Pakistan Economy - News & Updates - Archive

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Relocation of big industries: Chinese investors briefed about government incentives, facilities ​

LAHORE (May 02 2008): The globalisation has provided Chinese investors a golden opportunity to relocate their large scale industries to Pakistan to reap the benefits of its most conducive business policies as compared to other regional countries. As per available figures as many as 10,000 industries are relocating per annum in China.

This was the consensus of the speeches made by Provincial Minister for Food Malik Nadeem Kamran and Lahore Chamber of Commerce and Industry (LCCI) President Mohammad Ali Mian while addressing a 14-member potential Chinese delegation, led by President of Shenzen Chamber of International Commerce He Xuewen. LCCI Senior Vice-President Mian Muzaffar Ali, Vice-President Shafqat Saeed Piracha also spoke on the occasion.

The Chinese delegation comprised people from real estate developers, construction companies, computer hardware trading, investment, consultants and high-ranking government officers. The Provincial Minister, who was representing Punjab Chief Minister Sardar Dost Mohammad Khosa, said the government would extend maximum facilitation to the Chinese investors for setting up their industry in Punjab.

He said the government of Punjab was ready to develop consultancy exchange programme with Shenzen for development of industrial infrastructure, high tech agricultural parks, logistics and transport sector, promotion of information technology (IT) industry and development of branding strategies.

LCCI President Mohammad Ali Mian told the delegation that the February 18 elections and the formation of democratic governments at the Federal and provincial levels had sent a positive signal to the outside world with several foreign investors now planning to shift their businesses to Pakistan. He said Pakistan was strategically located, providing shortest route to China for the Middle East, Africa and Europe.

He said the trade between Pakistan and China through proper channel had increased from 1,489 million dollars in 2004-05 to 2,956 million dollars in 2006-07, showing an increase of around 100 percent over a period of three years. The volume of trade between the two countries was expected to increase to 15 billion dollars during the next five years as a result of free trade agreement (FTA) between the two countries, he opined.

Mian said that the balance of trade between the two countries was heavily in favour of China, which required to be turned into a win-win situation for both the countries. Major imports of Pakistan from China include iron, steel products, tyres, tubes, chemical, medical, pharma products, fertilisers, yarn and thread of synthetic fibre, railway vehicles, hand tools and hardware products etc, he added.

Specific areas for investment/joint ventures could be coal mining, power generation, machinery, chemicals, building materials, especially cement production, textiles, synthetic fabrics, electronics, leather, paper and paper products and foodstuffs.

The possibilities of joint ventures for "Halal" meat production for export to the Muslim countries would be one of the most promising propositions for the Chinese investors, he maintained.

The LCCI President said that the government had prepared a special incentive package for the Chinese companies under Special Economic Zone, which offered exemption of customs duties (on import of machinery/equipment) income tax and sales tax to attract foreign investment from China.

Likewise, he added, the government of Punjab had allocated 500 acres of land to China National Power Company Limited in Faisalabad Industrial Estate to establish an industrial area, including 50-megawatt power project. An exclusive Chinese industrial park was also being developed at Lilla on Lahore-Rawalpindi Motorway, he said, adding that 65 acres of land in Sundar Industrial Estate had been earmarked by the government of Punjab for Chinese investors, out of which 44 acres had been allotted to the Chinese investors so far.

The balance of 21 acres was still available for Chinese investors, he added. Pakistan IT industry (PC) was growing at a rate of 12 percent per annum, he said, and added 1.2 million computers were sold in local market, out of which around 50 percent PCs were assembled by local vendors.

"We are of the opinion that Chinese companies should come forward for joint ventures to produce key boards, mouse, power supply and casing in Pakistan," he said, and assured all out cooperation with the Chinese investors.

Speaking on the occasion, President of Shenzen Chamber of International Commerce He Xuewen said that his delegation was visiting Pakistan for having first-hand knowledge about available business opportunities here. He hoped that in the coming days, the trade between Pakistan and China would touch new highs.

Business Recorder [Pakistan's First Financial Daily]

 

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World Bank chalks out plan to promote industrial sector in AJK ​

MIRPUR (May 02 2008): The World Bank is chalking out a comprehensive plan to promote and encourage collective and mutual potential of private and public sectors for industrial progress and to accelerate business activities in Azad Jammu & Kashmir, official sources said.

