Pakistan Economy - News & Updates - Archive

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'Power generation projects must to boost industrial growth' ​

ISLAMABAD (May 21 2008): The measures announced by the government to overcome the power shortage will help in saving electricity for essential uses, but the government should seriously think of establishing small and large electricity generation projects, which are extremely essential for the industrial growth, running other allied business and daily life.

This was stated by President of Islamabad Chamber of Commerce and Industry (ICCI) in a meeting here on Tuesday. He said that energy conservation steps would help in saving energy on temporary basis, but there was a great need to look for permanent solutions for the electricity generation, because in the years to come, more electricity would be required to meet the increase in demand.

The ICCI President said that at present industrial production was badly hampered due to shortage of electricity; as a result exports were also affected adversely. He said that for increase in exports, Pakistan had to seriously think for the power generation by launching small and big energy generation projects.

Abbasi said that the foreign investors showed great concern as far as the energy crisis in Pakistan was concerned and now they looked for other countries to make investment. "If Pakistan keeps on adopting policy of shortcuts and temporary solutions and ignores long-term planning, then our country has to face more difficult situation in future," he observed.

He said that business community would support the measures announced by the government for energy conservation, and assured the government of markets cooperation. "It is now the responsibility of the every Pakistani to take measures at its own for saving energy and avoid operating electric appliance unnecessarily," he added.

Business Recorder [Pakistan's First Financial Daily]

 

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July-April oil import bill crosses $8 billion ​

KARACHI (May 21 2008): The country's oil import bill has amounted to $8.7 billion during ten months (July-April) of the current fiscal year due to the soaring crude oil prices in international market. Crude prices on Tuesday hit record $129 per barrel due to increasing demand across the world.

The Saudi Arabia has announced that it will boost its oil output aimed to control the rising prices of commodity. However, this announcement did not have any positive impact on the world market and indicators are still on upward side.

The soaring oil prices have badly disturbed the country's import bill. As per official statistics, the petroleum group import bill has gone up by 47.04 percent during the July-April period of the current fiscal year. There has been an increase of $2.78 billion during this period from last year's $5.89 billion.

This the first time that oil import bill has gone beyond $8 billion as during last fiscal oil imports amounted to $7.339 billion. Thus the oil import bill during July-April is also some 1.34 billion dollars above the oil imports of last fiscal year.

The import of petroleum products has mounted by 53.60 percent to 4.65 billion dollars against 3.02 billion dollars during corresponding period of last fiscal year.

While the import of crude oil has gone up by some 40.11 percent to 4.019 billion dollars during the July-April 2008 over the 2.86 billion dollars during corresponding period of last fiscal year.

Oil import bill month on month has increased by 102.53 percent to 1.25 billion dollar during April 2008 over the import of some 619.057 million-dollar during April 2007. In addition import during April 2008 as compared to March 2008 depicting an increased of 16.48 percent, as during February 2008 oil imports stood at 1.076 billion dollar. "The rising oil import bill already has created difficulties for the government's policy makers on different fronts including import bill and exchange rate," analysts said.

The rising import bill not only a challenge for the newly constituted political government, but it is also expected that oil import bill would cross 10 billion-dollar by the end June 2008 on the back of high international prices, they added.

"Slow foreign inflows compelled government to utilise its foreign exchange reserves for oil payment ,and over 4 billion dollars decline has been witnessed in the country's forex reserves during current fiscal year", they said.

Due to the huge payment from the foreign reserves the Pak rupee is being devalued some Rs 8 to the dollar and presently exchange rate has reached Rs 69.90 to the dollar from Rs 61 to the dollar few months back.

Although the oil prices in the local market have been raised by four times during the last two months, last week Prime Minister Yousuf Raza Gilani did not allow Oil and Gas Regularity Authority (Ogra) to further raise the POL price aimed to give relief to the masses.

Business Recorder [Pakistan's First Financial Daily]

 

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Agriculture to get priority in upcoming budget: Naveed ​

ISLAMABAD (May 21 2008): Federal Minister for Finance, Syed Naveed Qamar said that agriculture would be given priority in the upcoming fiscal budget with an aim to promote the sector for ensuring food sufficiency in the country. "Keeping in view the worldwide food situation, agriculture sector would be given top priority in budget 2008-09," finance minister said while talking to journalists after dinner reception here on Monday night.

