Pakistan Economy - News & Updates - Archive

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World Bank's positive Gesture​

EDITORIAL (September 29 2008): When faced with a crisis situation, even a small gesture of goodwill from a prospective source is welcome. This is true in the case of both individuals and nations. In a meeting with President Asif Ali Zardari in New York, World Bank President Robert Zoellick assured the Pakistani leader of his institution's continued support for the economy of the country.

A $1.377 billion package was being considered to help Pakistan overcome its economic problems, while a $1.337 billion World Bank funded programme was already in the pipeline. The funds will mostly be used for investment in energy and water sectors, besides developing infrastructure in other areas. Assistance will also be provided for development projects in FATA as well as poverty alleviation programmes.

President Zardari apprised the Bank's Chief of Pakistan's macroeconomic stabilisation programme and sought his help in mobilising resources for industrialisation and investment in the country. The political government had taken difficult and tough decisions to meet the current economic challenges and was doing its best to bring the country out of the economic crisis. The President of Pakistan also referred to the Friends of Pakistan group that was being mobilised to support the country's economic recovery.



We feel that the meeting between the President of Pakistan and World Bank's Chief was quite productive so far as spelling out the relative positions and the intentions of the two parties were concerned. While Zardari appeared to be quite convincing in impressing upon the World Bank President that Pakistan was very much prepared to take tough measures for a stabilisation programme envisaged by the government, Robert Zoellick's remarks were quite encouraging and explicitly meant to convey the commitment of continued financial support which by no means is small.

Understandably in a short meeting like this one, which was almost like a courtesy call, the nitty-gritty of the programme could not be finalised but the beginning appears to be good and we hope that the relevant authorities of the country would be able to make the most out of the goodwill generated in the meeting. Pakistan's foreign exchange reserves which had hit a record high of $16.5 billion in October last year dwindled to $8.82 billion on 20th September, out of which only $5.41 billion are held by the State Bank, due mainly to the soaring import bill and political uncertainty.

Some other inflows are expected but whether and when these would materialise or not, is not yet certain. In a situation like this, continued flow of resources on a substantial scale from the World Bank is of critical importance for the country. However, the authorities of the country would need to keep at last two things in mind in this connection.

Firstly, a proper framework for the macroeconomic stabilisation programme and justification for the proposed projects have to be provided for the satisfaction of the World Bank and agreed upon between the two parties. And secondly, we have to retain the sympathies of the western countries, particularly the Americans, to keep the World Bank in a helpful mood. Their quotas and consequently influence in the institution are too overwhelming to be ignored.

 

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Wärtsilä To Deliver 200 MWe Million Power Plant To Pakistan - Value EUR 131 Million​

Wartsila; Corporation, Company announcement,
29 September 2008

Wartsila of Finland received in September an order for a power plant, worth EUR131 million, from Pakistan. The power plant will be delivered as a
turnkey project to Nishat Chunian Power Ltd, which is an independent
power producer that will supply electricity to the national grid in
Pakistan. The plant will have a total electrical power output of 200
MWe.

This latest order follows another power plant order from Nishat Power
Ltd, signed by Wärtsilä earlier this year. These two orders will,
together with other Wärtsilä power plants already under construction
or in operation in Pakistan, produce a combined generating capacity
of more than 1500 MWe.

The Nishat Chunian power plant, which will run on heavy fuel oil
(HFO), is scheduled to be fully operational in March 2010. It will be
located next to the Nishat Power plant on the same site in Jambar
Kalan, Kasur District, near Lahore.

"Wärtsilä and the Nishat Group have worked together as one team. Our
first project, developed by Nishat Power Ltd., is under construction,
and we were pleased to award our second project, developed by Nishat
Chunian Ltd., also to Wärtsilä. We are very happy with the level of
support that we have received from Wärtsilä." says Mr Mian Mohammad
Mansha, Chairman of the Nishat Group.

The Nishat Chunian plant will comprise eleven Wärtsilä 18V46 diesel
generating sets with exhaust recovery boilers. The power plant will
have a high overall efficiency of 45 percent for its lifetime. The
high overall efficiency will enable the generating costs to be
competitive. Wärtsilä is a leading provider of power plants for
distributed and flexible power generation.

Wärtsilä will supply the plant equipment, then erect, test and
commission the plant and provide local construction supervision. An
operations & maintenance (O&M) agreement to operate and maintain the
power plant is also under negotiation.