The sources told APP here on Thursday that close liaison and interaction between the private and public sectors in the field of industries as well as in small business sector is imperative to promote and gear up business activities in AJK.

The sources observed that it could also help in producing quality goods through the utilisation of the raw material from local areas. The World Bank, the sources indicated, intends to encourage this gesture of close interaction and mutual cooperation between the private sector and public sector institutions in the country including AJK.

It may be added that the industrial and investment potential of AJ&K, backed by a strong and reliable information database for local and foreign investment in AJK specially from lakhs of Kashmiri expatriates, was considered as one of the best areas of cooperation for promotion of industrial development in AJK.

Business Recorder [Pakistan's First Financial Daily]

 

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Pakistan's forex reserves fall to $12.611 bln​

KARACHI, May 2 - Pakistan's foreign reserves fell by $41 million to $12.611 billion in the week that ended on April 26, the central bank said on Friday.

Reserves held by the State Bank of Pakistan fell to $10.367 billion from $10.447 billion a week earlier, while those held by commercial banks rose to $2.244 billion from $2.204 billion.

Pakistan's foreign exchange reserves hit an all-time high of $16.486 billion on Oct. 31. 2007, but then fell sharply, partly because of outflows from the stock market after President Pervez Musharraf imposed emergency rule on Nov. 3.

The emergency was lifted on Dec. 15, but foreign investors remained cautious after the assassination of former prime minister Benazir Bhutto on Dec. 27.

On Friday, the rupee closed at a record low of 64.90/95 to the dollar, breaching the previous closing low of 64.66/70 on April 25. See [ID:nISL94596].

Pakistan's forex reserves fall to $12.611 bln - Yahoo! Singapore News

 

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Rupee falls to lowest level against dollar ​

Saturday, May 03, 2008

KARACHI: Panic continued to surround interbank market on Friday as rupee ended at lowest closing ever against US dollar on the back of escalating demand.

The national currency was being traded slightly below Rs65 against the greenback when the market closed on Friday.

The measures adopted by State Bank of Pakistan (SBP) in the beginning of outgoing week to curb speculation and ease depreciation in the value of rupee against greenback seem to be ineffective, analysts said.

“Widening trade gap, global oil price hike, low inflow of foreign investment due to ongoing uncertain political situation and annual June payments are simply causing dollar inflows to dry up, leaving the market with only one way to go -down,” a prominent forex trader Malik Bostan said.

He said high demand for dollar in interbank market compared to supply was creating panic in interbank market.

The country was expecting to receive home remittances worth $6 billion, $3 billion in the form of foreign investment and $3 billion through privatisation proceeds besides of remittance of one billion dollar by foreign exchange companies. However, foreign investors are shy to land Pakistan amid unstable political situation, whereas international lenders are also not extending a welcome hand in the prevailing world financial crunch.

The rupee commenced new day’s trading against dollar at Rs64.54. The dollar further stabilised its position to Rs64.92 till closure of the market.

In the open market too rupee remained under pressure against US dollar on another demand packed day of the week. Till late evening, dollar was buying at Rs65.70 and selling at Rs65.90 respectively.

On the international desks, dollar’s recovery due to another rate cut by the US Federal Reserve Bank also put technical pressure on rupee.

Rupee falls to lowest level against dollar

 

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Gulf states to heavily invest in agri, dairy ​

Saturday, May 03, 2008

KARACHI: The country’s agriculture and dairy sectors are looking forward to the inflow of precious foreign investment worth hundreds of millions of dollars as a number of Gulf states and multinational companies have announced at the ‘Middle East-Pakistan Agriculture and Dairy Investment Forum’ held in Dubai to invest largely in Pakistan.

Speaking at the inaugural session of the investment forum recently, the Chairman Abu Zahabi Group, Sheikh Nahayan Mubarak Al Nahayan, announced that his group is planning to set up a sugar mill in Pakistan and would be looking at agri-dairy investments as well.

