Pakistan Economy - News & Updates - Archive

[Rajkumar]

good for Pakistan.

i guess,it will take time due to instability in Pakistan

 

[Pk_Thunder]

New US govt to take up market access issue​

Wednesday, December 31, 2008
By our correspondent

ISLAMABAD: US Ambassador Anne W Patterson on Tuesday expressed keen interest in Pakistan’s energy sector and assured Islamabad that she would take up all issues related to the industry and access of its products to the American market with the new US government.

She stated this during a meeting with Mian Manzoor Ahmed Wattoo, Minister of Industries and Production, held here to discuss US cooperation in industrial development of Pakistan.

During the meeting, the federal minister hoped that under the new administration of Obama, US would adopt policies which would promote global peace and cooperation. He reiterated the devastating impact of the war against terrorism on Pakistan’s economy and its socio-political consequences.

Wattoo assured the US ambassador that the government was fully committed and dedicated to the war against terrorism.

He informed the ambassador that Pakistan produces world-class textiles, leather, gemstones and marble but the products have limited access to the US market. The envoy said that she would take up the matter with the new US government once it was in office.

On the establishment of Reconstruction Opportunity Zones (ROZ) in Pakistan, the minister said the issue had been delayed for quite some time and requested for extending this facility to all Export Processing Zones (EPZs) and National Industrial Parks (NIPs).

Wattoo said the US government should cooperate in development initiatives in the FATA region by taking skilled and entrepreneurial initiatives to encourage local youth to lead a productive life.

The US may also like to assist Pakistan in the newly emerging sectors such as furniture, sports goods, agriculture implements and leather goods.

The minister also emphasised that US entrepreneurs should invest in the field of alternative energy resources like solar energy and windmills to meet energy shortage.

Wattoo suggested to the Ambassador to ease visa processing for Pakistani businessmen and create a fast mode for them. The Ambassador responded that due to recent security issues visa processing for young Pakistani males takes more time and they were considering opening a business visa window at the Karachi consulate.

Regarding the support of Friends of Pakistan the Ambassador stated that the support was in the offing and some European friends were also interested to invest in Pakistan.

 

[Pk_Thunder]

Banks allowed to reclassify investments​

Wednesday, December 31, 2008
By our correspondent

KARACHI: As financial year comes to an end, banks have been allowed to reclassify investment in Islamic bonds and shares to avoid the impact of falling stock market and economic downturn on their profit and loss accounts.

“Banks and development financial institutions may reclassify their investments in equities, term finance certificates and Sukuks, categorised as “held for trading (HFT) to available for sale (AFS) or held to maturity (HTM),” State Bank of Pakistan (SBP) said on Tuesday.

The decision has been taken in view of negative market conditions and “exceptional circumstances”.

By declaring these investments as AFS, banks and DFIs would not need to revalue or include them in net income statement.

Farhan Rizvi, a banking analyst, said the move would not help significantly improve financial outlook of banks as exposure of securities and other investments was limited.

 

[Pk_Thunder]

Companies scramble to cut expenses​

Wednesday, December 31, 2008
By Mansoor Ahmad

LAHORE: The stark reality of economic downturn has started taking its toll on the productive and services sectors as companies scramble to slash expenses and weigh options like job cut, salary freeze or reduction all in a bid to stay afloat.

The News has found that production has fallen in almost all manufacturing and services sectors during the past one year and even the boom in construction is on the decline, leaving employees in surplus. Companies generally are trying to keep the workforce that worked with them during the period of high economic growth, but economic realities force them to consider options like sacking workers or taking other measures to cut employment cost.

“We have already curtailed our expenses in other heads,” said Nabeel Hashmi, head of an auto parts’ export company. After achieving maximum possible efficiency, he said, the only additional cost that most of the industries were bearing was retention of surplus staff after the production fall ranging from 40 to 60 per cent.

The difficulty faced by local companies is that that they have grown in a culture where firing employees is not accepted by society.

“One of the biggest challenges organisations face in a period of downturn is managing employee morale,” said human resource expert Amina Asif. “Anxiety and discontent are bound to rise at such times. Strong employee-engagement initiatives including robust communications mechanisms, open channels between managers, their teams and human resource, and training programmes to keep employees up-to-date are some of the measures organisations can take to address this,” she added.

Many multinationals are reportedly striving to get ‘lay-off’ mindset among their employees and there are high fears that jobs can be terminated at any time. However, employees do not really believe it can happen. It is still seen as just a clause in their appointment letters and wherever terminations do take place, they cause tremendous discomfort among managers too.

