Pakistan Economy - News & Updates - Archive

[Neo]

Japanese firm to invest $100m in IT​

KARACHI, July 19: A reputed Japanese company has announced to invest $100 million in information technology in Pakistan which will have a potential of generating 3,000 jobs.

According to a press release, senior officials of the company in a meeting with Sindh Industries Minister Rauf Siddiqui said that the plan is to set up a global data centre and a call centre with 1,000 employees in Karachi.

Japanese firm to invest $100m in IT -DAWN - Business; July 20, 2008

 

[Owais]

Share prices bounce back, KSE up 140 points
Updated at: 1826 PST, Monday, July 21, 2008


KARACHI: The equities market witnessed a healthy trading today as investors took fresh positions, pushing the KSE-100 Index up by 140 to 10, 374.

The investors booked new positions ahead of a series of high level meetings due to be held this week.

These meetings are planned to resolve the recent state of mayhem at the stock market, where finance minister Naveed Qamar is expected at the bourse on Tuesday followed by a visit from SECP's chief Razi-ur-Rahman on Wednesday.

Meanwhile, State Bank Governor Shamshad Akhtar also met various brokers and fund managers at the end of today's trade.

Dealers say, these confidence building measures relaxed sentiments to offset sharp losses in early trade when investors had off-loaded their leveraged positions.

Dealers say rising local fuel prices also invited buying in energy sector, whereas institutions also took advantage of discount valuations in other sectors.

However, despite the rise, volumes stayed dismal at 94 million shares against last week's average of 116 million shares.

KSE-30 Index gains 152 points to close at 11,559.

Share prices bounce back, KSE up 140 points - GEO.tv

 

[Owais]

Govt. to lend helping hand for bourses pick up: FM
Updated at: 1421 PST, Monday, July 21, 2008


Govt. to lend helping hand for bourses pick up: FM KARACHI: Federal Finance Minister, Naveed Qamar has assured the stockbrokers that the government would extend all possible assistance to the stock markets for its recoup.

Karachi Stock Exchange (KSE) senior member, Arif Habib told Geo News that a KSE delegation tomorrow had called on FM Naveed Qamar yesterday in Islamabad, where the minister was briefed about the underway crisis in bourses, while Naveed Qamar in turn assured all possible help for the recovery of the markets.

Arif Habib said that FM Naveed Qamar on KSE request would be visiting KSE tomorrow, when some vital announcements would be made for the betterment of the market.

Govt. to lend helping hand for bourses pick up: FM - GEO.tv

 

[Owais]

Gas prices for textile sector to be reconsidered
Updated at: 1727 PST, Sunday, July 20, 2008


Gas prices for textile sector to be reconsideredKARACHI: Government has assured to consider restoration of the research and development (R & D) fund and reduction of gas prices for textile sector.

This was told by president Chamber of Commerce & Industry Karachi Shamim Shamsi while talking with Geo News after the meeting between the government and trade organizations here on Friday.

He said that the government has agreed to restore R & D for textile sector for which an announcement would soon be made to allocate an amount.

This time, all departments of textile would be paid the amount of research and development and in this regard, trade organizations have been asked to determine a procedure.

Decision to withdraw the increase in gas prices for industries will be taken after reviewing the margin in the agreements with the exploration and distribution companies.

According to the president CC&I Karachi, the government has agreed to abolish 35 per cent LC margin on the remaining import items on the improvement in the position of foreign exchange reserves.

Geo TV Pakistan - Breaking News, World, Business, Sports, Entertainment, & Video News

 

[Neo]

Foreign investment down by 38 per cent ​

Tuesday, July 22, 2008

KARACHI: Net inflow of foreign investment dropped by 38.4 per cent to $5.193 billion during the recently concluded fiscal year 2007-08, causing a gradual reduction in the country’s foreign exchange reserves and exerting immeasurable pressure on rupee-dollar parity.

Foreign investors not only reduced fresh investment but also dragged out a massive amount from equity trade amid uncertain political situation and deteriorating economic condition due to spiraling oil prices and commodity prices.

Although most major economies of the world are also facing adverse impacts of oil prices the resource constrained countries like Pakistan are facing the brunt of rising oil prices causing widening of trade and fiscal deficits and consequently stimulating inflation.

During July-June 2007-08 total foreign investment declined to $5.193 billion which was recorded $8.428 billion during fiscal 2006-07.

Latest statistics of State Bank of Pakistan (SBP) revealed that in FY08 foreign private investment stood at $5.172 billion against $6.960 billion in preceding fiscal year, whereas foreign direct investment was recorded at $5.153 billion against $5.140 billion of last year of which, privatisation proceeds were witnessed at $133.2 million as compared to $266.4 million of previous year.