Qatari Livestock Company and Abraaj Captial UAE would also invest in dairy farming and value-added dairy products from its $250 million fund for Pakistan.

Emirates Investment Group has also planned to invest in agri and dairy sector in the country and would announce the detail of its investment plan later on.

MAP Services Group, UAE in partnership with Gulf Partners has set up “Middle-East Food Fund” MFFñ Gulf’s food production basket.

MFF will make investments in Pakistan, Egypt and Georgia for food and food related products to be produced for the requirements in the Gulf.

A major Saudi food company, Al Rabie ñ Saudi Arabia, has also shown interest to source tomato paste, citrus pulp and packed beans from Pakistan. DFID-UK has announced to grant a 25 million pound project for dairy and agriculture infrastructure investment in Punjab. The company would also spell out detail of its plan soon.

The objective of the forum was to showcase Pakistan’s dairy and agriculture sector for the Middle East/ Gulf investors and for compatible Pakistani and Gulf business houses to exchange contacts, experiences and network with a view to generating interest in investments and JV opportunities in the sector.

Pakistan was listed as one of the major emerging markets, placing the country on a list of 25 countries displaying continued “moderate to strong growth over a sustained period of time.”

Gulf states to heavily invest in agri, dairy

 

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SPI hits all-time high at 23.93pc ​

Saturday, May 03, 2008

ISLAMABAD: The coalition government seems to have failed in controlling the inflation, which is the main concern of poor and fixed income families suffering the everyday increase in prices of essential food items.

Like the previous government the present set up too seems helpless in controlling the runaway food inflation. For the millions earning barely enough to eat one meal a day there is no difference in the current and previous government.

The policymakers have not come up with any measure to reign in galloping food prices. This would not only erode reputation of the government but could also spark riots in the country.

The Federal Bureau of Statistics (FBS) on Friday reported that weekly Sensitive Price Indicator (SPI) inflation year-on-year for 53 daily use kitchen items for week ending on April 30 has increased by an all time high of 23.93 per cent as compared to the corresponding week of the last fiscal.

Rising food and fuel inflation would have severe social implications on the lives of poor and fixed income families.

The trend of the weekly SPI with base year 2000-2001 during the last 16 weeks as compared to their corresponding weeks of last fiscal shows a steep trend. For the week ending January 17, 2008 SPI stood at 14.46 per cent, January 24 (12.33 per cent), January 31 (12.47 per cent), February 7 (12.04 per cent), February 14 (11.96 per cent), February 21 (11.6 per cent), February 28 (12.16 per cent), March 6 (14.53 per cent), March 13 (15.67 per cent), March 20 (17.03 per cent), March 27 (17.35 per cent), April 3 (19.67 per cent), April 10 (20.83 per cent), April 17 (22.71 per cent), April 24 (23.71 per cent) and now at the week ending on April 30, it stood at 23.93 per cent. For lowest income group earning below Rs3000 per month, SPI registered an increase of 27.06 per cent. For income group Rs3,001 to Rs5,000 SPI stood at 26.51 per cent, for Rs5,000 to Rs12,000 it was at 24.56 per cent and for Rs12,000 and more income earners SPI stood at 21.16 per cent as compared to the same week of the last fiscal.

According to the SPI bulletin, year-on-year the rise in the prices of some necessities and kitchen items was exorbitant. These items were wheat and wheat flour, rice, fresh milk, potatoes, sugar, gur, tomatoes, vegetable ghee,cooking oil, mustard oil and all type of pulses.

The bulletin on SPI, based on data collected for about 53 items from 17 centres, showed that 23 items registered increase whereas six items showed decline while prices of 24 items remained unchanged.

However, further analysis of the data revealed that year-on-year basis; several items were dearer by double digits. These include rice IRRI-6 up by 110 per cent, masoor pulse 103 per cent, fresh milk 93 per cent, basmati rice broken 77 per cent, vegetable ghee (loose) 58 per cent, gram pulse 58 per cent, washing soap 34 per cent, bath soap 28 per cent, potatoes 20 per cent, firewood 18 per cent, fresh milk 16 per cent, curd 16 per cent, bananas 14 per cent and tea (prepared) price up by 12 per cent over the corresponding week of last fiscal. Prices of six items decreased, yet compared to the prices of corresponding week of last year, items which showed increase in their prices were; wheat flour which is dearer by 59 per cent, wheat 56 per cent, egg farm 89 per cent and chicken price up by 24 per cent.

