across the global Muslim diaspora."

He said, "By providing the best platform for interaction, collaboration and transaction, Naseeb Networks have the potential of being a truly significant player with a global footprint, both factors being hallmarks of DFJ investments."

Naseeb Networks operates a portfolio of web-sites including Rozee. PK and Naseeb com. Rozee. Pk is Pakistan's largest and fastest growing job portal. The site has delivered over 1.4 million applications to jobs posted by 8,800 employers, Rozee, Pk is used by some of Pakistan's most sought after employers to recruit human capital, including Mobilink, Nestle, Oracle, McDonalds, United Bank Limited, Microsoft, GlaxoSmithKlein, Engro Foods, Mentor Graphics, Teradata, Proctor and Gamble and other.

Rozee.Pk offers employers recruiting solutions including placement of online job ads, access to powerful CV search engine technology, online recruitment workflow management tools and white-labelled corporate job portals.

The company's flagship inter-net property, Naseeb.com, offers match marking and social networking services for the Pakistani and Arab diaspora communities. With over 1.3 billion Muslims worldwide, Naseeb.com has achieved a leadership position in a huge market. The site's features include blogging, instant massaging photo and music sharing, and an innovative algorithm that matches members based on common cultural norms.

Commenting on the market opportunity, Rahman said, "Pakistan's current Internet penetration is around 7.5 percent compared to India's 4.5 percent. With over USD $500 million recently invested here in broadband and WiMAX infrastructure, we are projecting Internet penetration to increase to around 16 percent over the next three years. We will leverage our leadership position to generate cross traffic for other key online services for the benefit of Pakistan's vibrant inter-net community."

Naseeb Networks, which have been cash flow positive since 2004, have 42 employees across its offices in Lahore, Karachi, Islamabad and San Jose and a management team transplanted form Silicon Valley.

Business Recorder [Pakistan's First Financial Daily]

 

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DIB to continue investing in Pakistan ​

Thursday, January 24, 2008

KARACHI: Chief Executive Officer (CEO) of Dubai Islamic Bank (DIB) Pakistan MA Mannan has said that DIB recorded a growth of 152 per cent in its total asset base, which expanded to Rs21 billion as of December 2007.

He said this while elaborating achievements of the DIB in Pakistan in the last two years at a press conference here on Wednesday. He said the bank would continue to expand its branch network besides introducing new innovative Shariah-complaint products.

“We feel confident, we will continue to invest in Pakistan and we will try to maintain current growth rate in future,” the CEO optimistically said and maintained that the bank had 17 branches in seven major cities of the country including Karachi, Lahore, Rawalpindi, Islamabad, Faisalabad, Gujarat and Peshawar which provided employment to 1,700 people.

DIB Pakistan is a subsidiary of UAE-based Dubai Islamic Group. Mannan shared the achievements of the bank with newsmen, saying in a short span of two years DIB’s customer base grew by 228 per cent to approximately 21,000 customers in Pakistan as compared to 6,400 in the year 2006, whereas the deposit base grew by 273 per cent to Rs16.1 billion in 2007.

He said that during 2007 DIB remained active abreast of industry by offering a number of world class products and services in corporate and consumer banking and among these products introduced last year, DIB Auto Finance, registered a volume of Rs2.9 billion within nine months after its launching which reflects a great success for the bank in a market where cut throat competition persists.

He said on the corporate side, DIB was at the forefront of product innovation and development. During last fiscal year DIB arranged Sukuks worth Rs24 billion, which is 41 percent of total domestic Sukuk issued. CEO DIB said that bank also successfully launched SME business which had a portfolio of over Rs1.5 billion

Similarly, the unique home finance facility, offered by Dubai Islamic Bank garnered an equally overwhelming response, he said and adding that in first three months, DIB home finance was the industry leader in the entire banking industry by far achieving a milestone of the fastest billion mark.

He maintained that DIB home finance maintained its market leadership throughout the year in 2007 and in only 12 months time DIB Home finance registered a volume of Rs2.6 billion which was the fastest growth rate in the entire industry.

CEO DIB attributed the overwhelming market response to distinctively unique design and features. He said that the success of the bank was not limited to the mortgage front but also resonates in other services offered by Dubai Islamic bank of Pakistan and added that beside from providing regular banking services, DIB was very active in attracting foreign direct investment in and from Pakistan.