"We have enjoyed a long standing relationship with the Nishat Group.
With the new orders from both Nishat Power and Nishat Chunian, the
Nishat Group will be our largest customer in Pakistan, with over 490
MW of installed capacity by 2010. This order endorses not only the
reputation of the Wärtsilä, but also the support service capability
that we are able to provide from our regional office in Lahore," says
Nomi Ahmad, Regional Director, Middle East, Wärtsilä Power Plants.

Both Nishat Chunian Power Ltd. and Nishat Power Ltd.are independent
power producers and members of the Nishat Group. The two companies
have signed Power Purchase Agreements with the National Transmission
& Despatch Company. The Nishat Group is one of the leading business
groups in Pakistan with interests in the textile, cement, insurance
and banking sectors.

 

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Pakistan urgently needs $3-4 bln to stabilise: adviser​

29 September 2008

ISLAMABAD - Pakistan needs a capital infusion of $3-$4 billion 'up front' to stabilise its economy and bolster rapidly dwindling foreign currency reserves, said an economist serving on the prime minister's economic advisory council.

Sakib Sherani said Pakistan faces a total financing gap of $7 billion to cover a projected current account deficit of $14 billion for the fiscal year ending June 20, 2009, but not all the funds were needed immediately.

"Up front we need at least 3 to 4 billion dollars to stablise the economy," said Sherani, who is chief economist at Royal Bank of Scotland in Islamabad.

He described the projected financing gap for the current account as a "ballpark figure", that took into account already expected financing, and foreign direct investment and portfolio flows.

"The financing gap could be higher or lower, depending on how world oil prices go and what happens to imports."

There are expectations that multi-lateral lenders and friendly governments will help the six-month-old civilian government avoid defaulting on a sovereign bond maturing in February, though the market has priced in the risk.

Analysts say Pakistan hopes to bridge the financing gap with a Saudi oil facility, around $2.5 billion from multilateral lenders and $1.5 billion in U.S. aid.

Former army chief Pervez Musharraf quit as president last month to avoid being impeached by the parliament elected in February, to bring down the curtain on nearly nine years of military rule.

Pakistan's support is regarded as crucial for the U.S. war against terrorism and for the NATO mission to stabilise neighbouring Afghanistan.

The new government is banking on support from the international community for its transition to democracy while faced with potential economic meltdown and the threat from al Qaeda linked Islamist militants.

A suicide truck bomb attack on the Marriott Hotel in Islamabad that killed 55 people on Sept. 20, has heightened concerns of foreign investors in Pakistan.

Foreign direct investment (FDI) has been concentrated in telecommunications, oil and gas, and banking.

Farhan Rizvi, senior analyst at JS Global Capital Ltd in Karachi, said he expected FDI to to fall to $3-3.5 billion this financial year compared with $5.15 billion in 2007/2008.

Crunch Time

The government does not want a support package from the International Monetary Fund, and is devising its own strategy to tackle a widening current account deficit, an unsustainable fiscal deficit, and inflation running at over 25 percent.

Prime Minister Yousaf Raza Gilani was scheduled to hold a news conference late on Monday that would focus on the government's plans to raise funds through privatisation.

Sherani said potential donors have been waiting to evaluate the government's strategy before pledging funds, but the situation was becoming increasingly desperate.

"Now, whether we have a policy framework or not, the donors need to step in and give us the money," Sherani said.

Data released on Thursday showed total foreign currency reserves had fallen to $8.82 billion in the week ending on Sept. 20, down $90 million from the previous week. The central bank's reserves were put at $5.41 billion.

The current account deficit widened to $2.572 billion in July and August which is equivalent to about 1.6 percent of gross domestic product, and compares with a full-year target of 6.0 percent of GDP.

The rupee was quoted at 78.05/15 to the dollar at noon on Monday, having dropped more than 21 percent since the start of the year to hit a record low of 78.55 on Sept. 22.

The Karachi Stock Exchange has kept an artificial floor under the main share index to protect share prices that have plunged nearly 35 percent this year. Foreign investors have been withdrawing from the market, but had become locked in by the price floor.

 

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ADB provides $500m financial assistance​

KARACHI - The Asian Development Bank is set to provide 500 million dollars to Pakistan today (Tuesday) to support the country to stabilise its foreign exchange reserves and to meet its financial obligations, The Nation learnt on Monday.