Besides, 24 items showed no change in their prices as compared to previous week, but still were costlier by double digit against corresponding week of the last fiscal. These items were mustard oil up by 71 per cent, cooking oil (tin) 59 per cent, vegetable ghee (tin) 55 per cent, match box 32 per cent, plain bread 27 per cent, kerosene 25 per cent, diesel 25 per cent, petrol 23 per cent and electricity charges were up by 23 per cent over the corresponding week of the last fiscal.

SPI hits all-time high at 23.93pc

 

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Power crisis can be overcome by closing markets at 8pm ​

Saturday, May 03, 2008

ISLAMABAD: The federal government has estimated that the torturous load-shedding can be overcome by saving 4,000MW electricity if the authorities are able to close down all markets and shopping malls by 8:00p.m.

The country is facing electricity shortage in the range of 3,000-3,500MW at the moment, a high-level official in the finance ministry told The News here on Friday.

Owing to skyrocketing oil prices, the finance ministry has also proposed energy audit of WAPDA’s machines, which are swallowing oil for producing electricity.

Criticising Prime Minister Yousuf Raza Gilani for announcing ‘eye-wash’ measures to save electricity, sources said that the premier should set an example by switching off at least one electricity light of the Prime Minister’s House. Switching off one light all over the country by each household and market, around 250MW can be saved.

The torturous load-shedding is aggravating and touching new heights by yawning power deficit up to 3,000 to 3,500MW, which was also putting pressure on oil import bill in the current fiscal year.

The country’s economy is at risk owing to higher oil prices. The current account deficit has hit $10 billion in first nine months (July-March) period of the current fiscal.

The imports increased by 60 per cent alone in March and such a high-level increase cannot be sustained on long term basis.

“The major factor for increasing trade and current account imbalances are soaring oil prices. There is also need to conduct WAPDA’s energy audit,” the official said. He also pointed out that there was a price differential related to oil in Pakistan and India as the price of diesel stood at Rs47 per liter here in this part while it was Rs63 per liter in India. “We cannot rule out smuggling of diesel to India,” said the sources. They said when wheat could be smuggled to India because of the economic incentives so why diesel could not be sneaked into neighboring countries on the same pretext. They said Textile Ministry was going to conduct energy audit of textile industries in order to gauge efficiency of the sector then why the WAPDA’s high-ups were reluctant to conduct audit of their machines to come up with facts.

The official said WAPDA employees got free of cost electricity as there were no meters installed at residence of their staff. “This issue was raised in the World Bank (WB) meeting back in 1998 where it was estimated that WAPDA’s own staff consumed Rs10.5 billion free of cost electricity at that time,” said the sources.

They said during the oil shock of 1973, the western world brought changes in the life style and adjusted them with new realities. “Now there is time to bring changes in our style and awareness should be created among the masses to achieve the desired results,” said the sources.

A senior bureaucrat told this scribe that “WAPDA’s officials are misusing 1,500MW as there are no meters installed at their residence all over the country.”

He said the WAPDA’s high-ups are misguiding the government as there is no problem to overcome load-shedding within one and a half months period. He said there are still 3,750MW within the system of WAPDA and it can eliminate load-shedding within the above cited period.

Power crisis can be overcome by closing markets at 8pm

 

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Maybank signals major acquisition in Pakistan ​

Saturday, May 03, 2008

KUALA LUMPUR: Malaysia’s largest lender, Malayan Banking Bhd (Maybank), suspended trade in its shares on Friday, pending announcement of a “material acquisition” amid talk that it was expanding into Pakistan.

Maybank, which last month denied a media report it was in talks to buy a strategic stake in Pakistan’s MCB Bank, made the comment in a stock-exchange statement, but gave no more details. A bank spokesman had no immediate comment.