Sharing DIB Pakistan’s vision for 2008, Mannan said, “We see the year 2008 as bright year which will take us to next level of success in terms of growth, our ambition is to continue our growth trajectory and take Islamic products more customers in Pakistan.”

DIB to continue investing in Pakistan

 

[Neo]

OPEN SV, PSEB to unveil Pak technology ventures ​

Thursday, January 24, 2008

PALO ALTO, California: Organisation of Pakistani Entrepreneurs (OPEN) Silicon Valley, in collaboration with Pakistan Software Export Board (PSEB), will introduce several Pakistan-based technology ventures to the business community in Silicon Valley in a series of high-level business meetings and a major OPEN SV networking event.

The delegation’s visit is designed to raise the profile of Pakistan’s software and IT services industry. OPEN SV seeks to enable visitors’ business relationships with key stakeholders in Silicon Valley.

The delegates will brief OPEN charter members, distinguished Pakistani-American business leaders and entrepreneurs in Silicon Valley, about the companies’ products and services and discuss potential for market entry and partnerships.

OPEN Silicon Valley President Dilawar A Syed said: “Silicon Valley leads the world in innovation and entrepreneurship, and Pakistani-American entrepreneurs play a significant role in innovation and economic vitality of Silicon Valley, especially in the high-tech sector.

Our initiative for the Pakistani ventures, is an excellent opportunity for Pakistani entrepreneurs to connect with leaders of Silicon Valley’s success stories, and get guidance on how to grow and expand their ventures globally.”

The companies represented in the PSEB delegation are Alp Business Service Management, CTO 24/7, Digital Prodigy, Digital Processing Systems, GoodCore Software, Intagleo Systems, Invaterra, Palmchip Pakistan, Prislogix, Post Amazers, Server4sale and Xorlogics.

OPEN SV, PSEB to unveil Pak technology ventures

 

[Neo]

British delegations to visit Pakistan ​

Thursday, January 24, 2008

KARACHI: The outgoing Deputy High Commissioner of the United Kingdom, Hamish Daniel, has said Pakistan has achieved many of its targets like revenue collection, maintaining GDP growth rate and other positive indicators and based on these facts 11 different companies have expressed their intention to send delegations to Pakistan for expansion of their establishments in the country and to explore further investment plans.

Visiting the Federation of Pakistan Chambers of Commerce and Industry on Wednesday, he said the country has always proved itself as a trusted trading partner of the UK and despite the ups and downs in the political scenario the business community of Pakistan has played its role for the stability and uplift of economic conditions.

He said during more than his six years’ stay in Pakistan he was very secure and comfortable everywhere as Pakistan is a very beautiful country and during his stay he travelled widely around the country.

Daniel also visited the Overseas Investors’ Chamber of Commerce and Industry (OICCI) on Monday and held an interactive session with member companies. He thanked the OICCI members for cooperation and support extended to the UK Trade and Investment (UKTI) team during his tenure and said the OICCI had proved to be an important forum for foreign investors to communicate their concerns to the government.

A presentation on Trusted Partnership Agreement (TPA), which exists between British High Commission and Chambers Of Commerce and Industry and UKTI listed business, was also given.

British delegations to visit Pakistan

 

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OGRA to issue 1,000 new licences for CNG stations ​

ISLAMABAD: Oil and Gas Regulatory Authority (OGRA) is likely to grant around 1,000 new provisional licences for setting up CNG stations and more than 300 marketing licences for commercial operations during the current financial year 2007-08, sources told Daily Times on Wednesday.

During the financial year 2006-07, OGRA has issued additional 2,218 licences for construction of CNG stations that means further investment of about Rs 28 billion in the pipeline. Sources also said that gas sector including LPG and CNG has attracted investment amounting to Rs 56 billion made by the financial year 2006-07.

During the current financial year the total number of CNG operational stations in the country would reach to 1,800, the sources said adding that the consumption of CNG as alternate fuel in automotive sector has increased from 38,886 million cft in 2005-06 to 67,296 million tons cft in 2006-07. “This tremendous growth is due to the increase in number of CNG converted vehicles and CNG stations over the years, sources added.