“We must recognise that a large percentage of our population is first generation in the workforce from agriculture. There is, therefore, an underlying expectation of loyalty,” Amina said.

Other big issue is social stigma attached to losing a job. It causes more than just financial implications because people work long hours at workplaces, are paid very well and their families tend to believe that they play a crucial role within the organisations. If they suddenly lose their jobs, it is reflected on their competence. The society does not understand that one can be asked to leave a job because there is an economic downturn.

“Tightening belts is certainly a preferable option to cutting jobs,” says Mohsin Syed, who persuaded his workforce of 500 to accept a 40 per cent pay cut instead of job loss by the same percentage.

“Cutting jobs leaves a bitter taste,” he said and added entrepreneurs did understand that in Pakistan majority of the households had a single breadwinner, so lay-offs hit them very hard.

“If organisational culture is good, employees will understand that these are difficult times and will be willing to accept these cuts,” added Mohsin. “There is willingness to fight bad times together. Companies will look at rationalising salaries, slash wage increases and perks like travel and hotel privileges and try to cut expenses wherever possible,” he said.

Slashing of jobs is more painful in Pakistan than developed economies because there is no social safety net for the unemployed.

 

[Pk_Thunder]

UBL signs contract with HESCO for ebilling system ​

KARACHI, Dec 31 (APP): The United Bank Limited (UBL), one of the largest private sector banks in Pakistan, signed a contract with Hyderabad Electric Supply Corporation (HESCO) for e‑billing.

An announcement here on Wednesday said that Guftar Anjum, CEO, HESCO and Aurangzaib Alamgir, VP Business Head E‑Commerce Group UBL, were present at the occasion to ink the agreement through which HESCO customers can pay their utility bills on‑line.

Sharing his insight on the newly launched facility Guftar Anjum, said that “it is our foremost priority to provide our customers with the best facilities and this contract shows our commitment towards achieving this goal”.

He further stated that consumers will be able to pay their HESCO bills through UBL’s website and toll‑free customer help‑line.

Highlighting the benefits of this scheme, Aurangzaib Alamgir said, “The e‑billing system is in line with UBL’s commitment of putting its customers first and finding new and innovative ways to make their life easier. This facility will help consumers save time by avoiding waiting in long queues in order to pay their bills, making it a very useful service for them,” Aurangzaib also pointed out that non UBL customers can also avail this facility using UBL Orion (Mobile Banking Service), while there are plans to introduce cards in order to facilitate customers further.

 

[Pk_Thunder]

Privatization to be carried out through consultation: Zardari ​

ISLAMABAD, Dec 31 (APP): President Asif Ali Zardari Wednesday called for carrying out the privatization process through a consultative process with all stakeholders especially the workers and labor unions. He made the remarks during a briefing by the Privatization Commission in the Presidency.

The President said the privatization policy introduced by Shaheed Mohtarma Benazir Bhutto had become bipartisan state policy.

He said privatization needed to be carried out through a consultative process with all stakeholders especially the workers and labour unions.

Briefing the meeting, Minister for Privatization said the government was pursuing privatization in an open, fair and transparent manner, for the benefit of the people of Pakistan.

The meeting was informed that there was a clear need for private sector to be inducted to enhance the overall image through capital injection and use of modern technology.

He said today private public partnership instead of unchecked privatization was the norm. He said Pakistan People’s Party and their allies adhere to new dimension of privatization to face the challenges of the future.

He also said that labor friendly policies will be introduced to cater to the needs of laborers and to safeguard their interests.

The briefing was attended by Minister for Privatisation Syed Naveed Qamar, Minister for Industries & Production Mian Manzoor Ahmed Wattoo, Minister for Investment Waqar Ahmed Khan, Minister for Law & Justice Farooq H. Naik, Sardar Assef Ali, Deputy Chairman Planning Commission, Advisor to the Prime Minister for Finance Shaukat Tareen and officials.

 

[opinion786]

The President said the privatization policy introduced by Shaheed Mohtarma Benazir Bhutto had become bipartisan state policy.

I'm glad he accepted this. Otherwise Musharraf's government was solely being blamed & labelled for the process cursed as 'privitization'.

 

[ejaz007]

Iran, Pakistan agree on new gas price formula

TEHRAN: Tehran and Islamabad have agreed on a revised price formula and a new price review mechanism for Iranian gas that will be piped to Pakistan, a senior Iranian official said on Wednesday.

The new formula and review mechanism update terms reached in 2006 during the long-running negotiations on the project that are part of Iran’s effort to become a major gas exporter.