During FY08 the massive outflow of 98.8 percent was recorded in portfolio investment which plunged to $19.3 million as compared to $1.824 billion in FY07.

Through Global Depository Receipts (GDRs) of UBL Bank brought an inflow of $90.5 million into country’s financial system in FY08 against $559.7 million of last fiscal year. In addition an amount of $106.5 million was brought into country through GDRs of Lucky Cement. In FY08 foreign public investment, which was mainly in portfolio declined to $20.8 million against $1.468 billion recoded in the pervious year.

From developed countries including Western Europe, Luxembourg, Denmark, France, Germany, Netherlands, Sweden, UK, other Western Europe Norway, Switzerland, North America Canada, USA other developed countries including Australia, Japan and unspecified countries dropped by 38.1 percent to $2.913 billion against $4.702 billion of previous fiscal year. However, from developing economies including Caribbean Islands, Cayman Island, Bahamas, other Caribbean countries, Africa, Libya, Egypt, Mauritius, South Africa, and other African Countries investment increased by 3.6 percent to $1.898 billion, which was recorded 1.831 billion in FY07.

From Asia including West Asia, Oman, Iran, Kuwait, Bahrain, Qatar, Saudi Arabia, Turkey, UAE the net flow of foreign investment recorded a slight increase of 2.1 percent to $1.722 billion as compared to $1.687 billion of last fiscal year. Similarly South East Asia countries including Bangladesh, China, Hong Kong, Malaysia, Singapore, India, South Korea, unspecified South East and South Asia slight surged by 0.8 percent to $836.6 million from $829.9 million of FY07.

Foreign investment down by 38 per cent

 

[Neo]

Current account deficit balloons to $14bn ​

Tuesday, July 22, 2008

KARACHI: The current account deficit ballooned to $14.016 billion during the recently concluded fiscal year 2008 against $6.878 billion of FY07, adding worries to the country’s economic managers, who were combating other challenges like highest ever trade deficit and inflation.

From July-June 2007-08, the current account balance without official transfers stood at $14.443 billion which was recorded at $7.403 billion in FY07. The deficit is equivalent to about 8.4 per cent of the gross domestic product (GDP), compared with a full-year target of 4.8 per cent. The State Bank of Pakistan (SBP) had estimated the deficit would be in the range of 7.3 to 7.8 per cent in 2007-08.

The break-of showed that during July-June 2007-08, goods worth $20.125 billion were dispatched outside the country against $17.278 billion of last fiscal year. In the meantime imports of the country swelled to $35.411 billion, which was the highest ever influx of foreign goods so far in the country during a single fiscal. The rising inflow of foreign goods widened the traded deficit to 15.286 billion in FY08, which witnessed $9.711 billion in FY07.

During the aforesaid period, the country witnessed inflow of $3.590 billion through exports of services sector. However, at the same time $9.892 billion drained out from the country in this head. In FY08, current transfers recorded were 11.619 billion, as compared to $10.658 billion of FY07, of which workers remittances stood at $6.451 billion against $5.494 billion of the previous year, whereas the country received $444 million from FCA residents.

Under the head of capital account, $69 million landed in the financial system of the country against $304 million in the previous fiscal year. In addition, $59 million were credited in the capital account of the country in the form of projects grants against $257 million of the year before.

Under the head of financial account, total flow of $8.709 billion was recorded against $10.145 billion of FY07, whereas direct investment abroad dropped to minus 75 million as compared to minus 114 million of fiscal 2006-07. The current account deficit is targeted at 6.0 per cent of the GDP in 2008-09.

Current account deficit balloons to $14bn

 

[Neo]

IT industry growing 50pc annually ​

Tuesday, July 22, 2008

KARACHI: The country’s information technology & IT-enabled services industry stands at $2 billion annually with a 50 per cent annual growth rate.

IT exports stand at $1 billion, according to a research study commissioned by the Pakistan Software Houses Association (PASHA).

Pakistan Software Export Board estimates show a higher figure of $2.8 billion as the industry size and $1.8 billion exports. This was stated by Jehan Ara, President Pakistan Software Houses Association while talking to the media during a one-day Career Expo for IT students and professionals organized by the association on Sunday.

Thousands of young IT professionals and fresh graduates visited the Career Expo to explore and apply for job openings posted by participating companies. They appeared in on-the-spot interviews, listened to eminent speakers and interacted with CEOs, CIOs and HR heads of ICT local and international companies regarding career opportunities.

IT professionals and students learnt about the different career tracks in various segments of the ICT sector, participated in interactive workshops, listened to company presentations and attended career counseling sessions.

Jehan Ara said Pakistan produces approximately 20,000 IT graduates annually, who need proper guidance in order to explore their true potential. Currently over 110,000 IT professionals are working in IT sector and there is a lot more potential for quality IT HR. The IT industry needs people with different skill sets, in addition to computer science graduates, they also require business analysts, domain specialists, project managers, senior management, marketing professionals, call centre professionals, animations, interface designers amongst others.