In the past few years, the petroleum prices have soared, the gas requirement has increased manifold to meet the energy requirements. Sources said that CNG sector has shown tremendous growth over the past five years and 1,080 operative CNG stations have been set up bringing the investment of more than Rs 45 billion, the sources said. .

They said that investment in Liquefied Petroleum Gas (LPG) stands around Rs 11 billion so far and in CNG sector it is more than Rs 45 billion. Sources said that more investment in LPG is expected during the next coming years with the consumption of LPG in auto sector.

The financial year 2006-07 remained well performance wise as the production of LPG stood at 1,525 metric tonnes per day and 13 licences have been issued to the marketing companies. Sources further said that OGRA has allowed oil marketing companies to set up LPG auto refuelling stations that would meet international standards.

Daily Times - Leading News Resource of Pakistan

 

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PIA sell-off proposed to make it competitive ​

ISLAMABAD (January 24 2008): Disappointed with the overall performance, Pakistan International Airlines (PIA) Chairman Zaffar Ali Khan has proposed privatisation of the national flag carrier, with injection of Rs 53 billion to make it competitive in the global market.

"PIA, in government ownership, will find it difficult to compete; its basic restructuring and privatisation must be undertaken for long-term sustainability," he said while unveiling PIA turnaround strategy beyond 2008 corporate plan to the caretaker Cabinet on January 22. The PIA Chairman, who faced tough questions from Cabinet members, also proposed that a consultant of international standing should be engaged to help identify and evaluate turnaround options.

He also projected Rs 38.5 - 41.5 billion accumulated losses in 2007-08, of which Rs 11.8 billion were carried over from 2005. The losses for 2006 and 2007 were Rs 12. 8 and Rs 13.9-16.9 billion, respectively.

Sources told Business Recorder that Zaffar suggested six measures parallel to pursue revenue/cost optimisation beyond those incorporated in 2008 budget ie Voluntary Separation Scheme (VSS) for 5000 employees costing Rs 6 billion in three years; laying off redundant flight engineers; reduction in size of establishment; revenue management system catch-up; third-party engineering business; fleet and routes rationalisation; and lowering of financing cost with injection.

Besides privatisation of the national flag carrier, he recommended sale of property and other surplus assets, in addition to pursuing opportunities to outsource non-core activities, sources said.

While giving an overview of 2007, the PIA boss mentioned four key issues hitting the airline in financial and administrative terms which included erosion of market position; high fuel price; organisational issues; and burdened balance sheets.

"Ineffective marketing, open sky policy, increased competition, EU ban, brand damage, inability to pass through high oil prices, failure in hedging oil prices, use of old planes, oversized establishment, leadership vacuum, ailing corporate culture, negative equity and huge debt servicing bill were the major reasons of PIA's worsened financial position," sources quoted Zaffar as saying.

Giving details of actions taken in 2007, he said that EU restrictions were removed in quick time; 9/15 top managers were hired; several non-profitable routes were eliminated; cutback on expensive foreign/overseas staff and leased aircraft; average of hangars aircraft reduced from 7 to 3.

The PIA management also signed contract for induction of 7 new A-320 aircraft in 2009, commenced implementation of revenue management system and started structured employee engagement, sources quoted Chairman elaborating key actions taken last year.

He projected the economy to grow by 6 percent (plus); fuel prices to hover around $80 per barrel; and the rupee to be further weakened to Rs 62 per dollar. According to him, key concerns for 2008 were uncertainty of fuel price and rupee exchange rate, political scenario and huge Civil Aviation Authority's (CAA) claims.

The PIA board has projected 15 percent growth in passengers, followed by overall revenue growth by 13 percent and increase in limited fixed expense to 1.6 percent, sources added.

Key initiatives for 2008 would include new marketing leadership team, stepping up interaction with travel agents, greater accountability of sales management, launch of new routes/increase frequency on others, opening up of ticket sales on all GDS's, attaining 100 percent e-ticketing, revamping of cargo strategy and securing of Haj fare that recovers cost. PIA has projected Rs 13.2 percent growth in revenue to Rs 79.8 billion in 2008 against Rs 70.5 in 2007.

Operating expenses/fuel cost would increase by 6.9 percent to Rs 32.3 billion in 2008 as compared to Rs 30. 2 billion last year, whereas operating margin would decline to Rs 3.1 billion.