MCB is the largest bank in Pakistan in terms of market value and is worth around $4 billion. Pakistan’s strongly performing banking industry ranks among the world’s most profitable after years of financial reform, economic growth and rising incomes. MCB shares were up 3 per cent at 427.5 rupees by 0951 GMT in afternoon trade on the Karachi Stock Exchange, while Maybank shares last traded at 8 ringgit. Maybank has lost 13 per cent of its value so far this year.

One dealer at a Malayian brokerage said Maybank was preparing to announce an acquisition in Pakistan, despite facing criticism over paying too much for a stake in an Indonesian bank in March.

Last month, Malaysian weekly the Edge quoted unidentified sources as saying Maybank was interested in buying a stake of 10 to 20 per cent in MCB.

But Maybank shares were sold down heavily after it agreed to buy Indonesia’s sixth-largest bank, Bank International Indonesia, for a steep 4.6 times book value.

Maybank signals major acquisition in Pakistan

 

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Silk Route ​

Dry Port at Sost starts business operations​

Saturday, May 03, 2008

ISLAMABAD: Pakistan and China have re-opened border for trade and tourism at Khunjrab from May 1.

According to a statement issued by the management of the Silk Route Dry Port, the port has also started its business operations with the taking over of the new management of the port at Sost (Upper Hunza) near Khunjarab.

The inaugural ceremony of the Silk port with its new management was held in the presence of Chinese friends who came to Sost to attend the ceremony.

Officials of the Northern Areas Administration, management of the Silk Route Dry Port and a large number of people of Hunza hailing from Kilick to Mayun were present there to warmly welcome their Chinese fiends at the ceremony.

The nine-member Chinese delegation at the ceremony was led by Mr Dang.

Speakers said that people of Hunza are playing a vital role in the socio- economic development of Pakistan and would continue to play their important role in future as well.

The newly elected Chairman of the Silk Route Dry Port, Ali Afsar, assured of his complete support to Pakistan’s local administration, customs officials and Chinese customs officials at the dry port.

Silk Route

 

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Energy crisis ​

Inefficiency, corruption major factors​

Saturday, May 03, 2008

LAHORE: High electricity demand and low production capacity are not the only factors that have exacerbated the present energy crisis, but political appointments on professional positions in the previous government have also played a major role.

The energy crisis has been linked to soaring international oil prices, which is an easy explanation, putting a cover on Pakistan Electric Power Company (PEPCO)’s internal inefficiencies, corruption and poor leadership.

Last year too, the power shortage was acute but the duration of load-shedding was restricted to four to five hours and each supply cut was not more than 30 minutes. The economy remained under pressure during the period after that. However, if it is accepted that demand this year has increased by 10 per cent over last year, the load-shedding should have increased by 10 per cent and not 60 to 100 per cent as is happening these days.

The high power outage is due to decline in thermal production which is the result of incompetence. The PEPCO is in dire financial straits not only because of high oil prices, but also due to mismanaged finances by allowing the receivables to accumulate to unmanageable levels and in return withholding of payments for the energy it buys from the private sector.

The company buys more than half of its thermal power from the private sector. It has failed to pay the independent power producers (IPPs) in time, forcing them to reduce production according to the resources available to buy fuel to run the generators.

The dues of the Karachi Electric Supply Company were allowed to pile up to over Rs33 billion before suddenly taking a drastic step of reducing supplies.

The entity should have been warned when the dues had crossed Rs4 billion which it could arrange with some efforts. The burden of non-payment of KESC dues was passed on to the IPPs whose outstanding amount was withheld as a result.

Thermal production from PEPCO’s own plants this year is far less than its installed capacity. This has caused more shortage than it should be if the institution was managed professionally or efficiently.

Previous Water and Power Development Authority (WAPDA) chairman had been pleading with the government to arrange rental power as a stopgap arrangement till new generation capacities were added to the system. He succeeded in arranging 350 megawatts rental power during his tenure. The end-price paid for gas-fired plants was 6.89 cents per kilowatt hour (kwh). Now PEPCO management has agreed to install new rental gas-fired plants which have been acquired at 9.26 cents per kwh.

However, this process is not transparent which should have been carried out through international competitive bidding as laid down in government’s policy. Despite reservations from some government circles, the National Electric Power Regulatory Authority (NEPRA) has approved the plan, stating “the authority considers that the project has proceeded to a stage where not ratifying or denying the rates agreed between parties (the PEPCO and the renter) would result in stalling the process of provision of adequate generation capacity on fast-track basis.”