IT industry growing 50pc annually

 

[Neo]

Prohibitive investment cost in Karachi​

THE total foreign direct investment during 2006--07 was estimated at aro-und $8.4 billion. Of this total, Sindh got something like $2.32 billion or 27 per cent, the Sindh Industries Minister, Mr Rauf Siddi-qui estimated recently.

Compare these figures with industrial investment in 2002-03, when Sindh's share was 57 per cent of Rs536 billion as Mr Tariq Ikram, former Chairman of Export Promotion Bureau, had informed members of the SITE Association of Industry.

Has Sindh lost appetite for the industrial investment over time? “Yes,” say many industrialists while attributing this trend to a host of factors. ``We are located in close proximity of two ports,'' Nisar Sheikhani, Chairman of SITE Association of Trade and Industry said and added “but we are being denied the location advantages”.

“We should get imported items of strategic interests like oil and petroleum products at landed cost,'' he observed and wondered as to how the government would justify taxing Karachi business by keeping a uniform price on oil while it discriminates when it comes to sharing the benefit of hydroelectric power. “Did not we pay from our taxes the costs of Tarbela, Mangla and Warsak dams and are we not contributing in many new water projects?'' he argued.

Sheikh Fazal Jalil, the Chairman of Korangi Association of Trade and Industry has one industrial unit in Lahore and one in Karachi. “I pay electric bill in Lahore at Rs5.33 a unit and in Karachi I pay Rs9.10- Rs9.60 for a unit'' he informed.

Industry in Karachi grew at a fast pace in early days because of its close proximity to ports. It suffered a setback in the decade of eighties because of shifting of government's focus to the north. Some improvement in terms of utilisation of idle capacities and some investment was seen when interest rate came down in the year 2000, lasting hardly for a few years.

Business complains of growing lawlessness in Karachi and for that matter in the whole of province, rising utility costs and perpetual shortages of water, electricity and gas, crumbling infrastructure and the expensive bank loans. It seems that all these factors are slowing down pace of industrial investment in Karachi and other parts of Sindh.

More than 10,000 big and small industrial units in and around Karachi are hard pressed because of such problems. The Sindh government is yet to make a comprehensive survey of industries in the province to find out how many of these are working at optimum or partial capacities and about the demand for water, gas, electricity and other infrastructure facilities that can be taken up at the provincial and federal levels.

During these conversations and meetings with the industrialists and the Sindh’s industries minister, two factors emerged conspicuously that have hampered the industrial growth in Karachi and other parts of the province.

Industrial land in Karachi and adjoining areas is hard to get and if it is available, it's price is prohibitively high. What is astonishing is the fact that the available land in second and third phases of SITE, North Karachi, Nooriabad is booked but most of it lies vacant for want of investment. The second factor is more than 100 per cent high cost of electricity is given by the KESC for industry in Karachi as compared to Wapda-fed areas.

“The government knows that industrial estates have become hub of real estate activities,'' Mr Rauf Siddiqui, responded to the observations made by many industrialists during their meetings with him. ``Speculative booking of industrial plots and a shamefully low non-utilisation fee on such booked plots encourage speculators to hold on the property for unlimited period,'' the minister remarked. He did indicate that, ``something might be done'' but did not elaborate as to what could be done to tackle the problem.

Business people say that an acre of industrial plot in Korangi is now priced at Rs100 million, in SITE Manghopir Rs60 million and anywhere from Rs30-50 million in other industrial zones in and around Karachi.

“A 500 square yards plot in Korangi is now worth Rs10 million'' Sheikh Fazal-e-Jalil, the Chairman of Korangi Association of Trade and Industry (KITE) informed.

“Availability of industrial land at affordable price is the most important and deciding factor in investment'', Mr Siraj Kassim Teli, a former president of the Chamber of commerce and Industry said while recalling his suggestion he made at a businessmen convention organised by Mr Rauf Siddiqui in May in Karachi.

The previous government in Sindh enforced a law according to which the industrial land was to be given to prospective investors at 25 per cent of the market price with a condition that the project would be taken up and completed within a stipulated time frame. Those who failed to comply with timeframe would lose their plots and their money will not be refunded.

Siraj was one of the two private sector members taken in Scrutiny Committee of Land Utilisation. In the light of his two years experience in that committee, he observes that “the need of the hour is to have a policy which does not have discretionary powers with any committee or government department'. Land allotment given by the Chief Minister's Investment Cell by the last government was scandalous. One of the beneficiaries who acquired a big piece of land to set up a `gold city' was arrested and now is in hiding.