Hojjatollah Ghanimifard, the oil minister’s special representative to the pipeline talks, said both sides agreed to amend terms because of changes in the energy market since 2006. He said agreement was reached after two days of talks in Tehran. “We agreed that the formula should be changed,” he said, adding that the price review formula was also amended.

“One of the changes (to the review formula) was that a year before the commencement of delivery of the gas we are going to have a price review. Of course, this can be an option that either side can use,” said Ghanimifard. reuters

Daily Times - Leading News Resource of Pakistan

 

[AliFarooq]

Pakistan receives $3.1 billion IMF loan
Updated at: 1756 PST, Thursday, January 01, 2009

ISLAMABAD: Pakistan has so far received an amount of 3.1 billion dollars from the International Monetary Fund (IMF) out of total loan package of US $ 7.6 billion agreed mutually.

“We have received US $ 3.1 billion from the IMF on November 26, 2008 out of the total agreed loan package of US $ 7.6 billion while remaining amount will be received in phases after quarterly reviews in 23 months period” a senior official of the Ministry of Finance told reporters here on Thursday.

He said that FBR has set a revenue target of Rs.1.360 trillion for the current financial year and expressed the hope that government would be able to achieve the target.

Similarly, he added exports from the country also registered an increase of 17.1 percent in July-November 2008 when compared to 13.2 percent increase registered in the same period of last fiscal year adding that exports during the time under review were registered at US $ 8269.8 million.

He added that during the period July-November 2008, Pakistan received worker remittance of US $ 2966.5 million.

Commenting on the foreign investment, the official said that up to November 2008 an amount of 1603.3 million Foreign Direct Investment (FDI) inflows were attracted into the country.

Besides, he added, Pakistan signed a loan agreement of US $ 300 million with Asian Development Bank (ADB) with the objective of achieving sustainable high economic growth, poverty reduction and improving health services.

He said that another US $ 900 million loan agreement was signed with ADB to improve the transportation system under the National Trade Corridor (NTC) programme.

 

[Pk_Thunder]

Inflation should ease as world prices fall​

Thursday, January 01, 2009
By Shahid Shah

KARACHI: Food inflation may come down to 25 per cent if the benefit of decline in international commodities market is passed on to consumers, market sources told The News.

“Prices of commodities such as fuel have fallen,” said Anis Majeed, Chairman Karachi Wholesale Grocers Association.

Looking at the declining trend in the international market, cooking oil as well as ghee prices should come to Rs80 per kg from Rs130, said Farid Qureshi, Secretary General Karachi Wholesale Grocers Association. He said the past practice of local companies showed that they would take six months to pass on the benefit to the customer, as in a couple of months the price of cooking oil was only cut to Rs130 from Rs165.

Edible oil companies say they cannot cut prices sharply as electricity tariff had increased besides depreciation of the rupee.

Among other commodities, pulses are a daily-use item for the low and middle income class, but there is no decline in their prices. In the international market, the price of fair average quality (FAQ) black matpe (mash) fell to $450 per metric tonne from $650 while special quality (SQ) dropped to $550 from $750.

Anis Majeed said due to liquidity crunch faced by importers after imposition of 35 per cent LC cash margin, they were unable to buy in bulk quantity.

When the rupee started slipping against the dollar this August, the government imposed 35 per cent LC cash margin on all imported items. It exempted food items from the cash margin, but pulses remained under the barrier. Majeed said if cash margin was not imposed, prices of commodities could decline up to 25 per cent.

Pakistan’s total consumption of pulses is around 1.5 million tonnes, of which nearly 50 per cent is imported. Mainly, black matpe (mash), qabli chickpeas (qabli channa), lentil (masoor), red kidney beans and yellow peas are imported from Canada, Australia, China and Burma.

Contrary to the international declining trend, lentil is available at Rs125/kg against Rs143/kg in October. Rates of other pulses remain at the peak of the year. Black matpe is available at Rs75/kg, qabli chickpeas at Rs90/kg and kidney beans at Rs90/kg.

LC cash margin was waived from several other items including some textile goods but remains on pulses, essential items of daily usage. It has wedged millions of rupees of importers.

Importers say pulses are items of daily use of the poor and the waiver of LC cash margin deposit can bring prices down in the market, as they will have more money to buy them. “They are not luxurious items like cigars or mercedes,” said Anis Majeed.

 

[Pk_Thunder]

Petrol shortage attributed to low refineries’ output​

Thursday, January 01, 2009
By Saad Hasan

KARACHI: The shortage of petrol in Punjab and the NWFP due to a drop in production by cash-starved refineries has been compounded by gas load-shedding, industry people told The News on Wednesday.

Petrol, which has till recently been a surplus product in the country, became scarce in Lahore and Peshawar after refineries were forced to slash production, they added.