The Board of Investment had arranged dinner reception in the honour of business community and investors here on Tuesday night with an aim to apprise them about the investment opportunities in the country. The federal minister said that agriculture was the backbone of country's economy, however, unfortunately it was not given proper attention and neglected in past years.

Besides, the federal minister said that special attention would be given towards infrastructure development to lead the country towards economic prosperity. Promotion of agriculture and manufacturing sectors will be given priority for sustainable economic growth, the minister added.

Speaking at the reception, Syed Naveed Qamar said that there has across-the-board consensus on economic polices of the government adding that continuation of investment-friendly policies was the reflective of government commitment to facilitate investors in the country.

He said that investment and privatisation policies have continuity to take the country forward towards progress and economic prosperity, however, added that country was facing great challenges on economic front, which have aggravated following the surging oil and food prices. He, however, expressed the hope that with the positive support of business community and investors, the government would overcome all these crisis successfully.

He said that government has been giving special attention towards energy generation adding the serious efforts were being made to overcome the power crisis. He expressed the hope that load-shedding problems would be overcome within a year. He said that coal sector would be given priority in power generation.

Business Recorder [Pakistan's First Financial Daily]

 

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Foreign investment in the energy sector ​

EDITORIAL (May 21 2008): Prime Minister Yousuf Raza Gilani assured investors that he met on the sidelines of the World Economic Forum held in Sharm-el-Sheikh, Egypt, that the new government in Islamabad will fully support foreign investors, especially in the energy sector.

The Prime Minister reminded the gathering that it was Benazir Bhutto's government that had actively sought the Independent Power Producers (IPP) to invest in the country and was thereby responsible for providing an additional 4000 to 5000 MW of electricity to the national grid. Nothing has been added since or such has been the PPP refrain.

There is little doubt that the severe energy shortage in the country is seriously impacting on the productivity of the country. It is, therefore imperative for the government to come up with both short and long term measures to meet the ongoing energy crisis.

On an emergency basis the government has already announced a number of measures that would be required, for example, allowing the private sector to enter the field of generation, a continuation of the policy of the past eight years. The other measures, namely, switching off all air-conditioners in the PM house for three hours a day in the morning, using energy saving bulbs as well as forcing shops to close at 9:00 in the evening would prove effective only in so far as there is compliance. In the private sector, it is difficult if not impossible to enforce such measures. Be that as it may, a good start has been made and it is a matter of time when the results would start to kick in, in terms of reduced load shedding and increased productivity.

In the long run, however, the government would have to take other decisions to facilitate energy supply. There is much talk of building dams that would have the capacity to meet our energy needs at minimum cost, but at this stage it would be an extremely unpopular decision to support the building of dams with long gestation periods while not looking at importing energy from energy surplus countries around us. Iran does come to mind, as does energy surplus Central Asian. However there are issues in accessing both possible sources - issues that are related to the United States and its foreign policy goals as well as security concerns associated with Afghanistan and Russia's desire to maintain its regional dominance.

There is little doubt in the world today that ensuring an uninterrupted energy supply at affordable prices is not only critical for the economy of a country but also for the political survival of any government. One has only to look at the two most recent wars that the United States has been involved with in recent times to know the value it places on an uninterrupted cheap supply of energy.

While US adventures in Iraq are attributed by a global public to its focus on ensuring that there is no supply disruption which would negatively impact on the price of oil in the United States; yet some argue, perhaps unfairly, that Afghanistan provides a critical link between the energy surplus Central Asian Republics and the energy deficient South Asia - the raison d'etre of US military intervention in the country.

The fact that the US has been unable to guarantee the supply chain between the Central Asian Republics contiguous to Afghanistan and energy deficient South Asian countries is mainly because of (i) Russia's Gazprom deal to purchase all surplus energy to ensure its regional supremacy over the United States and (ii) the continuing security issues associated with laying any pipeline or transmission line linking Central Asia with South Asia.

This is not to say that the US is not exerting considerable pressure on Pakistani and Indian governments not to purchase energy from Iran - a project that has few hitches other than the price of oil demanded by Iran in the early stages of the proposed project. This bottleneck has been practically resolved in recent weeks and President Musharraf has indicated that he will travel to Iran to finalise the deal. It is to be hoped that the deal does follow through, for it would form the basis of our medium term energy policy as the proposed project would be completed in two to three years time.

