Pakistan Economy - News & Updates - Archive

[Neo]

Punjab working on hydel, coal power generation projects: Shahbaz ​

Says country facing serious energy crisis​

Tuesday, January 13, 2009

LAHORE: Punjab Chief Minister Shahbaz Sharif has said Pakistan is facing serious energy crisis and the government is taking measures to solve this problem.

He expressed these views while addressing a meeting held at the Chief Minister’s Secretariat on Monday to review the Punjab Power Generation Policy, 2006. He said the Punjab government was working on a number of projects, including electricity generation from hydel power and coal.

He added that negotiations were being held with China in this regard while the Independent Power Producer Forum had also visited the Punjab and expressed keen interest in investing in the energy sector.

Shahbaz said that at present, Pakistan was facing a power deficit of more than 4,500 MW and there was a dire need for investing in the energy sector in the interest of the agriculture and industrial sectors.

He said power shortage was also affecting exports besides leaving a negative impact on various sectors.He said that though heavy borrowing was made in the past but instead of using this money on public welfare and power-generation projects, it was wasted on luxurious living, which was a great disservice to the nation.

He said that efforts had been made for capacity-building and activating the Punjab Power Development Board. Experts have also been included in the exercise, he added.Shahbaz lauded the services of the Punjab senior minister for comprehensive amendments in the Punjab Power General Policy.

He added that the amendments were being sent to the Punjab cabinet for approval.Earlier, the irrigation secretary briefed the meeting on amendments in the Punjab Power General Policy, 2006.

He said a special committee had been set up under the chairmanship of Raja Riaz. The committee had given a final shape to these amendments after detailed deliberations, he added.Shahbaz said the Punjab Power Development Company Limited, headed by Nadeem Babar, had also been constituted which would undertake various power-generation projects in the province.

He directed the committee, set up under the chairmanship of Senior Adviser Sardar Zulfiqar Ali Khan Khosa regarding the PIDA, to submit its recommendations as soon as possible.The planning and development chairman, secretaries of finance, mines, irrigation and power and others were also present on the occasion.

 

[Neo]

Educationists discuss USAID $75m project ​

Tuesday, January 13, 2009

LAHORE: The Punjab University on Monday organised a meeting of the educationists, who deliberated upon $ 75 million project ‘Pre-Service Teachers Education Programme’ of the United States Agency for International Development (USAID).

Vice Chancellor Dr Mujahid Kamran chaired the meeting attended by renowned educationists from all over Pakistan including University of Education’s VC Dr Munawar Mirza, Fatima Jinnah Women University’s VC Prof Dr Saeeda Asadullah Khan, Bahauddin Zakariya University Multan VC Prof Dr Muhammad Zafarullah.

The USAID team was headed by Programme Chief Doran Bernard, while Deputy Chief Phillip Butterfield and Project Coordinator (Peshawar) Kamran Iftikhar Lone were also present.

Briefing the meeting on the USAID programme, Dr Doran Bernard said the project would be implemented in Pakistan in five years and as many as 15 universities and 75 government colleges have been selected for this project. He said the objectives of this project are: To improve system and policies that support teachers and education managers; to support HEC and the Ministry of Education, teachers institutes to develop/revise, evaluate and finalise elements of pre-service teachers education degrees; development of a plan to implement new curriculum for new and existing teachers. USAID Project Deputy Chief Phillip Butterfield said the agency would also run a project to develop financial resources for higher education.

Dr Mujahid said the PU was meeting its 60 per cent expenses from its own resources and striving for financial independence. He hoped that the USAID programme would help uplift education standard of the selected educational universities of the country. Dr Munawar Mirza, Dr Hafiz Iqbal and other participants also spoke and gave their suggestions to make the project a success.

 

[Neo]

‘40% decrease in wheat production expected in Pakistan’ ​

ISLAMABAD: We are expecting 40 percent decrease in wheat production in Pakistan, as 72 districts are deficient in wheat availability, says Dr Pervez Ameer, Member Technical Advisory Panel, Ministry of Environment.

Dr Pervez said this while speaking at a workshop on climate change at LEAD House, Islamabad.

Around 35 million acre feet of our water is being wasted out of the total water of 148 million acre feet, owing to inefficient use of our water resources. The need is for a united front and systematic struggle to cope with climate change challenge,” said Ex-Minister of State on Environment, Malik Amin Aslam.

Musharraf Zaidi, governance expert, discussed the issues of public policy impacts in Pakistan and elaborated hierarchal system involved in decision-making process.

“Climate Change is emerging as the most critical challenge of our times. Need is to look at and renegotiate environmental policies, in the light of ongoing and expected climate change impacts. Climate Change will increase poverty through droughts, floods, extreme events causing resettlement, disasters and diseases. Syed Ayub Qutub, CEO PIEDAR, said most of our problems are related to the climate change vulnerabilities with respect to five core issues: water security, food security, infrastructure, public policy and disaster management.

LEAD believes that Pakistan needs to develop a plan of action on climate change like several other nations, including India and China. The national plan of action on climate change should address some of the most pressing issues that will confront Pakistan and outline areas of priority for investments and actions. This action plan should also serve as the basis for our revised energy, water, agriculture and forestry policies.