“Refineries cannot operate at the required capacity because of cash shortfall,” an official close to the development said. “Circular debt is still hovering around Rs80 billion.”

“Petrol supply is expected to improve in the next 2-3 days,” he said, adding that consignments were on their way to Lahore. “Oil marketing companies keep stocks as per their demand assessment. The hike in demand was unexpected.”

The issue of rising circular debt between the government, power producers, oil marketing companies (OMCs), refineries and banks had worsened earlier in the year when international oil prices were moving up every day.

Though oil prices have dropped to four-year lows, the issue of circular debt could not be settled as refineries await payments from Pakistan State Oil (PSO), which in turn is looking at the government to help power generation companies clear its dues.

Oil industry people say the government was informed time and again about the impending crisis which was bound to occur considering diminishing supply of the country’s main fuel source ie natural gas.

“As soon as CNG (compressed natural gas) stations closed due to a drop in gas pressure, petrol consumption increased,” said another official. “We had informed the government on different forums that this was to happen.”

Gas demand has continued to outstrip supply in the last couple of years with mushroom growth of CNG stations and heavy reliance of power plants and industry on gas.

Pakistan People’s Party (PPP) government has tried to fix the problem by doing away with electricity subsidies, industry people said, but it has not been able to place its priorities right vis-a-vis energy requirements.

“What is the need to discuss blending of ethanol with petrol and all these new regulations for petroleum product prices, when the industry is trembling due to dropping margins?” questioned the official.

Withdrawal of subsidies was supposed to make WAPDA’s power distribution companies financially independent, which would have enabled them to timely clear the bills of power purchases.“Present situation is the result of tight fiscal position and some policy decisions, which should have been taken much earlier,” an energy expert said.

 

[Pk_Thunder]

FBR collected Rs518bn in July-Dec​

Thursday, January 01, 2009
By our correspondent

ISLAMABAD: The Federal Board of Revenue (FBR) has collected Rs518 billion in the first half (July-Dec) of the current fiscal year, latest provisional tax collection figures reveal.

The FBR will be facing an uphill task to collect Rs842 billion in the second half (January-June 2009) in order to meet annual target of Rs1,360 billion.

“Without an effective move to apprehend non-filers, it will not be possible to achieve this ambitious tax collection target on June 30, 2009,” an official source said and added it required ‘political will’ on the part of the incumbent regime to face pressure from vested interests.

“We expect to reach Rs530-535 billion in July-Dec period of 2008-09 in the next few days because the figure of Rs518 billion does not incorporate revenue collection on December 31,” a high-level official of the FBR disclosed while talking to The News.

When FBR’s Member Fiscal Policy, Mumtaz Haider Rizvi, was contacted for comments, he said the FBR would make all-out efforts to achieve the stiff tax collection target of Rs1,360 billion by end-June 2009.

“We do not consider it as impossible task but it will be certainly a stiff target for us,” he added. On insistence of the IMF, the FBR decided to jack up its annual tax target up to Rs1,360 billion from earlier envisaged target of Rs1,250 billion, making commitment to generate additional revenues by Rs110 billion for displaying the desired number in a bid to control ballooning fiscal deficit.

The FBR, the sources said, collected Rs90 billion in December 2008 and tax authorities expected to get Rs17 billion more along with corporate returns.

The FBR’s collection stood at Rs428 billion in the first five months (July-Nov) period of the current fiscal year and by adding Rs90 billion more the total tax revenue rose to Rs518 billion in the first six months of the ongoing financial year. The IMF’s revenue projections for the FBR are based upon higher inflationary pressure up to 23 per cent and steep depreciation of rupee against dollar, which would help generating additional tax revenues in the ongoing fiscal year without imposing any new taxes.

But the steep decline in prices of crude oil in the international market is negatively impacting the FBR’s efforts to generate additional revenue thus the target of Rs1,360 billion seems to be a difficult task for the tax authorities in the existing circumstances.

 

[Pk_Thunder]

Government urged to follow homegrown economic policies​

RECORDER REPORT
LAHORE (January 01 2009): Member British parliament Sarwar Chaudhry has urged the Government to follow homegrown economic policies instead of IMF's dual policies that dictates Pakistan increase interest rates and advise US to decrease rates.

He was addressing to a function organised by Pervaiz A. Butt President of Lahore Industrialists and Traders Associations and Chairman Zonal committee on law and order in Federation Pakistan Chamber of Commerce & Industry at his Model Town residence yesterday. He said the IMF policies were not benefiting Pakistan because these policies would increase poverty, unemployment and inflation.