President Bush voiced serious concerns over the proposed Iranian pipeline deal to Prime Minister Gilani which implies that Pakistan would have to carefully consider the pros and cons of the deal, especially considering US annoyance against another decision of the newly elected government to hold parleys with the militants in the border areas with Afghanistan. Those who may encourage the government towards an independent foreign policy must remember that US economic and military support for Pakistan is considerable and that multilateral donors can be swayed not to extend loans to a country if powerful donor countries vote against any project.

Business Recorder [Pakistan's First Financial Daily]

 

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S&P downgrading of Pakistan's credit rating ​

EDITORIAL (May 20 2008): The sad news, though shocking, was expected for some time. Standard and Poor's Rating Services on 15th May lowered its long-term foreign currency debt rating on Pakistan to 'B' from 'B+' and its long-term local currency rating to 'BB-' from 'BB'.

"The outlook is negative. In tandem with the lowering of sovereign credit rating, we are also lowering the Transfer and Convertibility Assessment rating on Pakistan to 'BB-' from 'BB'," added the S&P. According to a statement by Agost Benard, a credit analyst of S&P, the negative outlook reflects the assessment that Pakistan's vulnerabilities may be accentuated further, given that the emergence of a stable, cohesive and effective physical environment needed to tackle mounting macro-economic imbalances does not seem to be at hand.

"Following a year of turbulence accompanying Pakistan's transition to democratic rule, macro-economic management and policy formulation remains significantly constrained by the precedence of political imperatives in the context of coalition and historical rivalry between the two main partners," Benard pointed out.

The downgrading of rating by S&P was backed by a proper analysis of the current situation. Its report observed that in a sharp reversal of years of consolidation, the general government fiscal deficit (excluding grants) was set to reach about eight percent of the GDP in fiscal 2008, well above the four percent of fiscal target and the average 3.7 percent for the past five years.

Significant expenditure overruns due to rising subsidies and interest costs, defence and capital spending were exacerbated by the apparent atrophy of an already weak revenue effort. If the current trend persists throughout the year, Pakistan's revenue to GDP ratio could decline to about 14 percent from 15.3 percent in FY07.

Fiscal shortfall of this magnitude, in conjunction with adverse changes in the financing mix towards short-term higher-cost domestic borrowing and commercial external borrowing, would jeopardise Pakistan's favourable debt dynamics and its debt-to-revenue ratio could rise to about 400 percent against the median 171 percent for similarly rated countries.

In the external sector, a rapid rise in the oil import bill and stagnant exports are yielding record current account deficits, projected to reach 7.3 percent of GDP for fiscal 2008. "With the underlying negative political setting partly causing as well as prolonging the fiscal and external deterioration, an improvement in the rating on outlook is not envisaged unless a fundamental shift occurs".

From the above analysis, it is more than obvious that there is no ulterior motive of any party or some kind of conspiracy of silence involved and downgrading of Pakistan's credit rating is based on a fundamental shift in some of the major indicators of the economy and continuous political instability in the country. The outlook perhaps would have been more negative if the S&P had taken into account the most recent political events in the country which point towards a likely confrontation between the two main political parties and further deterioration in the external sector accounts.

The fact of the matter is that nuclear-armed Pakistan has been through a tumultuous 14 months since President Pervez Musharraf tried to dismiss the top judge in March last year. The crisis was followed by emergency rule, general elections in February, 2008, formulation of a four-party coalition government at the centre and then quitting of the second biggest party from the government.

The lawyers' community continues to be in revolt and the country is now standing at a juncture where nobody can even predict with some degree of confidence the course of events in the next few months. Economic woes of the country are also multiplying.

Inflation rate is high and increasing, current account deficit has widened to unsustainable level, government spending has caused the budget deficit to balloon and the rupee continues to be under tremendous pressure despite State Bank's occasional intervention in the foreign exchange market. The worst part is that political imperatives are dominating the scene while the economy continues to drift. The outgoing Finance Minister had indicated that the country would try to attract inflows of about 3-3.5 billion dollars to tide over the situation but the plans of the new Finance Minister are still unknown.

There is no ambiguity about the undesirable consequences arising from downgrading of Pakistan's credit rating. Both foreign and domestic investors would become jittery and try to avoid the country. In fact, foreign investment is already down by a sizeable margin. This would adversely affect the growth rate of the economy, increase unemployment and may drive the rupee to new lows.

The negative outlook would also hurt the government's ability to raise foreign debt, especially at a time when the country is facing a huge current account deficit and experiencing a consistent decline in its foreign exchange reserves. Venturing into the international debt market would become more difficult and expensive and the proposed issues of sovereign bonds may have to be put on hold.