Zubair Motiwala a former President of Karachi Chamber of Commerce and Industry and ex-Chairman of SITE Association of Trade and Industry too complains of the disparity in quality and cost of land available in Karachi as against that in Lahore and Multan.

The infrastructure facilities available to investors at Kot Lakhpat in Lahore, Multan, Sunder and Faisalabad are much better than in many places in Karachi and other places in the province.

With a virtual non-existent infrastructure, the cost of industrial land in Karachi is much higher. Even in the schemes that are to be launched, the price of land is higher and Zubair made a comparison of land cost at Rs25 million an acre in upcoming Textile City and only Rs4 million Sunder in Lahore.

In Karachi, the investors suffer high capital cost of project mainly because of prohibitively high land cost and the production cost mainly because of more than 100 per cent difference in electricity tariff of KESC and WAPDA.

The KESC was seeking a five year power purchase agreement with National Transmission and Distribution Company (NTDC) for a dedicated supply of 750 megawatt but apparently failed to get a positive response. Instead, the KESC is being given electric supply at marginal cost i.e Wapda gives KESC electric power from its most uneconomical plant and hence the difference in cost.

With reports that electric tariff is being revised in the coming days, the industrialists fear it may prove to be a proverbial last straw on the camel's back.

Prohibitive investment cost in Karachi -DAWN - Business; July 21, 2008

 

[Neo]

Investing in livestock and dairy sector​

The livestock provides essential items of food in the form of meat, milk and egg. Every farming house in the rural area has two to five animals. Some others rear bigger stock as their major source of income.

Livestock also provides useful items such as wool, hair, hide, bones and organic fertiliser. Pakistan has a variety of good milch species cattle. Production of milk has increased over the last several years but a gap between milk consumption and production still exists. Lack of processing and chilling plants and poor distribution system in hot weather keeps milk away from the market.

The production of milk is not picking up fast due to shortage of feed, fodder and increase of concentrate ingredient in animal diet. This is because of population explosion and fast urbanisation leading to shrinkage in area of cultivation leading to decrease in fodder production.

Non-descriptive crossing and lack of proper breeding system are also the factors behind reduction in per animal yield of milk. Traditional farming has been an impediment in achieving the desired production targets. Lack of trained manpower is also a handicap.

Buffalo is the main dairy animal.. It is basically of two types, swamp and riverine. Swamp buffalo is usually light gray in colour and smaller than the riverine breed. The riverine breed is darker in colour with better milk and carcass quality. There are two best breeds of buffaloes Nili-Ravi and Kundi. They are reared in canal-fed areas, where water is in abundance and fodder and crops in plenty.

During the summer, buffaloes need shade and shelter as they have fewer sweat glands. Pakistani buffaloes are adapted to both hot and cold climatic conditions. They are the best milch buffaloes in the world with considerable genetic variation. The gestation period of buffaloes is 312–334 days (compared to cattle with 285 days) with the potential of giving over 4,500 liters milk per period of lactation through efficient breeding, good feeding, health care services and better management.

Milk and meat products are integral part of human diet and account for 70 per cent of animal protein intake. The availability of milk is relatively high here as compared to other regional countries. Presently Pakistan is fourth among milk-producing countries of the world with an estimated 33 billion litres of milk produced annually. Out of the total produce, 75 per cent is contributed by buffaloes and the rest by cows, sheep, goats and camels.

As a major contributor of milk, buffalo acquires an important position as the dairy animal. Lactation in buffaloes varies from two to 20 kg based on conditions, quality of feed and fodder and their genetic make up. Buffalo milk is richer than cow’s milk with an average butterfat content of over seven per cent. The SNF content is around 8.5-10.5 per cent. Buffalo milk is popular throughout the country and sells at higher price than cow’s milk.

Buffaloes and cattle are primarily kept for milk. The males are used in carriages and for ploughing fields. The adult animals are mostly slaughtered when they become un-economical and unfit for work.

Unlike the dairy sector, the meat industry is growing at a very low speed. With the adaptation of proper fattening practice of cattle and buffalo calves, meat production can be increased and the surplus exported.

After the development of Livestock and Dairy Development Board (L&DDB), recently a calf-fattening project has been started. The farmers are being supported technically and financially to attract them towards this business to meet the increasing demand of meat at home and abroad. In addition to the L&DDB, the Pakistan Dairy Development Company (PDDC) is also motivating farmers to invest in the dairy sector by providing them with technical and financial facilities.

Buffalo meat has little cholesterol as compared to cattle beef and its colour is slightly dark reddish. Buffalo is resistant to most of infectious diseases as compared to other cross-bred cattle and is immune to extreme weather conditions.

The by-products of livestock obtained from buffalo, such as hides are thick and are used in multiple products i.e. footwear, handbags etc., and tanned hides are used as clothing. Horns are used in different items like handles of spoons, knives and shoes and combs etc. Its dung is commonly used as fertiliser. The end products such as blood and offal are used in manufacturing poultry feeds, as they are rich source of proteins.