The ADB had made a commitment with the government to provide 1.50 billion dollars worth economic support to Pakistan in 2008-09, out of which 500 million dollars were being released on today (Tuesday), sources said. They said the federal government had approached the ADB to get released the amount on urgent basis. The senior government officials had raised this issue with the ADB during recent meeting of the Friends of Pakistan forum, held in New York on Friday that was chaired by President Asif Ali Zardari. As a result, the ADB officials had promised to meet this demand of the Pakistan government urgently, said the officials.

Officials said the World Bank would also provide 1.37 billion dollars to Pakistan in FY09 and the bank is expected to disburse the money according to the schedule.

It is worth noting that in first two months of current fiscal, Pakistan had received a record amount of 712 million dollars, whereas in the corresponding months of last fiscal the country had been provided only 99 million dollars from the donors. Thus in monetary terms, Pakistan had got 613 million dollars more foreign exchange during July and August 2008 as compared to the same months of last fiscal.

Official sources said that the disbursement of the economic assistance would increase further in this fiscal as the Friends of Pakistan have promised to come up with economic support in the next meeting, to be held in Abu Dhabi.

During recent meeting in New York, the Pakistan government had demanded 10 billion dollars economic assistance from the Friends of Pakistan.

The dignitaries who attended the Friends of Pakistan forum meeting included the representatives from United Arab Emirates, United Kingdom, United States, Australia, Canada, China, France, Germany, Italy, Japan, Turkey, European Union and United Nations. President of Pakistan Asif Ali Zardari chaired the meeting in New York last week.

In 2007-08 the disbursement of economic assistance to Pakistan amounted to 3.05 billion dollars as against 2.76 billion dollars in 2006-07.

However, in 2008-09 the government is expecting the disbursement of well over 4 billion dollars.

 

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Mango export falls by 20pc​

ISLAMABAD, Sept 29: Mango export witnessed more than 20 per cent decline this year than last year as Pakistan received the lowest per kg rate for its mango in the international market due to poor quality.

Sources in the Pakistan Horticulture Development and Export Board (PHDEB) told Dawn on Monday that by the end of August, the country had exported 79,000 tons of mango, 36,000 tons less than 115,000 tons exported till the end of August 2007.

Of the total shipments, 58,000 tons was sent by ship and 21,000 tons by air to major destinations, including UAE, Saudi Arabia, Oman and the UK.

The drop in export is being attributed to high domestic price. The country had to export “out-graded” fruit this year due to decline in production owing to which its per kg price remained the lowest in the international market and far behind its Indian competitor, an official in the Federal Ministry of Food, Agriculture and Livestock (Minfal) told Dawn.

Lack of proper post-harvest handling is yet another reason of poor quality of Pakistani mango as farmers were not able to properly determine the fruit maturity time.

A PHDEB official said that slow pace of export continued throughout the current month as well and that exports could hardly touch the figure of 90,000 tons at the end of the season compared to 120,000 tons exported last year.

Minfal believes that new awareness plans about international requirements, including Global GAP certification needed to be launched.

It says efforts should be made to develop pack-houses on modern lines and provide cool-chain facilities to avoid huge post-harvest losses.

Farmers also need to be trained in fruit maturity determination by using maturity guide, refractometers and visual observation of fullness of cheeks and skin appearance.

Pakistan’s fruit exports, during the fiscal year 2007-08, surged by 27 per cent in terms of value and 20 per cent 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 tons, with a value of $113.635 million.

During 2007-08, it grew to 413.726 tons with a net value of $144.676 million, depicting an increase of up to 27 per cent during the period.

 

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Gwadar oil city project stumbles ​

Wednesday, October 01, 2008

ISLAMABAD: A mega oil city at Gwadar port, which is the most strategic project with an investment of $40 billion, has hit snags as the process of acquiring land has been delayed because of a massive rise in prices of real estate.

The Government of Balochistan has informed the federal government that the cost of land for the oil city has increased manifold, which is why it is not possible to acquire land on nominal rates.

The government wants to establish at the Gwadar port the biggest crude and refined oil storage base in the region, for which it had allotted 12,500 acres of land in 2006. It had announced that the required land be made available on lease at nominal rates to interested parties for setting up refineries or making investment in oil logistics and storage facilities.

But in the latest scenario, the cash-strapped Balochistan government has no money to pay the high cost of the land needed for the project.