Financial cost would increase by 15.6 percent to Rs 8.4 billion in 2008 as compared to Rs 7.3 billion in 2007 and Rs 4.8 billion in 2006 whereas there will be no other income, and the Chairman termed it as 'worst case'.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

'Pakistan is a promising destination for investors': President briefs big firms' chief executive officers ​

DAVOS (January 24 2008): President Pervez Musharraf said here on Wednesday that Pakistan is a promising destination for investors due to attractive incentives, and the multinational companies should prefer it over other developing countries for investing their money.

He expressed these views during his meetings here with Goldman Sachs Group Inc of USA, Royal Dutch Shell and ENI's Chief Executives Officers {CEOs}. The President briefed the business leaders about conducive investment climate in Pakistan and opportunities available for better return on their investment.

He particularly pointed out the incentives given to foreign investors for different sectors and expressed firm commitment of the government to protect and safeguard investors' interests, besides making possible for them to take out from Pakistan their earnings or any other moveable assets whenever they would want.

He said the cost of doing business in Pakistan is less than other countries of the region and skilled labour was available for all sectors for more production with better quality to help the producers compete in the international market.

The President said that Pakistan enjoys ideal locale in the region, besides many other advantages over other countries, and multinational companies (MNCs) should take their full benefit to earn comparatively more by investing in Pakistan. He maintained that currently 600 MNCs were doing their businesses in Pakistan successfully.

He said that Pakistan 's all-time high $8.4 billion foreign direct investment (FDI) was indicative of the investors confidence. The President noted that Pakistan will firmly stay on course of reforms and the policy of deregulation, liberalisation and privatisation to keep on trusting on the private sector for economic growth in Pakistan.

During the meetings, Musharraf also gave details of Pakistan 's economic achievements for last few years and showed full confidence in government policies to keep the same trend to get even better result for economic growth in the future.

The CEOs who met the President showed great interest in investing in different sectors in Pakistan. Shell and ENI CEOs informed the President about on-going economic operations in Pakistan and expressed interest in investing more to expand their businesses in the coming years.

Shell and ENI are operating in Pakistan 's downstream and upstream petroleum sector. The Goldman Sachs Group Inc, a New York-based firm, is a stimulant for investment in the world banking sector.

Business Recorder [Pakistan's First Financial Daily]

 

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Tax relief granted to Japanese, Pakistani banks, financial institutions: revised convention on avoidance of double taxation signed ​

ISLAMABAD (January 24 2008): The income tax exemption would be available to Japanese and Pakistani public sector banks and financial institutions under the revised convention on the avoidance of double taxation inked between the two countries on Wednesday.

In this connection, a signing ceremony was held at the FBR House, here. The convention was signed by Abdullah Yusuf, Secretary General, Revenue Division, and Seiji Kojima, Japanese Ambassador. It will be presented to the Cabinet for ratification to initiate the enforcement process. Some key features of the revised convention are that tax exemption has also been provided to public sector banks and financial institutions.

Business Recorder [Pakistan's First Financial Daily]

 

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Pakistan's foreign exchange reserves show over $1 billion decline after emergency ​

KARACHI (January 24 2008): Foreign exchange reserves have shown a significant decline of over $1 billion after imposition of emergency, mainly due to rising imports and current account deficit. In the second week of November the country's foreign exchange reserves were sufficient for imports of some 27 weeks, while now these are sufficient for 25 weeks only.

Since the imposition of emergency, huge outflows have taken place from the Special Convertible Rupee Accounts (SCRA), analysts said. The State Bank of Pakistan's (SBP) reserves statistics show that forex reserves have registered 6 percent dip during November 10 to January 12, 2008.

The country's forex reserves stood at $15.3716 billion on January 12, 2008, down from $16.3875 billion on November 10, 2007, depicting a dip of $1.0159 billion. This happened after the imposition of emergency.

On January 12, reserve held by SBP stood at 13.0921 billion dollars dipped by some 1.0911 billion dollar after the imposition of emergency. Earlier, in the second week of November 2007, foreign reserves held by SBP stood at 14.1832 billion dollar.