Energy crisis

 

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‘No discrimination against foreign investors’ ​

Saturday, May 03, 2008

LAHORE: Domestic and foreign investors are treated in Pakistan equally with regards to facilitation and taxation, and there is no discrimination whatsoever.

The policy of remittances in the country is also very liberal, Investment Division & BoI Office, Lahore’s incharge Syed Asghar Abbas Rizvi told a 14 member Chinese delegation visiting the Lahore Chamber of Commerce and Industry here on Friday, headed by president Xuewen of the Chamber of International Commerce Shenzhen.

The Chinese delegation is currently visiting Pakistan to explore possibilities of a Joint Venture and to expand mutual business ties.

Asghar Abbas Rizvi apprised the delegates of very liberal and business friendly investment policies in Pakistan, its resource base and potentials including Pakistan’s competitive edge for investments in various vibrant sectors of the economy, including telecommunications, engineering, mining and services.

There is no restriction on remittances of capital and profits, he added.

The leader of the Chinese delegation appreciated these incentives offered in Pakistan and the warmth and affection shown by the people of Pakistan during their visit.

He also assured that business meetings between both countries will finalise Joint Venture agreements in various sectors to the mutual benefit of both.

The Director, Investment Division & BOI on the occasion distributed a set of BOI promotional publications which included investment guides and sectoral profiles on potential sectors.

‘No discrimination against foreign investors’

 

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Reserves’ investment in foreign countries: FBR wants SBP’s fund managers taxed​

By Muhammad Yasir MINFAL seeks approval from ECC on Bt cotton​

KARACHI: The Federal Board of Revenue (FBR) is insisting the State Bank of Pakistan (SBP) to collect income taxes from those foreign fund managers engaged in investing money in various global markets, sources told Daily Times.

According to the sources, the tax authority estimated more than Rs one billion taxes from the foreign fund managers earning on behalf of the SBP’s money in foreign countries. The FBR is demanding this tax under the fee for technical services section 2(23) levied on the financial advisors whether they are non-resident or they don’t have any establish office inside the country.

The SBP invests its money through foreign fund managers and keeps deposits in other countries after closing working hours in Pakistan. The detailed scrutiny of SBP’s financial statements for the period 2006-07 revealed that the central bank made a record profit Rs 818.148 billion in 2007 and Rs 686.966 billion in 2006 through investment and deposits accounts in the international market that also shows 19 percent growth in a year.

The officials said the FBR, in a meeting with SBP, has explained the legal tax position on payments made to the non-resident fund managers, as contained in the Income Tax Ordinance, 2001, and the bilateral Avoidance of Double Taxation Treaties.

“The definition of “Technical Service” as given Section 2 (23) of the Income Tax Ordinance 2001, has a wider scope and it covers the “managerial services” and consultancy service.” The services of non-resident fund mangers being managerial and consultancy nature fall within the ambit of the mentioned definitions, “sources quoted as saying by FBR officials.

The tax authority asked SBP as a withholding agent deducting or collecting income tax from the gross amount of payments made to the non-resident fund managers and foreign banks as service charges u/s 152 of the Income Tax ordinance 2001.

On the other hand, SBP tax consultant, Shabber Zaidi expressed his contention and said the nature of work done by the non-resident fund by the non-resident fund mangers falls within the ambit of “business income” rather than “fee for technical services”. He made references to Indian case law in this connection.

The investments in the international market are made through foreign fund managers, and the deposits are kept with the foreign banks and financial institutions. Both the foreign fund managers and the banks charge SBP for their services, it is learnt. These financial advisors charge two percent money from SBP as initial consultancy fees.

Sources disclosed said that taxmen claim that these financial advisors, under the taxation laws of various countries, are also liable to pay 12 to 15 percent withholding income tax to the immediate tax authority.

During the scrutiny, FBR identified three foreign managers in UK and one in Singapore have been doing investments of SBP money for different time period, they further disclosed. Various meeting were held between officials of FBR and SBP on this issue, but the central bank is reluctant to collect taxes from their foreign financial advisors, they told. In view of the sensitivity of the matter it was concluded that the issue would be settled through a meeting between the chairman FBR and governor SBP.