An official said the Balochistan administration had told the Centre that it had identified 100,000 acres of land for the project at a cost of Rs38,000 to 40,000 per acre. Balochistan also requested for release of Rs3.8 billion to acquire the land and warned of more increase in land prices if funds were not released timely.

Under the plan, the official said, the project would be executed in two phases. In Phase-1, a petrochemical city will be set up with an initial investment of $12.5 billion. In this city, a big refinery, along with petrochemical, oil logistics and storage complexes will be set up.

In the first three years, the refinery will be able to refine 10.5 million tonnes of oil annually. This capacity will be increased up to 21 million tonnes in seven to nine years.

The official said Chinese Petroleum Chamber would come up with a $12.5 billion investment plan for the project.

On behalf of China, Great United Petroleum Holdings Company Limited (GUPC) is working on the feasibility study of the petrochemical city project.

The official said GUPC would first conduct the feasibility study and preparation work for the project and then both countries would enter into a formal agreement for materialising the petrochemical city project.

The official said GUPC would also build 1,000-2,000 service stations in Pakistan as service terminals for the petrochemical city.

 

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KSE requires Rs30-40bn to stabilise near 9,000 points ​

Wednesday, October 01, 2008

KARACHI: According to a local brokerage house’s comprehensive report, the Karachi stock market immediately requires Rs30-40 billion to stabilise near and around 9,000 points, otherwise the KSE 100-share index can fall to 7,000 points ahead of floor removal.

The current market is running under a floor price mechanism since August 28. KSE Board of Directors has hinted to remove this floor sometime in October along with introducing a market rescue package. In this regard, they have called on Governor SBP and have reportedly conceived the idea of constituting a market rescue fund.

So far the market has fallen by 41 per cent or 6,500 points to date from an all time high closing of 15,676 points on April 18. During the same period, an outflow of over Rs1.9 trillion was also recorded from overall market capitalisation.

According to JS Global Research, “market needs fresh injection without any delay as each passing day is affecting investor morale and confidence. While the size of the fund needed is a tricky question, we believe, if Rs30-40 billion ($400-500 million approximately) is injected, the market may stabilise close to 9,000 points level.”

If availability of funds is less than the actual requirement, investors could see the index falling 12-25 per cent to 7,000-8,000 levels after the lifting of the price floor mechanism. This assumption is based on historic trends using years 1999 and 2002 as proxies for a worst case scenario, the brokerage house said.

It expects recovery in the medium term in case Pakistan’s external account position improves in the first half of the calendar year 2009. Though reaching to its original (earlier expected) target of 14,000 looks difficult, brokerage said it expected a recovery in the medium term.

Strategy: Worsening global market conditions may not help Pakistan in attracting huge FDI in the short to medium term. This, coupled with the government’s slow movement to tackle serious economic issues, raises the probability that Pakistan will seek an IMF programme. And if that happens by the beginning of the first quarter of 2009, one may see investor confidence improving and stock market providing opportunities. The IMF programme would help to chalk a sound long term macroeconomic policy framework, which would enforce fiscal discipline along with addressing structural problems. Moreover, monitoring by IMF would instill confidence amongst other potential investors, hence paving the way for foreign inflows into Pakistan.

In the medium term, the house advised investors to also look for stocks trading on cheap multiples and offer decent growth opportunities. Thus, besides HUBCO, PPL and FFC, it recommended investors to gradually buy OGDC, POL, PSO, ENGRO and PTC for the medium term.

 

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Pakistan risks expulsion from MSCI index​

LONDON, Sept 30: Pakistan’s imposition of a floor under its main stock index could see it expelled from the benchmark MSCI emerging equities index while Colombia’s recent easing of investment curbs could help the country remain in it, the index compiler’s research head said on Tuesday.

“If capital controls are strict and prevent investors from moving in and out, that country needs to leave the index,” Remy Briand, global head of index research at MSCI Barra, told Reuters.

“Definitely the situation in Pakistan is not good.”

Fund managers and other investors use MSCI’s emerging markets index to benchmark their investments, and removal from the index can exclude companies or markets from capital flows due to fund regulations.

The Karachi Stock Exchange imposed a floor on its benchmark 100-share index on Aug 27 as part of a series of steps taken by authorities there to protect share prices.

Colombia, along with Argentina, is among the countries with capital controls that could be removed from the MSCI Emerging Markets Index as part of a wider consultation expected to end by December.