In our view, there could be no two opinions about the urgent need to revert to the path of economic emancipation and political stability which is basic to the improvement of credit rating and a positive change in the country's perception.

The restoration of investors' confidence is of utmost importance, at least till the time the country is dependent on foreign resources for a respectable level of investment. The leaders of the country could send a positive signal in this regard by avoiding a confrontational attitude and giving democracy a chance to flourish.

Business Recorder [Pakistan's First Financial Daily]

 

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Pakistan's per capita income rises to USD 1,027​

Islamabad, May 21 : Pakistan's per capita income has risen to $1,027 in fiscal 2007-08 against $878 in the last financial year.

The total size of Pakistan's economy went up to $170.8 billion in the fiscal that ends June 30 against $143.9 billion in the previous fiscal to register a growth of $26.9 billion, says a paper forwarded by the National Accounts Committee (NAC) to the Annual Plan Coordination Committee (APCC).

During the last financial year, the provisional per capita estimate claimed by the then government of prime minister Shaukat Aziz was $925 but was reduced to $878 in accordance with the finalised per capita income related figures.

Inflation is projected at 10.5 percent in the current fiscal.

Quoting from the NAC paper, The News said Wednesday that production of major crops fell one percent due to lower than expected output of wheat and cotton.

Production of minor crops also fell 2.97 percent.

This meant overall farm produce grew a mere 1.49 percent in 2007-08.

Wheat production is estimated at 21.7 million tonnes in the current fiscal against 23.3 million in the previous financial year.

Keeping this in mind the government of Prime Minister Yousaf Raza Gillani has decided to import 2.5 million tonnes of wheat in addition to the 1.7 million tonnes that have already been imported at an estimated cost of Pakistani Rs.60 billion.

Rice production stands at 5.5 million tonnes against the envisaged target of 5.7 million tonnes, while cotton production is estimated at 5.9 million tonnes against 6.5 million tonnes in the previous fiscal.

The production of sugarcane registered an increase to 63 million tonnes in fiscal 2007-08 against 54 million tonnes in the previous year.

--- IANS

Pakistan's per capita income rises to USD 1,027 @ NewKerala.Com News, India

 

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Moody's downgrades Pakistan on economy, politics​

HONG KONG, May 21 - Moody's Investors Service lowered Pakistan's sovereign ratings on Wednesday due to concerns over its economy at a time of political uncertainty, becoming the second rating agency to downgrade the country this month.

Moody's cut its government bond ratings to B2 from B1, or five levels below investment-grade, citing its concerns over the country's fiscal position and economic policies in a volatile political environment.

That brought Moody's ratings on Pakistan in line with rival Standard & Poor's Ratings Services, which last week downgraded it by one notch to a B rating in a move that analysts saw as reflecting the economic and political turmoil in the country.

But unlike S&P, Moody's opted to raise its outlook on Pakistan to stable from negative -- indicating there was no further downside to the rating in the immediate future -- on the prospect the country could receive external financial support from multilateral organisations or creditors.

"Substantial fiscal loosening and poor tax collection had led to a sharp erosion of the fiscal position in the run-up to the February elections which have not been adequately corrected," Moody's analyst Aninda Mitra said in a statement.

"Furthermore, Pakistan's difficulties were compounded by a haphazard policy response to sharp supply-side shocks, amidst a prolonged period of intense turmoil that accompanied a difficult post-election political transition."

Pakistan has been through a rough 14 months since President Pervez Musharraf tried to dismiss the country's top judge in March last year. That sparked a crisis that was followed by emergency rule and then general elections in February.

But the newly formed four-party coalition government is facing the possibility of breaking up after former prime minister Nawaz Sharif, who heads the second biggest party in the group, said last Monday his members were quitting.

The worsening political backdrop comes amid a deteriorating economic and fiscal situation.

Annual inflation is at its highest in more than than three decades at 17 percent, while the country's current account gap has widened and government spending has caused the budget deficit to balloon.

Moody's said Pakistan's fiscal and current account deficits could surpass 7 percent of gross domestic product this year, constraining the central bank's resources and increasing inflationary pressures.

Meanwhile, the instability of the coalition is undermining the policy response needed to stabilise these imbalances, Moody's said in its statement on Wednesday.

But Moody's still raised its outlook on the country to stable, saying external assistance could give a short-term boost to Pakistan's fiscal situation.