Daily Times - Leading News Resource of Pakistan

 

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Public Sector Development Programme: Infrastructure, health and education on govt’s priority list​

ISLAMABAD: New elected government is likely to re-prioritise the Public Sector Development Programme (PSDP) with infrastructure, health and education as main priorities for the next fiscal year 2008-09, official sources told Daily Times on Friday.

A PSDP clean up exercise has been carried out to create a reasonable space for the new elected government to include its own new projects in the next year’s PSDP by deleting some big as well as politically motivated projects announced in the government of Pakistan Muslim League (Q), sources added.

The process for prioritising the projects for the next year’s PSDP is expected to initiate during Annual Plan Coordination Committee Meeting likely to meet in third or fourth week of May 2008.

Projects not benefiting general public and were designed and approved to gain political motives and giving benefits to influential were expected to be dropped from the PSDP in the next fiscal year, sources disclosed.

A careful selection of projects would be undertaken which would be financed through bilateral as well as multilateral loans to avoid excessive foreign borrowing. No extension in projects would be granted, giving desired results especially rural development in provinces, sources said.

Although the Planning Commission officials are claiming that no cut has been made in the PSDP for the current fiscal year 2007-08, however, putting on hold those projects work on which not started during the first half of the current fiscal are being seen as cut in development programme.

During the last government, thousands of projects worth Rs 2,500 billion have already been approved and if the new government allows implementation of such projects than it would not be able to include its single project in PSDP in next 7 years, sources added.

The country requires infrastructure development on war footing to put the economy on actual track, achieving required growth rate of 8 percent or more in coming years to address the issue of reducing poverty.

Energy and food crisis in the country requires the government to focus development of infrastructure for water storage, hydel power generation, highways and establishing rail and road links with neighbouring countries with cool chains and where housing facilities along.

A renewed effort is expected to be made during the five-year tenure of the new elected government for infrastructure development including dams, ports, rail and road links, said the sources.

National Trade Corridor (NTC) would also be re-prioritised to make it more beneficial for the international trade and link between China, Central Asian Republics and Russia and Gulf States as well as rest of the world, sources added.

Health and education being basic needs of the 160 million people of the country would be the second and third priorities in the next year’s PSDP at the federal as well as in the provincial annual development plan’s (ADPs).

In the last government, many foreign funded projects, which were allowed to continue after actual completion period provided people to continue enjoy handsome salaries, luxury vehicles and other monetary benefits, said the sources.

In some cases, projects were designed and started to give jobs and benefit to dear ones through PSDP allocation.

The sources added that in the last government, Planning Commission was used as project approval authority and its role in the new government would as a think tank to recommend the government steps required for rapid economic development with concrete proposal for its implementation.

Planning Commission would be tasked to carryout sectoral development studies as well as other studies in the new set up, which were being arranged in the last government through consultants of International Financial Institutions (IFIs), sources informed.

Daily Times - Leading News Resource of Pakistan

 

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PSDP 2008-09 may range up to Rs 550 billion ​

ISLAMABAD (May 03 2008): The Public Sector Development Programme (PSDP) for the year 2008-09 is likely to range between Rs 535 billion and Rs 550 billion despite the fact the new government is facing the overspending of over Rs 500 billion in the current year.

Given the tough challenges being faced by the government, the likely allocation for development is showing the new government commitment to the development of the country, sources told Business Recorder on Friday. To take the development agenda ahead is essential for infrastructure development, which plays an important role in attracting role in maintaining the growth trajectory around 7 percent.

The government may pass on the total differential of oil prices to the consumers before close of 2007-08. This would give the government some fiscal space to make considerable budgetary allocations for development, sources said.

The Finance Division's priorities committee has completed its exercise of consolidating the development allocation. The Planning Commission (PC) is of the view that PSDP size should be at least Rs 550 billion in the next fiscal year. The Finance, on the other hand, says that Rs 535 billion should be enough allocation for PSDP. Sources said that both Finance and PC will give their opinions in the Annual Plan Coordination Committee (APCC).