But Colombia lifted its restrictions on foreign portfolio investments in shares on September 1.

“We are monitoring the situation but it’s a positive development. If there are no capital controls, there is no reason why we should transition Colombia

 

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Govt to build shipyards in Karachi & Gwadar​

ISLAMABAD: The federal government has decided to build shipyards in Karachi and Gwadar to meet the growing needs of shipping lines.

A committee has been constituted to finalise the sites for building shipyards and submit its report before the policy board within two weeks for final approval.

Prime Minister Syed Yousuf Raza Gilani, while expressing government’s resolve for the development of shipbuilding industry in Pakistan, said that the setting up of two shipyards at Karachi and Gwadar would go a long way in catering to domestic as well as international needs.

The Prime Minister observed this while chairing a meeting to review the progress on the development of shipbuilding industry in the country here at the Prime Minister’s house this afternoon.

The Prime Minister constituted a committee under the chairmanship of the Minister for Ports and Shipping, Qamar Zaman Kaira, to finalise the sites for building shipyards at Karachi and Gwadar.

The Prime Minister emphasised upon the need to make Pakistan a leading shipbuilding country of the region thus contributing towards economic development and poverty alleviation.

While highlighting Pakistan’s unique geo-strategic location and trained manpower, the Prime Minister said, advantage needs to be leveraged to enter into shipbuilding industry in a big way through joint venture with reputable international shipyards. He said shipyards not only generate employment opportunities but also develop wide range of ancillary industries.

Earlier, MD Karachi Shipyards briefed the Prime Minister about the progress made on the development of shipbuilding. He also apprised the Prime Minister that two world-class shipyards on Joint Venture basis are proposed to be built at Gwadar and Port Qasim.

Minister for Ports and Shipping, Qamar Zaman Kaira, Chief of Naval Staff, Admiral M. Afzal Tahir, Secretary Defence Production, Secretary Ports and Shipping, Secretary Planning, Secretary BOI, MD Karachi Shipyard also attended the meeting.

 

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Govt plans to divert floodwater for irrigation purposes​

ISLAMABAD: In order to prevent heavy losses to the crops by flood and to divert the floodwater for irrigation purpose, the government has planned a scheme ‘Remodeling measures for dhana sadoori irrigation scheme on porali river’ with cost of Rs 158.889 million.

The scheme would also help the government to protect agricultural land, town and infrastructure from the threat of flooding and will provide drinking water supply facilities to the inhabitants of the area. The recent floods across the country brought destruction particularly to the agriculture of the country along with loss of precious human lives and property. “The government is now taking appropriate steps for controlling the effects of floods,” a senior official in the ministry of water and power told Daily Times here on Tuesday.

Under this scheme, the government would construct two escape structures at Usman Wali and Mehrullah Bunds. According to the working paper of the project, strengthening / raising of existing Dhana–Sadoori and Mehrullah Kulli Gharib Bunds would be carried out. The government has allocated Rs 500 million for the project in the Public Sector Development Programme 2008-09.

Pakistan is an agricultural country with largest irrigation network in the world. About 64 percent of its population resides in the rural area, 57 percent of rural workforce is engaged in agriculture and 23 percent of GDP is attributed to agriculture.”

However, the per capita availability of water, which was 5650 cubic metres in 1951, has been reduced to 1200 cubic metres and is projected to drop to the critical limit of 1000 cubic metres by 2010. “This is a very alarming situation and it is, therefore, of utmost importance that water is used judiciously, efficiently and wastage of water should be avoided.”

The project would help the government to address various problems like water scarcity, need for additional reservoirs, safe disposal of drainage effluent to sea, protection of infrastructure form onslaught of floods, mining of ground water, and seepage losses in irrigation system.

Explaining details of the project, the official said Dhana-Sadoori and Mehrullah – Kulli Gharbi complexes were constructed by irrigation department in 1968 to divert the floods flows of porali river from where Old Gidri, Lakhar and sheh Gidri channels receive irrigation water.

 

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Electricity shortage increases to 2,100 MW​

LAHORE: The shortage in electricity has started increasing once again, reaching 2,100 megawatts on Tuesday. The Pakistan Electric Power Company (PEPCO) has claimed however that there will be no load shedding on the eve of Eidul Fitr.