However, reserves held by the banks showed strong position and despite the declined in the SBP reserves the banks' foreign exchange reserves have been increased by 3.41 percent. The reserves held by the banks have gone up by 752 million to 2.2795 billion dollars during week ended on January 12, 2008, previously stood at 2.2043 billion dollars on November 10. "After emergency, the foreign investors withdrew some 400 million dollars from the stock market," an economist said.

Business Recorder [Pakistan's First Financial Daily]

 

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'Facilities for foreign investors to yield results' ​

LAHORE (January 24 2008): Punjab Minister for Trade and Investment M Shafique has said that foreign investment up to 25 billion dollar is expected in the Punjab within the next few years, due to the facilities for foreign investors announced by the government.

Talking to a delegation of traders here on Wednesday, he said that foreign investment will ensure economic uplift in the province, while efforts will be made to make Lahore, the hub of trade activity.

He said the government is focussing on improvement of infrastructure facilities to attract foreign investors, while the provincial government has announced special incentives for Chinese investors due to the special Pak-China relations, he added.

Initiatives by the government in this regard have resulted in 20 percent increase in the trade volume of both countries, he said, adding that efforts are under way to balance trade between Pakistan and China. Traders of both countries should also help prepare comprehensive plans in this regard.

Business Recorder [Pakistan's First Financial Daily]

 

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'Pakistan losing export market due to high production cost' ​

KARACHI (January 24 2008): Former senior vice president, Karachi Chamber of Commerce and Industries (KCCI), Muhammad Mansha has urged the government to take appropriate steps to reduce cost of doing business in the country.

Taking to newsmen, he said that Pakistan was losing export market due to extraordinary high cost of production, rendering locally produced goods uncompetitive in the international market.

Referring to quality of goods, he said that Pakistan was producing high quality goods and locally produced goods were much better than goods produced in many countries of the world.

In his remarks, he noted it is a natural phenomenon that low prices attract customers and they prefer to buy good quality offered at low price. This is the main reason of declining exports, he added.

Foreign buyers are reluctant to visit Pakistan owing to deteriorating law and order situation in the country, which, he added is another reason for exports' reduction. Mansha also urged upon the government to take appropriate measures to overcome load-shedding and ensure uninterrupted power supply.

Suggesting use of coal for power generation, he said that Pakistan had huge reserves of coal and coal-fired power generating projects should be expedited on war footing. Use of coal would also reduce power production cost, he added.

Business Recorder [Pakistan's First Financial Daily]

 

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Pak-Uzbek trade ties to grow more: ICCI ​

ISLAMABAD (January 24 2008): Islamabad Chamber of Commerce and Industry President Ijaz Abbasi said on Wednesday that Pakistan would make all-out efforts to improve economic and trade relations with Uzbekistan. Taking to Uzbek ambassador to Pakistan Oybek O Usmanov, Ijaz said Pakistan's economy was rapidly growing due to which its energy needs were increasing at 10 percent per annum.

Ijaz assured the ambassador that a trade delegation of ICCI would visit Uzbekistan in April. He emphasised the need to exchange trade delegations between the two countries to further cement bilateral ties in various sectors.

Both sides decided that a MoU should be signed between ICCI and Tashkent to promote trade and investment. Uzbek ambassador offered Pakistan help to enhance bilateral trade with his country, adding that his country could supply oil, gas, electricity, cotton and minerals such as copper, gold, iron, chromium and lead to Pakistan, while in return Pakistan could export textiles, cement, medicines, shoes, machinery, garments, military and telecommunication equipment's.

Uzbek ambassador said it was the policy of Uzbek government to facilitate Pakistani investors. As a result of investor-friendly policy, a number of Pakistani entrepreneurs have set up industries there. He also offered Pakistan aeroplane on lease.

Business Recorder [Pakistan's First Financial Daily]

 

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Coal-fired power plants planned for Balochistan ​

QUETTA (January 24 2008): The Balochistan government is planning to set up coal-fired power plants to overcome increasing power shortage in the province, sources in provincial Irrigation and Power department told APP here on Wednesday.

They said the provincial government concluded an agreement with two private companies, Balochistan Power Generation and Canadian Everlight Energy Corporation on December 4 last.

Under the agreement, both the companies would prepare feasibility for setting up of 50 megawatt coal-fired power plants on various localities in the province within 180 days after the signing of the agreement.