Moody's downgrades Pakistan on economy, politics - Yahoo! Malaysia News

 

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One million tons of wheat to be imported before Ramazan: TCP told to cancel flawed tender ​

ISLAMABAD (May 22 2008): The Trading Corporation of Pakistan (TCP) will cancel, in the next two days, the tender issued for import of 0.25 million tons wheat, sources told Business Recorder here on Wednesday. "The Food Ministry has issued instructions to TCP to cancel its tender for import of wheat published in the newspapers a few days back (May18)", sources said.

They said that the terms used in the tender were not in unison with wheat specifications finalised by Minfal. "TCP used the terms like 'White Wheat' and 'Red Wheat' despite the fact that it is against the specifications of the government. So, it will have to cancel the tender for importing wheat", sources added.

On the other hand, sources acknowledged that to overcome shortage of wheat in domestic market, the government has directed the TCP to import one million tons of the commodity as quickly as possible. "The tender notice that will be issued by TCP to import one million tons wheat will have to be in accordance with the specifications of the government", sources said.

This decision was taken in the recently held 'Secretaries' Committee meeting. "TCP will have to ensure that this quantity of wheat should reach the country before the start of Ramazan", sources added. They said, "Last year, in Ramazan, the local market was witnessing acute shortage of wheat. It had become very difficult for a common man to provide meals to his family. That is our main staple food".

The government has already decided to take action against wheat stockists and to seal the Pak-Afghan border to ensure availability of sufficient wheat in the country. Even the flour millers have been prohibited to have stocks of wheat in their mills beyond their quota.

Wheat prices in the domestic market are increasing by each passing day. Even in the most neglected provinces of NWFP and Balochistan the prices have sky-rocketed as this essential commodity is being sold in the local market at Rs 800-815 per 20 kg while in Punjab and Sindh, the prices are around Rs 750 per 20 kg bag.

Business Recorder [Pakistan's First Financial Daily]

 

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Current account deficit swells to about 7.3 percent of GDP ​

KARACHI (May 22 2008): The country's current account deficit soared to about 7.3 percent of GDP during ten months of the current fiscal year mainly due to slow growth in exports, increase in imports and sluggish foreign money inflows. The current account deficit for July-April period has widened by 74.8 percent to all time high level of $11.58 billion.

The government had fixed the current account deficit target at 5 percent of GDP for the 2007-08 fiscal year. However, current account deficit has reached about 7.3 percent of GDP for the first time in the history of the country.

According to economists, trade, services and income deficit, and huge payments of interest and dividends during the current fiscal year have contributed to the widening current account deficit.

They said that the government failed to achieve the export growth target while there had been huge imports, including soaring oil bills. Official statistics on Wednesday showed that the current account deficit has gone up by 74.80 percent, or 4.958 billion dollars, to a new peak of 11.586 billion dollars as compared to 6.628 billion dollars of the corresponding period of last fiscal year.

"Goods trade deficit, services deficit and income deficit are the chief factors behind the rising current account deficit," analysts said. The deficit including trade, services and income stood at 21.372 billion dollars during July-April of 2008 against 15.074 billion dollars during the same period of fiscal year 2007, depicting an increase of 6.298 billion dollars.

According to the State Bank, overall current account transfers stood at 9.899 billion dollars as against the deficits of 21.372 billion dollars. Although current account transfers rose by 1.397 billion dollars, its growth has been much lower than the increasing deficits. Goods trade deficit witnessed an upsurge of 53.36 percent to 12.74 billion dollars, services deficit went up by 44 percent to 5.575 billion dollars and income deficit rose by 15.4 percent to 3.057 billion dollars.

During this period altogether income from abroad stood at 1.385 billion dollars as compared to 4.442 billion dollars payments of income, while services sector trade payments reached 8.243 billion dollars as against the receipt of 2.668 billion dollars.

Goods exports stood at 16.167 billion dollars as compared to imports worth $28.907 billion. The statistics depict that due to the massive international payment the foreign exchange reserves held by State Bank of Pakistan (SBP) also declined by some 1.865 billion dollars, as SBP reserves presently stand at 10.451 billion dollars as compared to 12.316 billion dollars by April 2007.

The current account deficit without official transfers climbed to 12.071 billion dollars as compared to 6.888 billion dollars in 2007, depicting an increased of 75.24 percent or 5.183 billion dollars.