Processing of milk is very important as shelf-life of raw milk is about 2-4 hours. Presently about 95 per cent of milk is taken as fresh. So, a large quantity of milk can be processed and converted into powder form to avoid spoilage in liquid from. Investment in the processing and chilling plants is very important for saving milk from being spoiled.

There is also a need to exploit the genetic potential of the pure bred animals, through efficient management, quality fodder and concentrates supply and through adaptation of measures to control disease. As there is great variation in milk yield per animal, only high milk-producing animals should be kept.

Progeny-tested, disease-free and proven bulls should be used for insemination and service, non-descriptive crosses should be avoided. The Punjab government realising the importance has built four semen production units (SPU) to ensure supply of good quality semen through progeny testing and pedigree analysis.

Adulteration of milk and meat is a common and open practice. Laboratory tests for detection of residues should be adopted, and rules should be followed to avoid health hazards.

Majority of farmers are not linked to markets and are not aware of marketing potential of livestock and dairy products. The government has taken an important step toward marketing of livestock and dairy products and opened a new department of livestock marketing at the University of Veterinary and Animal Sciences, Lahore, to train the professional and technical people with current demands of livestock marketing. Moreover grading of milk and livestock products is very essential for maximum profitability in dairy business. Collaboration of livestock farmers with research institution is also important to make investment profitable, through use of advanced research.

Investment in livestock and dairy sector is required for training the farmers and livestock holders to deal with the disease outbreak, proper and timely vaccination programme, record maintaining and feed management.

As food is a never-ending need of human beings, quality food can only be obtained through investment in livestock and dairy research institutions, training of livestock farmers, pasteurisation of milk through UHT.

Upgradation of market infrastructure can only prevent the looming food crisis in developing countries. The best way to overcome the crisis and attain economic prosperity is possible through livestock business, white revolution and exporting livestock and diary products.

Investing in livestock and dairy sector -DAWN - Business; July 21, 2008

 

[Neo]

An expanding informal economy​

We have more of an informal economy than a formal one as is indicated by a low tax-to-GDP ratio, the size of the non-documented business activities and the under-served sectors by the banking system.

In other words, we have more of a cash economy .Normally small businesses do not avail of the services of the banking sector. The rural areas are under-served by the banks. These indicate aspects of under –development of the economy.

A low literacy rate is also a hurdle in opening of bank accounts. To make matter worse, the massive capital and financial inflows particularly the $6 billion remittances has obviated the need for the banks to seek deposits.

This has not encouraged banking among the teeming millions. Banks are also shy of lending to small enterprises. Lending could help enterprises in the informal sector in documentation of their businesses.

Of course, businesses operating in the formal sector have succeeded in evading taxes because of the inefficiency and corruption among the officials of the tax collecting agencies. The farmers do not pay income tax although the share of agricultural sector is close to 21 per cent of the national income. If the withholding taxes are excluded, the direct taxes have remained constant at around 20 per cent of the GDP. The direct tax has not risen in proportion to the incomes generated by a recent 6-7 per cent economic growth.

Now the government has come out with a tax amnesty scheme under which the black money can be converted into white money/assets.

Since the people have not been paying income tax, the government continues to increase the rate of sales tax, raised to 16 per cent in this year’s budget. The result is massive evasion of sales tax by a strong section of the businessmen who also claim vast refunds offered in collusion with the taxation officers.

If the commercial transactions were rooted through the banks there are better chances of tax collection, but only a part of the commercial transaction takes place through banks.

Now to make cash transactions easy, we have Rs5000 notes, apart from the Rs1,000 notes.

When asked what per cent of the informal sector borrowed money from the banks, Mr Ashraf Junjua, a former deputy governor of the Bank of Pakistan told a Management Association seminar, “not more than five per cent”. Such loans are for short periods and do not entail detailed documentation which suits the semi- literate traders.

The liberal exchange rate policies have also created a pool of money that is used for cross-border transactions, resulting on inflow and outflow of funds, depending on the economic and political health of the country. Now there is so much speculation that billion of dollars have moved to Dubai by businessmen in search of greener pasture. Similarly, tax officials suspect that remittances include financial inflows made by some of those engaged in foreign trade.

An expanding informal economy -DAWN - Business; July 21, 2008

 

[Neo]

Islamabad shifts $4.1bn global trade to Delhi​

ISLAMABAD, July 21: Pakistan has diverted its global trade worth $4.132 billion towards India following inclusion of 438 new importable items in the positive list during the past 10 months, officials told Dawn on Monday.

The expansion in the tradable list came in the backdrop of the composite dialogue launched in 2004, the forum which India successfully used for the benefits of their businessmen, while no progress has been made on the thorny issues including Kashmir, water barrages etc.