Sources in the Water and Power Development Authority (WAPDA) told Daily Times on Tuesday that PEPCO had asked all electricity distribution companies to carry out load shedding for four to six hours a day. The sources said PEPCO had also asked all the companies to announce the load shedding schedule after Eid, so that consumers could make adjustments to their daily schedules. “Currently, all the distribution companies are forced to carry out load shedding due to the extra demand on the system,” they said, adding that electricity demand had reached 16,000 to 16,500 megawatts, while the generation remained at 14,000 megawatts to 14,500 megawatts.

 

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ADB releases $500 million from $1.5 billion loans ​

KARACHI ( October 01, 2008): Asian Development Bank will provide $1.5 billion in three tranches under the Accelerated Economic Transformation Programme. The first tranche of $500 million was released on Tuesday, under a formula based approach, after the Federal Cabinet approved.

(A) Consolidated supervision law whereby State Bank of Pakistan will regulate all kinds of deposit taking in the country; thereby transferring leasing companies, investment banks and Development Financial Institutions (DFIs) from supervision of Securities and Exchange Commission of Pakistan (SECP) to SBP;

(B) Cabinet has approved the Draft of Anti-Money Laundering Law and approval of Ministry of Law for issuance of an Ordinance or passage of law by Parliament is awaited; and;

(C) Raising the minimum capital for banking companies to $300 million already in offing. The next tranche of $500 million is expected to be released after Pakistan complies with Basel-II requirements; establishes a deposit protection scheme and modernises the SBP Act to effectively become the lender of the last resort.

The programme for the third tranche of $500 million will be drawn up for compliance later by SBP. The ADB loan basically uses this vehicle for easing Pakistan's balance of payments difficulty.

According to reliable sources the full amount of $500 million (Rs 39 billion) will be utilised to retire the SBP debt. Government had committed not to borrow from SBP after July 1st, 2008 and retire Rs 22 billion of existing borrowing by 30th September 2008. Contrary to the commitment over Rs 160 billion were borrowed during the first seven weeks of the first quarter. With last date for tax return extended to October 31st, it would be difficult for the government to meet its commitment.

A press release issued by ADB from Manila says: The Asian Development Bank (ADB) has approved a $500 million loan to support Pakistan's efforts to address harm done to poor families and the country's economy by unprecedented international food and fuel price hikes.

The ADB loan will support ongoing changes in the energy and agriculture sectors, and will help lay the foundation for a radical transformation of the economy by diversifying, deepening and expanding a competitive industrial sector, and creating much-needed jobs for Pakistan's young and growing labour force.

ADB support comprises a key part of a global financing plan underpinning the government's economic stabilisation program. The stabilisation plan includes actions to shore up and manage foreign reserves, improve monetary policy, trim the fiscal deficit and, its financing gap, and cut back on government borrowing from the State Bank of Pakistan. The stabilisation plan is focused on protecting the poor through special safety net programs, and reassuring financial markets through fiscal and monetary discipline.

"Addressing the impact of fuel and food price increases unleashes immediate benefits to Pakistan's people and to markets," said Juan Miranda, Director General of ADB's Central and West Asia Department. "The fiscal space created by reforms will cut financing gaps, generate conditions for a better deal in the sectors down the road, and provide much-needed cash flow to pay for safety net programs that protect the most vulnerable. ADB's support balances the need for addressing the needs of Pakistan's people while reassuring markets that the government is on the right track with its ongoing economic stabilisation program."

The stabilisation plan was formulated by the Government, with technical advice from other parties. "ADB financing takes place within the context of this stabilisation framework," added Mr Miranda. "We are one of several parties contributing to the financing of this plan; others will soon follow with their own financing and programs."

Pakistan will strengthen the legal and regulatory framework of its financial sector through the ADB program. The State Bank of Pakistan, working closely with the government, has undertaken a series of actions to improve risk management in the sector, strengthen payment systems and protect consumers. This will create stability at a time when international markets are in turmoil.

"The measures supported by ADB's program will benefit ordinary Pakistanis, directly as well as indirectly," said Mr Miranda. "Timing is of the essence here." ADB is a major financing partner of Pakistan. Its strategy focuses on three areas: infrastructure (roads, irrigation and logistics), utilities (power, energy, urban services) and reforms (including social service provision and finance, public financial resource management, financial sector intermediation and capital markets development).

 

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India may ease FDI norms for Pakistani firms​

NEW DELHI (October 01 2008): India may ease foreign direct investment (FDI) norms for Pakistani companies once political situation becomes more stable in Pakistan. Indian state minister of Commerce & Power Jairam Ramesh said the country would lift restrictions on investment from Pakistan just as it did with Bangladesh a few months back.