Business Recorder [Pakistan's First Financial Daily]

 

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Coal mining agreement: firms offering power below 1000 megawatts won't be considered ​

KARACHI (May 22 2008): The Sindh government has decided not to sign further agreements for coal mining and establishing power plants at Thar coalfield with companies offering power generation below 1000 MW. Official sources told Business Recorder on Wednesday that the proposal was forwarded by Sindh Mines and Minerals Department to the provincial government in a recent meeting held at Chief Minister House.

Sources said that the decision in principle has been taken in this regard as CM Qaim Ali Shah, who was chairing the meeting, endorsed the proposal by the department. However, public announcement of this decision has not been made for some reasons, sources added.

The decision, they said, has been taken in view of the estimated cost of coal-based power plants and expenditure needed for their smooth functioning. "Setting up a coal-based power plant is not only very costly but a huge amount would also be needed to keep it running, and it would only be possible for financially strong companies to invest in the project," said sources.

The construction cost of a 1000 MW coal-based power plant at Thar is estimated at around Rs 120 billion, which a small and medium enterprises/investor could not afford, they added.

The meeting was briefed that the payback period of coal-based power plants of less generation capacity would be long, and hence the investors would either seek government help or would demand high upfront tariff, which the government had experienced in the past, they said.

Moreover, sources said, the decision has been taken also keeping in view the ongoing power crisis in the country, as small power plants would not be helpful in overcoming the electricity shortage and generate less instead of large consumption of resources in terms of land, budget and time.

The decision, however, would not harm the companies which have already inked MoUs with the previous government for coal mining and setting up power plants of less than 1000 MW generating capacity at Thar coal field and are already carrying out their activities at the site, sources added. The past government had signed more than a dozen MoUs for coal exploration and power generation at Thar, which except two all are of less than 1000 MW capacity power plants.

However, sources said that the meeting had also kept a door open for granting exception to companies having strong financial or coal-based power generation background, and has authorised the concerned department to decide such cases on merit.

Business Recorder [Pakistan's First Financial Daily]

 

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New budget will unveil relief package for poor: Gilani ​

ONBOARD PRIME MINISTER'S AIRCRAFT (May 22 2008): Prime Minister Syed Yousuf Raza Gilani reiterating the government's commitment to improve the lot of common man has stated that the new budget will unveil a relief package for people, with focus on poorest of the poor.

"Our fiscal policies are aimed at improving the economic indicators and our focus in the new budget will be to provide relief to poorest of the poor," he told newsmen onboard his plane on way back home after attending the World Economic Forum on Middle East.

When asked as to what was his greatest worry at this point of time, the Prime Minister said, "my highest worry is to give relief to my people." About his meeting with US President George W Bush on the sidelines of the World Economic Forum, the Prime Minister said he discussed with him issues of mutual interest, trade and investment, market access, terrorism and extremism as well as matters relating to regional and international situation.

He said the discussion focused on the challenges of food and energy crises faced by Pakistan as well as the cooperation in combating terrorism. The Prime Minister said he discussed with President Bush the close cooperation, which is being provided by Pakistan, in the war against terror.

"I told President Bush that we have paid a heavy price in this international war against terrorism and even lost our leader Benazir Bhutto," he said. Prime Minister said there was a convergence of views on issues of intelligence sharing and cooperation between the security agencies to eliminate terrorism.

To a question about meeting with President Bush, Gilani said, it was not a planned meeting, as the US President and he had come to Sherm El Sheikh to attend the World Economic Forum.

He, however, added, "we want to strengthen bilateral relations with the United States in various fields including defence and energy cooperation." Similarly, the Prime Minister said, the two sides also discussed cooperation in other areas such as education, health, social sector and market access for our products in the US. Gilani, who was looking very confident at the end of his first overseas visit and meeting with President Bush and other leaders after assuming the office, said: "The US President was in full mood to assist Pakistan in the areas of energy, defence and market access."

The Prime Minister said during his meeting with the US President, Pakistan's relations with neighbouring countries including India also came under discussion. The Prime Minister said he asked President Bush that US should play a role in resolving Kashmir dispute, as it was making efforts for peace in the Middle East. The Prime Minister said he told the US President that unless the core issue of Kashmir is resolved there cannot be good and sustainable relations between Pakistan and India.

About his bilateral meetings with other leaders including Egyptian President Hosni Mubarak, and Prime Ministers of Egypt and Jordan and the Commerce Minister of Saudi Arabia, the Prime Minister said they wanted to strengthen cooperation with Pakistan in various sectors and were keen to invest in our energy, agriculture and real estate sectors.