Commerce and Defence Minister Ahmad Mukhtar said Pakistan was in the process of “gradually liberalising” trade with India. “Composite dialogue process, especially on economic and commercial cooperation, has been instrumental in addressing the bilateral issues,” he added.

Official figures available with Dawn showed that Pakistan’s tradable list with India had 591 items in 1997, but it has been enhanced to 1,938 items in 2008. The government added 302 items to the list in October 2007 and 136 items in July 2008.

This expansion has widened Pakistan’s trade deficit with India to $893 million in 2006-07 from $73.736 million in 1999-2000. With the substantial expansion in the tradable list, the deficit is likely to reach $1.5 billion in 2007-08, when the final figures are finalised.

The figures for July-March 2007-08 showed Pakistan’s trade deficit with India stood at $1.095 billion.

Pakistan exported $200 million worth commodities to India in the July-March period of 2007-08, while the value of imported goods reached $1,295 million during the period under review.

Pakistan’s exports to India are stagnated between $200 million to $400 million despite the fact that New Delhi has granted MFN status to Islamabad.

A diplomatic source said, “India is satisfied with the constant expansion in the tradable items list. Whatever they want they get from Islamabad.”

Indian side never stressed for the MFN status as they were aware of the fact that the expansion in the positive list would serve their interest.

“MFN status has become just a political issue, which will lose its importance with the passage of time as Pakistan would keep on expanding the positive list to meet their demand,” he said.

Indians did not challenge the issue at WTO because they knew that they would lose the case.

Meanwhile, in a significant shift of policy, Pakistan also unilaterally announced measures in the trade policy to encourage Indian investment in manufacturing of CNG buses.

The government had already withdrawn the 15 per cent duty on the import of CNG buses in the budget 2008-09.

An official in the Board of Investment on condition of anonymity told Dawn that there was no law, which could bar Indian investment in Pakistan.

Pakistan has a liberal investment policy, but the official said generally both countries discouraged bilateral investments. It is not just for CNG buses the Pakistan government is also signalling its readiness to embrace Indian investment in other sectors.

The government has invited at least three Indian companies -- Tata, Reliance and Essar -- to a meeting of potential investors in the power sector to discuss the development of the Thar Coal Power Project. The meeting is due to be held in late July or early August.

Pakistan’s efforts at liberalisation of trade with India appear to be in line with the sentiments voiced by PPP co-chairman Asif Ali Zardari that the new government wanted to improve economic relations and would not allow the differences on Kashmir to come in its way.

Islamabad shifts $4.1bn global trade to Delhi -DAWN - Business; July 22, 2008

 

[Neo]

Pakistan IT exports touch $1bn benchmark​

KARACHI: The country’s Information Technology (IT) exports have marked one billion dollar benchmark in fiscal year 2007-08, a research commissioned by Pakistan Software Export Board reported Monday.

According to this research, the country’s IT and related industry has witnessed $2 billion increase in its worth, maintaining 50 percent handsome growth rate in 2007-08.

President Pakistan Software Houses Association (P@SHA), Jehan Ara said Pakistan produces approximately 20,000 IT graduates annually for pursuing their right fields of interest in the industry.

However, Jehan Ara said the size of the industry was much higher to attain $2.8 billion level with the exports $1.8 billion to various countries. Currently over 110,000 IT professionals are working in IT sector and there is a lot more potential for quality IT HR, she added. IT industry needs people with different skill sets, in addition to computer science graduates, also requires business analysts, domain specialists, project managers, senior management, marketing professionals, call center professionals, animations, interface designers etc.

Daily Times - Leading News Resource of Pakistan

 

[Neo]

Pakistan’s fruit exports surge by 27 percent​

KARACHI: Pakistan’s fruit exports, during the fiscal year 2007-08, surged by 27 percent in terms of value and 20 percent in terms of volume despite multifarious irritants faced by the fruit exporters during the export process and non-cooperative attitude by foreign shipping lines operating their services between Pakistan and different destinations across the globe.

During the previous fiscal year of 2006-07, quantity of fruit export was 343.424 metric tonnes with a value of $113.635 million. During 2007-08 it grew to 413.726 metric tonnes with a net value of $144.676 million, depicting an increase of up to 27 percent during the period.

A leading fruit exporter, when approached by Daily Times to seek his point of view over substantial increase in fruit exports, credited the surge owing to collective efforts of members of the fruit exporter association.

“An overwhelming number of exporters either in their individual capacity or collectively have frequently been visiting Gulf and Far Eastern countries besides European destinations for exploring markets, specially for mango and Kinnow” he added.

In response to a query he also questioned the role of the Trade Development Authority of Pakistan (TDAP) towards promoting country’s fruit exports by facilitating exporters community through arranging their foreign visits and help explore new markets.