 

[Pk_Thunder]

Prolonged power outages irk industrialists​

RECORDER REPORT
FAISALABAD (January 01 2009): The severe loadshedding of electricity has reached up to 22 hours in most parts of the Industrial City, which irked industrialists, powerloom owners and workers, civil society members to come on the streets and protest against Fesco and Ministry of Power.

Angry protestors blocked the roads in Ghulam Muhammadabad Colony, Faizabad, Abdullahpur, Dijkot Road and Factory areas to protest against continuous power outages. Protestors burnt old tyres and raised slogan against PPP ruling party.

The major protest procession was taken out from Ghulam Muhammabad Colony, which led by ex-MPA and leader of JI Faisalabad Malik Muhammad Din and other labour leaders. Prolonged power outages continue in different parts of Jhang, Toba Tek Singh and other towns of the Division.

Meanwhile, Industrial production, especially cloth manufacturing, continued to decline during the last month of December, registering a negative growth, said the leaders of All Pakistan Cotton powerlooms Association (APCPA).

Khalid Mehmood Cheema, Chairman, and Muhammad Akram Ghouri, Vice Chairman, APCPA said that the severe energy shortages, deterioration in law & order situation, high international oil prices and rupee depreciation were major impediments for all kinds of manufacturing. Power shortages have been haunting all Textile export oriented manufacturing units.

Textile sector, in particular, was jolted by other multiple shocks firstly because it is an export-driven sector and impact of weak external demand fell disproportionately on it.

Secondly, poor law and order situation diverted importers of Pakistani products to search for new suppliers. Thirdly, rising cost of raw materials, and fourthly as imported inputs go into textile production process, a high degree of volatility in domestic currency value created problems of costing and pricing, they added.

 

[Pk_Thunder]

Credit guarantee agency soon for small enterprises​

RECORDER REPORT
KARACHI (January 01 2009): Provincial Chief, Small and Medium Enterprise Development Authority (SMEDA), Muslim Raza, has said Credit Guarantee Agency (CGA) for small and medium enterprises (SMEs) is under likely to start soon. Speaking at establishing Third Party Facilitation Center (TPFC) at Korangi Association of Trade and Industry (KATI) on Wednesday, he said that banks are an important source of external credit but they are reluctant to lend to SMEs due to the high credit risk.

He said that CGA would assist SMEs to secure loans from financial institutions in Pakistan. He said that the authority has identified six areas, including leather, marble, furniture, dairy farming, gem and jewellery and livestock for immediate attention and support. He said that the authority has established five companies including marble, furniture, gem and jewellery, dairy and livestock development company. Work on establishing leather development company is in progress.

The provincial chief said that the authority addresses the needs and problems of SMEs in the form of SME cluster - a concentration of largely homogeneous enterprises within a certain geographical area. Cluster development initiatives aim at achieving results in a short time by getting involved with stakeholders and improving the support systems at the micro level. He said that the first TPFC was established at Sarhad Chamber of Commerce and Industry (SCCI) about a year back and is operating successfully.

He said that TPFC facilitates SMEs in resolving their legal problems through experts advices and opinions with the assistance of a network of lawyers, in addition to raising awareness of legal rights and creating understanding through training courses.

He said TPFC provides free of cost legal services for SMEs in taxation, labour, corporate/mercantile, intellectual property rights, environment, local government, regulations related to utility connections, banking etc. A legal expert on SMEDA will be available at the TPFC once in a week to facilitate members of KATI and others. President Income Tax Bar Association (ITBA) A.K. Memon emphasised the need of development SME sector which creates more employment than any other sector.

He pointed out that there was nothing in Taiwan before 1993. After that 400 companies had initiated work on a very small scale and now they are very big companies. Pakistan also has potential to develop SMEs. He said that the government is providing best facility through free legal advices.

President, Sales Tax Bar Association (STBA), K.A. Khan, said that pubic sector organisation, SMEDA is providing best legal services to general public in relation to SMEs. He said that an expert on sales tax and federal excise duty will be available at TPFC to guide SME sector. President, Small and Medium Business Alliance, Zafar Iqbal, said that every government official and political leaders had emphasised the importance of SME sector, but had practically made no move for its development.

He said that small traders and entrepreneurs did not get a loan until and unless they furnish security of Rs 8 lakh for a loan of Rs 5 lakh. In this scenario small and medium enterprises cannot flourish, as they did not have finances to furnish securities. Chairman KATI, Mian Zahid Hussain, emphasised the need for encouraging people to establish more and more SMEs. He said that the government must introduce businesses friendly policies for boosting business and industrial activities in the country.