Business Recorder [Pakistan's First Financial Daily]

 

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Foreign firms investing in energy sector assured of government help ​

KARACHI (May 22 2008): City Naib Nazim, Nasreen Jalil on Wednesday inaugurated the 6th Pakistan Oil, Gas and Energy Exhibition (Pogee) and the 4th International Fire & Security Exhibition Pakistan at Karachi Expo Center.

Speaking at the opening ceremony, Nasreen Jalil said that Pakistan's energy sector is playing a vital role in the progress and development of the country. She assured full support to foreign companies investing in oil, gas and energy sector of Pakistan.

The Naib Nazim highlighted the efforts of the government in providing fire fighting equipment and facilities at the Union Council level. She said that the City District Government Karachi aims to establish a rescue center with a fire tender and an ambulance at each UC.

Earlier, Professor Dr Engineer Galal Osman, Senior Vice President of World Wind Energy Association, Egypt appreciated the organising team for their efforts towards the industrial development of Pakistan. He termed Pogee an important event to showcase latest technologies relating to oil, gas and energy sectors in Pakistan as well as in the region.

Pogee is also a platform to promote investment in various sectors of the country's economy, he added. Aasim A Siddiqui, Chairman and Managing Director Pegasus Consultancy, in his address of welcome thanked all the local and foreign exhibitors for their participation and lauded the efforts of the government and ministries for supporting Pogee and Fire & Security exhibitions.

He said around 300 companies from 32 countries including Germany, France, Singapore, Sweden, Switzerland, Turkey, UAE and UK as well as a country pavilion from China are attending the exhibitions, which will continue until May 24. The opening ceremony was attended by the Mayor of Peshawar as well as foreign dignitaries, exhibitors and high-profile visitors.

Business Recorder [Pakistan's First Financial Daily]

 

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Foreign investment ​

EDITORIAL (May 22 2008): Prime Minister Yousuf Raza Gilani, while addressing a huge gathering at Multan, vowed to bring foreign investment and prosperity to the country, which should give the nation hope that the economy will at long last start moving in the right direction.

Citing terrorism and sectarianism as major impediments to attracting foreign investment, he pledged to restore the 1973 Constitution, restore judiciary and other institutions and ensure press freedom. He has rightly claimed that the PPP is a symbol of federalism. He also said that his government had inherited problems like price hike, etc, which the PPP will address. These are brave words indeed, becoming of a prime minister determined to set things right, and bring the country out of the economic doldrums.

However, some leading economists do not entertain such hopes. As the present is a continuum of the past, we cannot avoid analysing the pluses and minuses of economic policies of the past nine years, in order to put things in proper perspective. As a leading analyst has said, keeping the structure of the economy unchanged was the biggest disappointment, as a result of which the problems that had plagued the economy in October 1999 continue to bedevil it, despite some occasional attempts to bring about structural changes.

Secondly, conspicuous consumption by some, the mushrooming of palatial "white houses" and flaunting of expensive cars was seen as a proof that some people had indeed grown very rich, and though the "trickle-down" effect was also there, it did not reflect true health of the economy. The new government will, therefore, have to tackle multiple economic crises in the months and years ahead, foremost among them will be the high rate of inflation as well the twin deficits of fiscal and trade accounts.

As we have often pointed out in this space, the credibility of economic data during the preceding regime was at times called into question by some economists, and the charge of figure-fudging was often levelled against the economic managers, though how far the accusations were correct was not known. This was done to portray the health of economy that was at variance with the ground reality. A leading economist has categorised these problems at three levels: near-term crises relating to the twin deficits of in fiscal and trade accounts.

Secondly, there are the medium-term crises relating to the chronically low domestic savings rates, an undiversified source of foreign direct investment, which largely consists of money sent by expatriates, and a perennially narrow income tax base. And finally, there are the long-term crises connected to mounting income inequalities, a high poverty rate, and a rate of population growth that is counted among the highest in the world. According to a prediction made by a leading analyst, the budgetary deficit is likely to touch higher than six percent during the current fiscal year - 50 percent higher than the limit deemed safe by the lending institutions.

It can provide a credible measure of the state of the economy that during the first nine months of the current fiscal, the trade deficit was expected to mount to $19 billion, up by 44 percent over the corresponding period of last year. The hefty deficit has been largely driven by mounting imports of consumer goods, none of which can contribute towards increasing the productive capacity of the economy. Even more worrisome is the State Bank's prediction that inflation might reach nine percent during the fiscal year ending in June, which will be almost 33 percent higher than the target of 6.5 percent.