TDAP’s role is limited only to facilitate few of its favorite exporters overlooking large number of them who often questions its lack of effectiveness in discharging its true role in promoting exports.

Mateen Siddiqui, former Chairman, All Pakistan Fruit Exporter Association, said that the government should acknowledge endeavors of fruit exporters who have managed to create new markets for Pakistani fruits resulting in their enhanced demand across the globe.

The surge in the exports are noteworthy in the sense that during the last few years, large the crops of mango and kinnow witnessed damage owing to inclement weather and number of other factors resulting reduction in the annual yield.

He, however, blamed foreign shipping companies for creating extreme hardship for Pakistani exporters which continue to be victim of their reckless attitude causing them massive financial losses amounting to millions of rupees.

In many instances depicting their reckless attitude, some leading shipping companies of the globe despite advance booking of fruit laden containers, destined for different countries, left the shipment at Karachi Port without offering any plausible justification of their move which cause irreparable financial damage to exporters. However, with no alternative available to exporters to dispatch their shipments across the globe in response to their international demand, as Pakistan has non-existing shipping lines, the exporters community is helpless to rely on same shipping lines for dispatching their orders.

Daily Times - Leading News Resource of Pakistan

 

[Neo]

‘Pakistan on the brink of massive economic crisis’​

* Dr Meekal review says SBP missed opportunity to act early​

WASHINGTON: The Pakistani economy today faces the looming risk of a full-fledged balance of payments crisis, domestic and external fiscal imbalances that have reached alarming proportions and show no signs of self-correction or correction through policy action, according to an economic expert.

Dr Meekal Aziz Ahmed, who served senior advisor to the IMF executive director dealing with the region and as senior economist with the Pakistan Planning Commission, writes in a brief review of Pakistan’s economic plight that inflation has accelerated to levels never seen before in the country’s history and it is set to rise further, devastating the fixed income groups and the poor. There has been “criminal negligence” behind the power crisis, which has led to untold losses in domestic production and exports. Added to these disasters the country has a food crisis, an oil crisis, an emerging water crisis, not to mention a political crisis. There is agreement among economists, he notes, that Pakistan’s short-term prospects are grim. With economic policies likely to remain broadly unchanged, the economy will continue to slide downward until the country runs out of its foreign exchange reserves. At the point of reserve exhaustion, Pakistan will not be able to pay for its imports or meet its debt service obligations. The country, in short, will be bankrupt, Dr Ahmed predicts.

Dr Ahmed points out that Pakisan’s present predicament did not happen overnight, but is the direct consequence of the government’s “short-sighted and misguided policies” in the recent past, characterised by its single-minded obsession with producing high growth GDP rates, without consideration to the quality or sources of growth which have a crucial bearing on sustainability. Such an economic strategy, largely consumption driven and fueled by cheap credit, rather than being driven by the more desirable route of investment and exports, was, sooner or later, bound to run into resource constraints. Eventually demand would outstrip available capacity, macroeconomic imbalances would widen and inflation will start to turn upwards. The view that today’s economic problems are the lagged consequence of past policies is neither conspiratorial nor does it amount to playing the blame game. There have been long lags between policy actions and policy outcomes and what the Pakistani economy is witnessing today are the lagged consequences of policy actions taken earlier. “The chickens have come home to roost,” he adds.

Dr Ahmed writes that the State Bank’s recent actions to tighten monetary policy reflect a failure to gauge the strength of the inflationary pressures building up and the failure to act in time. Given the long lags in the monetary policy transmission mechanism, the monetary policy should have been tightened much earlier. The State Bank missed the opportunity to act early and responsibly and its belated actions are a classic illustration of “too little, too late”. Dr Ahmed says he is dispirited by what appears to be the State Bank forfeiting its hard-won autonomy. Despite possessing considerable statutory powers, the State Bank seemed to have waited for a nod of approval from government, rather than act in accordance with its mandate and tighten monetary policy immediately. Inflation, many observers believe, is now out-of control, which is troubling because Pakistan has little experience with high inflation and policy-makers may not know how to control it.

According to Dr Ahmed, the new government missed an excellent opportunity to demonstrate that it was taking charge of the rapidly worsening economic situation by failing to devise a bold fiscal strategy aimed at reducing aggregate demand pressures and starting the process of restoring macroeconomic stability. This could have been achieved through the implementation of a sound 2008-09 budget. A tight fiscal stance, desirable in its own right from a macroeconomic standpoint, would have reinforced the tight monetary policy stance. The “awam dost” budget that followed showed that the government was no aware of the crisis towards which the country was hurtling. The budget was a major disappointment, being loose, abounding in exemptions and concessions and amnesty schemes, despite bitter experience from the past.