According to sources, before the priorities committee began the exercise, the PC was striving for allocation of around Rs 624 billion for next year's PSDP. "The proposed allocation of Rs 624 billion was being made, keeping in view the demands of the ministries," sources added.

The allocation for the development budget was a tough task for the government. But the decision of the government to pass on the oil prices differential to the consumers is seen to be a factor that the government is making at least reasonable allocation for development budget.

Even in current fiscal year there has been a great pressure on the development budget and the government had to adjust the available funds in order to furnish some savings in PSDP 2007-08, which is Rs 485 billion. Keeping the operational shortfall of Rs 35 billion, the actual PSDP size is 450 billion. An allocation of Rs 150 billion is for provincial development programmes in the current fiscal year. The allocation outside PSDP for development is Rs 239 billion.

According to the proposal of the priorities committee, the allocation for provincial development programmes could be curtailed to Rs 100 billion in the next budget. The rest, which could be between Rs 435 to 450 billion, would be for federal development programmes.

Around 667 new schemes were accommodated in the 2007-08 PSDP with an allocation of Rs 45 billion, whereas in the current fiscal year so far the Planning and Development (P&D) Division has approved 218 development projects costing more than Rs 565 billion. Apart from this, 1444 development projects are those which have been under execution for the last some years.

Sources said that if looked into the quantity of the projects, there would be a lot of pressure on the Finance Division to substantially increase the PSDP size. But the finance division is of the view that all the projects' executing agencies must concentrate more on timely execution so that the number of time overrun and cost overrun schemes could be brought down.

Business Recorder [Pakistan's First Financial Daily]

 

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Efforts on to bring maximum foreign investment: Fehmida ​

BADIN (May 03 2008): National Assembly Speaker Dr Fahmida Mirza has said that all out efforts are being made to bring maximum foreign investment to establish industries. This would also help overcome the problems of unemployment, she said while addressing an open Katchery in Tando Bago, some 25 kilomters away from here on Thursday.

The country was suffering multi-dimension challenges both in internal and external sides and there was the need of sincere efforts to meet the tasks in effective and collaborative manners, she added. The NA Speaker said the country was in grip of internal and external threats and there was the need that we should realise their responsibilities and bring out the country from the crisis.

Besides unemployment, the countrymen are also suffering many issues including price hike, shortage of essential commodities and water, and sincere efforts are underway to provide maximum relief to the masses by launching effective projects for their welfare.

She said that because of the efforts of the present government, the issues of the masses had been started addressing, however, adding that resolving the peoples' issues from grassroots level would take some time.

Dr Fahmida Mirza termed her election as NA Speaker a great honour, adding that Sindh was the land, which received many honours including the first Muslim Woman Prime Minister and first Woman Speaker of the Assembly in Asia. She informed that she came in the field of politics on the advice of Shaheed Mohtarma Benazir Bhutto who wanted to see her to serve the masses and help in completion of the mission of Zulfiqar Ali Bhutto.

She thanked the people of Badin for expressing confidence on her and elected three times from the constituency and assured the people that all out efforts would be made to address the grievances of the people of Badin at the earliest.

She also thanked PPP Co-Chairperson Asif Ali Zradari and other senior party leaders for expressing confidence upon her and nominated for NA Speaker. Being the Speaker, she said that all out efforts would be made to come up to the expectation of the people of the country.

While hearing the problems of the people, the NA Speaker asked the officers of Sindh Irrigation Department to ensure the judicious distribution of water and take stern action against water theft. She also asked the officers concerned to improve water distribution system and ensure the availability of irrigation water at the tails of the canals so that the growers could face no difficulty in cultivating crops.

All illegal connections should be cut off and cases should be registered against those, who involved in water tempering, she directed, adding that strict disciplinary action would be initiated against those officers who found negligence in their duty.

Dr Fahmida Mirza vowed to bring such system in this country, under which, the people could take sigh of relief by getting all basic facilities at their nearest. She informed that a complaint cell was being established in Badin where the people could submit their complaints. The genuine demands of the people would be addressed without any discrimination, she maintained.

Business Recorder [Pakistan's First Financial Daily]