A stable law and order situation is the foremost prerequisite for attracting foreign investment. The government should therefore start putting greater emphasis on the carrot than the stick, which anyway has not so far achieved significant success. The Prime Minister's remarks that he is determined to root out terrorism and sectarianism should send a clear message to the forces of divisiveness to work for sectarian harmony, which will not only help attract greater foreign investment, but will also revitalise our economy. We wish Gilani Godspeed.

Business Recorder [Pakistan's First Financial Daily]

 

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Electronics complex in Lahore, Karachi planned ​

Thursday, May 22, 2008

LAHORE: The Technology Upgradation and Skill Development Company (TUSDEC) is planning to set up Common Facility Centres (CFCs) in Lahore and Karachi to develop and promote the electronics industry in a bid to quickly reduce billions of dollars worth of imports of electronics and telecom gadgets and boost exports.

Electronics is considered the world’s largest industrial sector and the most lucrative market. Unfortunately, Pakistan since independence has not developed a significant place in the ‘electronics world’ which has an annual turnover of US$1.2 trillion.

Though electronics goods burden the import bill by 10 per cent, regrettably they earn less than 1 per cent through exports. Pakistan is currently importing more than $1 billion worth of mobile phones annually to meet increasing demand commensurate with growing tele-density.

According to a TUSDEC spokesman, the Lahore Electronics Complex being set up at a cost of Rs2.7 billion would focus on the mobile phone and telecom sectors while the Karachi Electronics Complex costing Rs3 billion would cater to the needs of consumers and home appliance industry including LCD (liquid crystal display) TV, computer monitors and multimedia products.

The two centres are designed to support and help grow the local industry through ‘economies of scale’ supply of sub-assemblies and kits at competitive prices compared to those being imported from China and nearby countries. The ‘economies of scale’ supply will contribute significantly to lowering the cost of electronics products in Pakistan compared to other players in the international market.

The local electronics sector basically focuses on consumer electronics, with activities confined to the assembly of conventional TV sets, radio, cassette recorders and other allied consumer electronics products using completely knocked down (CKD) or semi-knocked down (SKD) kits, imported mostly from China.

The share of electronics in the country’s manufacturing sector is merely 3 per cent. In the light of need assessment surveys carried out by the TUSDEC, the CFCs would provide the industry with much-needed help in the supply of competitively-priced and readily available parts, component kits, SKD and sub-assemblies including complete printed circuit solutions as well as expert services for product design and prototyping. This will facilitate the industry in the production of internationally competitive gadgets in terms of price and quality.

The TUSDEC spokesman said these centres would house modern electronics design and quality assurance labs and would be equipped with hi-tech SMT machines for assembly of Printed Circuit Boards (PCBs) as well as high-volume automated assembly.

The centres, the spokesman said, would handle all requirements of an electronic company’s printed circuit or mother boards for use in the final product.

To ensure that local electronics products penetrate the world markets and cross new ‘non-tariff barriers’, compliance with various standards is required. The Federal Institute of Materials and Homologation (FIMH), being set up in Gujranwala, would carry out testing and homologation of these electronics products to allow their export to Europe, the US and other advanced countries bringing revenues for Pakistan, the spokesman concluded.

Electronics complex in Lahore, Karachi planned

 

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USC directed to expand network in Balochistan ​

Thursday, May 22, 2008

ISLAMABAD: Adviser to Prime Minister on Industries and Production, Mian Manzoor Ahmad Wattoo, has directed officials of the Utility Stores Corporation (USC) to expand its existing network of stores in Balochistan so that people in all parts of the province can get essential commodities at subsidised rates.

“Special arrangements may be made for opening more utility stores in Balochistan,” said Wattoo adding “special treatment may be given to Balochistan in this regard.” He said this while chairing a briefing on the performance of USC here on Wednesday.

Wattoo further said that there was a need to open more utility stores in urban areas because the poor people in these areas are more adversely affected by the rise in the prices of essential commodities, especially flour.

Earlier, MD USC gave a detailed briefing about the structure and working of the USC. He told Mian Manzoor Ahmad Wattoo that 4,500 utility stores are operating through out the country and USC was working on a no profit, no loss basis and during the last two years, a relief of Rs15 million had been extended to the people through the utility stores. Wattoo observed that the role of USC as a relief mechanism needed to be enhanced further, so that people in parts of the country can benefit from the relief provided by the govt.

USC directed to expand network in Balochistan