The Provincial Thermal Power Board (PTPB) would review the feasibility and if it found the project feasible, it would give green signal to these companies to launch physical work on the project, the sources said.

They further said Quetta Electric Supply Company (QESCO) would purchase the electricity generated by these plants on the price recommended by PTPB. Besides, these companies would be bound to spend five percent of their total revenue on the development of social sector in the areas where they supply power. They appreciated the setting up of coal-run power plants, as it would help overcome power shortage by utilising locally extracted coal.

Business Recorder [Pakistan's First Financial Daily]

 

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BankMuscat ready to start operations in Pakistan
Staff Report

KARACHI: BankMuscat is acquiring a majority stake in Saudi Pak Commercial Bank in Pakistan in association with Sinthos Capital, International Finance Corporation along with Washington and Nomura International.
The consortium has already signed the Share Purchase Agreement with Saudi Pak Investment Company (SAPICO) to buy a 68% stake in the Bank.
BankMuscat’s total stake in the Saudi Pak Commercial Bank will be 35%. BankMuscat has obtained the necessary regulatory approvals in Oman to go ahead with this investment. An approval from the State Bank of Pakistan is currently awaited.
With assets worth over $9.6 billion, BankMuscat (SAOG) is the largest bank in Oman. Its strong capabilities in Corporate, Consumer and Investment Banking, Treasury, Private Banking, Project Finance and Asset Management. It serves over 43% of the market through its domestic network of 107 branches and over 260 ATMs nationwide.
Internationally, the Bank has a branches in Kingdom of Saudi Arabia, Dubai and India. To further capitalize on the booming Indian equity markets, the bank also acquired a 43% stake in Mangal Keshav Group, one of the oldest securities firms in India.
Daily Times - Leading News Resource of Pakistan

 

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Car production may fall short of target: experts ​

Friday, January 25, 2008

LAHORE: Car production would be another major industrial target that is likely to be missed as banks reduced car finance due to increase in bad debt while middle class has also opted out of car finance on account of high mark-up.

Industry experts said it would be impossible for the car production to cross the 200,000 units’ mark this year as is envisaged in this year’s target. They said it would be a miracle if the industry could achieve last year’s production level. They predicted the car production this year would be about 150,000 units that would be 25 per cent below the target.

The News has learnt the auto-vending sector is in dire trouble as the decline in the car production coupled with tendency of assemblers to import localised parts by paying higher duty has reduced their orders by 40-50 per cent.

Vendors complain the government failed to implement its auto-policy in its true spirit. They claim that the local auto-parts are much cheaper if actual duty is paid on imported part. They said the government imposed 50 per cent import duty on auto-parts that are manufactured in the country. However these parts in many cases they claimed are imported well below even the cost of raw material used on them. They said this makes the high protection duty meaningless.

Moreover they added the past government policy of allowing import of used cars impeded the growth of local automobile sector. They said the high mark-up on car financing was already slowing down the car loans but the defaults have practically stopped this process. They said the value of used cars has declined very sharply due to complaints about their quality.

They said the government stopped unregulated import of used cars when it realized its blunder. The banks compounded damage by granting liberal car financing on those vehicles with the result that the auto-industry is also suffering.

Former chairman Pakistan Association of Auto-Parts and Accessories Manufacturers (paapam) Syed Nabeel Hashmi said a large number of auto-vendors have closed their units for the time being as they could not afford the losses they suffered from infrequent power outages and non-availability of natural gas.

In fact he added some vendors even laid off their entire workforce. He said at least 15,000 workers in the auto-vending industry have been unemployed. He said the car production is not likely to suffer as the production has already slowed down but the tractor production is still on the rise. He said most of the tractor parts are made from iron ore or pig iron. He said there is acute shortage of these two vital raw materials.

Moreover he added the engineering industry that melts steel couldn’t operate without sustained supply of gas and electricity. Some vendors complain that the Engineering Development Board and the Custom Department have remained aloof to the miseries faced by the auto-vendors.

They said tractor manufacturers for instance are importing tractor parts from India via Dubai. They said the import of these parts has been banned. They said their claim could be verified if the officials of these two institutions pay a visit to any tractor assembling facility of the country. They said the parts manufactured in India could be easily found in the assembly lines.

Car production may fall short of target: experts