The poorly thought out plans to “help” the poor are likely to be ill-targeted, costly, and only make matters worse. The tax revenue target is fanciful and completely out of line with what the Federal Board of Revenue (FBR) has been able to achieve in the past six decades. To add to that, the budget expenditures are seriously understated. All this boils down to a fiscal deficit outcome that is likely to be significantly higher than budget projections. Demand pressures will grow, and spill over into the external sector via enhanced imports, the last thing the economy needs. With limited autonomous or induced financing, there is not much left to sell by way of privatization.

Dr Ahmed predicts that the speculative stock market and real estate “bubbles will pop,” creating havoc in the financial sector and wiping out the lifetime savings of small investors. According to some economists, the economy could fall apart as early as December this year or March 2009 by the latest, even with the respite offered by the recent Saudi oil facility. What the economy needs is an immediate and drastic tightening of macroeconomic policies, to be achieved principally through deep and durable expenditure cuts. These cuts have to be real and not cosmetic. They can be implemented quickly. Similarly, quick-yielding revenue measures could also be considered. Pakistan needs to halt adverse trends and start the process of reversing them. Valuable time has already been lost, confidence is being rapidly eroded as reflected in the recent fall of the domestic currency and the stock market, which are symptoms of accelerated capital flight. The government will become unpopular because of the belt-tightening, but there are no other options. Getting inflation under control and back into low single digits will not be easy, he warns. There is no “soft option,” Dr Ahmed adds, no easy way out. He rejects the idea of donor conferences as being unrealistic. Any aid given will be conditional and attached to a programme, which is consistent, coherent and doable, with assured implementation. He suggests that Pakistan should give the IMF a programme which is strong and credible, with appropriate conditionality, and ask the IMF and donors to finance it.

Daily Times - Leading News Resource of Pakistan

 

[Neo]

'60 percent plasma, LCD TVs being smuggled into Pakistan'​

ISLAMABAD (July 22 2008): About 60 percent of plasma and LCD TVs are being smuggled into Pakistan annually, said Chief Operating Officer (COO) of Document World Pakistan (DWP) Rizwan Butt. He was addressing the media personals on the launching ceremony of new series of Samsung LCD TV' on Monday at Bhurban.

DWP Chief executive Farooq Naseem, Senior Manager of Samsung Electronics Company Limited Jin Gak, Marketing Manager Khurram Farooq, Product Manager Kaleem Khan, and Sales and Marketing of TV MEA Manager Hyun Joong Kim, were also present on the occasion.

He said that some of the manufacturers/assemblers of Plasma Display Panel (PDP) and Liquid Crystal Display Panel (LCDP) represented the government that they were facing tough competition because of smuggling of these items. "They claimed that smuggled TV sets are available at 28 percent to 41 percent cheaper than locally produced/assembled LCD/PDP. This price difference rendered the local assembling/manufacturing of LCD/PDP uncompetitive in the domestic market", he maintained.

"They proposed to abolish customs duty on the SKD of the LCD and Plasma TVs together with application of strict administrative measures", he added. He further said that to discourage smuggling, they brought drastic changes in the prices of the electronic products.

"Besides, there is a dire need to create warranty awareness among the masses", he added. He said that in the near future Samsung and DWP would invest 1.5 billion dollars and emphasis would be more on infrastructural development.

"We would continue to invest in Pakistan despite knowing the current political instability and weak financial position that no doubt is discouraging many investors", he said. Speaking on the occasion, Khurram Farooq said: "Samsung today marked the beginning of a new era in the evolution of entertainment with the launch of its new series of high-definition LCD TVs for the consumer Series 6, Series 5, Series 4 and Series 3.

"Combining elegant styling with a wide range of higher-end components ordinarily exclusive to premium sets, consumers can now experience superb picture quality, optimised digital performance, and ease-of-use in an HDTV that fits seamlessly into any home décor."

He further said: "HD market has unlimited potential in Pakistan and consumers' expectations are already running very high. Samsung's new HD solution presents unprecedented picture clarity, the widest colour expression and amazing sound, complemented by distinctive sleek style. These new models are set to make big impact on our lifestyle as the introduction of television did on the lives of our forefather. Samsung has a reputation for innovative and stylish products and our new range will have no exception," he added.

He further said that they were confident that people of all level would appreciate the addition of these stylish models. "This is very important step of Samsung, which is set to support our expansion in this competitive product sector," said Jin Gak Chung. "By raising technology to the level of art, these new series are great examples of Samsung's approach to LCD TVs," said Farooq Naseem. "Customers' care being the cornerstone of DWP's business philosophy, every LCD TV is backed by authorised Samsung-DWP Warranty. Customers get complete satisfaction after sale support through a countrywide network of authorised service centres.

Business Recorder [Pakistan's First Financial Daily]