He said investments from Pakistan are not allowed due to security concerns. He said FDI could be allowed from Pakistan on a case-by-case basis and not through automatic route. FDI approvals to Pakistani firms could be granted through Foreign Investment Promotion Board (FIPB).

 

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Bilateral trade, poverty: Pakistan and India need to be flexible in tackling South Asian issues​

ISLAMABAD (October 01 2008): Pakistan and India have a leading role in regional grouping and the two countries can ensure a good future to masses if they show flexibility, which will immediately result in augmenting bilateral trade to the tune of 10 billion dollars, said Dr Murtaza Mughal, President of Pakistan Economy Watch (Pew) here on Tuesday.

"Both the countries are major players in South Asian Association for Regional Cooperation (Saarc) and their positive role can help provide relief to 500 million poor living in South Asia", Dr Mughal added. He said that if the Saarc members set aside the political differences, a new era of growth would spur and Pakistan would reap dividends, as Asia would be world's centre of economic activity by next decade.

Pakistan needed to avail of this chance and initiate preparation as "we have missed many opportunities in past," he said, adding that Pakistan would be world's leader in textiles and banking. He said that 500 million people were living below poverty line in South Asia and their plight would end only if the region could grow at a rate of eight percent, which was possible only in presence of enhanced regional trade.

He said that regional trade was five percent of the total Saarc trade activity, while the trade among Association of Southeast Asian Nations was 30 percent. Intra-European Union commerce had been estimated at around 55 percent he added. Dr Mughal stressed the need for evolving common strategy the purpose, and said India should rethink about her aims of regional dominance and expansionism, otherwise everybody, including New Delhi, would be at the loosing end.

He said that New Delhi was mulling to ban foreign direct investment (FDI) from Pakistan, which would send very negative signals, and added that the region needed to focus on FDI, tourism, deficits and technical expertise in which it was behind other regions. "Political differences, corruption, lack of proper infrastructure etc are also stumbling blocks," he said, adding that agriculture insurance was a very positive step that could change the fate of Pakistan if executed properly.

 

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LSM growth down by four percent in July​

KARACHI (October 01 2008): Large Scale Manufacturing (LSM) growth has decelerated and witnessed a decline of some 4 percent during the first month of the current fiscal year due to negative economic indicators, high interest rates, and shortage of utilities.

LSM already had presented poor performance during the last fiscal year and registered a six-year lowest growth of 3.76 due to the political uncertainty, power shortage, and deteriorating law and order situation.

The performance of the manufacturing sector had been impressive during the last five years, as it had posted an average growth over 10 percent per annum since 2003. However, the battles on political front, poor law and order situation, and negative economic indicators have pushed the LSM growth in a downward side.

The Federal Bureau of Statistics (FBS) on Tuesday informed that the Quantum Index Number of LSM industries shows a negative trend of some 3.85 percent during July 2008 as compared to July 2007.

The Quantum Index Number of LSM industries stood at 196.64 points in July 2008 as compared to 204.52 points in July 2007. Official provisional statistics of Quantum Index Numbers of Large Scale Manufacturing Industries (QIM) of FBS depicting the production of major industries in the country have not been growing.

QIM shows the industrial productivity of the 100 items received from different sources ie Oil Companies Advisory Committee (OCAC), Ministry of Industries & Production and Provincial Bureaus of Statistics. The OCAC supplied the data of 11 items, the Ministry of Industries & Production supplied the data of 35 items and Provincial Bureaus of Statistics provided data for 54 items.

Major share in present negative growth has contributed by OCAC, as during the July 2008 OCAC index have declined by 5.14 percent to 173.94 points from 183.37 points while, the ministry of industries index has dipped by 3.35 percent to 185.25 points.

The LSM growth during July 2008 also has registered a decline of 7.21 percent in growth, when compared to June 2008. As in June 2008 QIM stood at 211 points. Economists said that poor law and order situation, high interest rates, shortage of power and other utilities are the major contributors to the slow growth of LSM in last fiscal year and in July 2008. The production of petroleum products has decreased by 5.14 percent during July. In addition the production of cigarettes, soda ash, motorcycles and tractors registered a growth of 20.30 percent, 0.36 percent, 1.40 percent and 10 percent, respectively during the first month of the current fiscal year.