 

[Neo]

CMC to invest $2m in coalfield ​

KARACHI: A China National Machinery Import and Export Corporation (CMC) has planned to invest more than two million dollar for development of coal mines at Sonda-Jherruk field in District Thatta, Sindh. The Chinese company began its preliminary studies for mine construction work in May 2008 and it has almost started mining operation in the beginning of the calendar year. This is the second detailed exploration made by CMC at the coalfield that will contain detailed hydro geological testing and water resource investigation, shaft geological investigation and shaft drilling.

 

[Neo]

Electricity shortage drops to 1700MW ​

ISLAMABAD: The demand and supply gap of the electricity in the country has dropped to 1700 megawatt in the wake of increased power production which helped reduce the duration of the load shedding by 1 to 3 hours. PEPCO spokesman, Tahir Basharat Cheema said that now only gas-fired thermal power stations of 750MW were closed due to short supply of gas. He said oil supply has improved with fog spell waning out, which prompted further increase in power production by 2800 MW.

 

[Neo]

WB puts $834.5m projects for Pakistan on hold​

* Suspends programme loans due to poor macroeconomic conditions​

ISLAMABAD: The World Bank’s (WB) monthly operational summary for revealed that two key projects for Pakistan worth $834.5 million are to be put on hold.

The report, released on Monday, said the WB had suspended the programme loans for Pakistan due to the country’s poor macroeconomic conditions. The suspension is likely to continue until the WB’s Executive Board considers that Pakistan’s macroeconomic indicators are improving. Under this arrangement, the two projects are being put on hold and further action on them would depend on the WB’s decision.

According to the summary, both sides may negotiate the projects’ purpose and cost in the months to come.

The report said the WB was suspending the International Bank for Reconstruction and Development (IBRD)-funded National Expressways project. The $634.5 million project is to provide an efficient, high-speed, safe and access-controlled expressway system, which would contribute to lowering transit costs and time.

The other project that the WB shelved temporarily was the National Trade Corridor Improvement Programme.

The $200 million project funded by the IBRD would work to enhance the country’s export competitiveness by reducing the cost of trade and transport logistics, and bringing the service quality to international standards.

Other WB-funded projects whose preparation is underway are:

Higher Education Support Programme: The $100 million project is to support the government of Pakistan’s higher education medium-term development framework. It will work to foster public-private partnership in the higher education sector. The project also aims at providing substantial technical support in developing a reasonable financing plan, consistent with the macro-framework of the country.

Mineral Sector Technical Assistance: The objective of the $50 million project is to implement a strategy to accelerate sustainable mineral sector development by strengthening governance, transparency, and capacity in the management of mineral resources.

Rural Telecommunications and e-Service: The project worth $124 million aims at accelerated access to communications in under-served areas by using targeted subsidies for rural expansion and strengthen legal, policy, regulatory and spectrum management.

Second Sindh Structural Adjustment: The project costing $100 million is to implement reforms to improve fiscal and financial management, governance, public service delivery, and the state’s regulatory framework.

Support to Safety Nets: The $50 million project will support the effective strengthening of implementation and monitoring mechanisms for delivery of cash transfer programmes, including the Benazir Income Support Programme.

Trade and Transport Facilitation-II: The project worth $25 million will facilitate the National Trade Corridor Implementation Plan and modernise Pakistan’s international trade procedures and practices.

 

[Neo]

New growth strategies ​

Syed Mohammad Ali

While trying to make energy use more efficient and more cost effective, it is vital that the issue of equitable access not be ignored. There is no significant trade-off between climate change mitigation and energy access for the poorest

It is said that necessity is the mother of all inventions. Thus the evident changes that are taking place now within the natural environment on which all life on our planet remains dependent may not only have inevitable consequences for all to bear, but should also offer the hope of finally altering the very behaviour that has been largely responsible for causing these changes.

The existing models of economic productivity have been pumping ever-increasing quantities of pollutants into an atmosphere that is already so contaminated that it has begun to usher in climate changes. These changes threaten to derail whatever modest progress has been achieved with regards to human development.

Unprecedented changes in global climate are evident from observations of increases in average air and ocean temperatures, the widespread melting of snow and ice, and rising sea levels. There is no dearth of projected increases in the frequency and intensity of heat waves, storms, floods and droughts. These will have major impacts on all life on the planet in the form of changes in water availability, land degradation, food insecurity, and loss of biodiversity.

In an effort to avert this self-perpetuating disaster, the World Bank has finally reacted by devising a new strategic framework for helping its client nations carve out a sustainable growth path. Some of the supposed ‘win-win policies’ identified by the World Bank include removal of energy subsidies and promotion of end-user energy efficiency.

The World Bank is arguing that energy subsidies are expensive as they damage the climate, and disproportionately benefit the well-off who are in the business of energy generation. The benefits of energy subsidies are not only said to be skewed towards wealthier groups, this form of subsidisation is also considered to have a negative impact on the amount of public expenditure available to resource constrained developing countries to improve the lives of ordinary citizens.

There is also empirical data to support this argument given that fuel subsidies alone are 2 to 7.5 times as large as public spending on health in countries like Bangladesh, Ecuador, the Arab Republic of Egypt, India, Indonesia, Morocco, Pakistan, Turkmenistan, Venezuela and Yemen.

Moreover, energy subsidies also encourage inefficient, carbon intensive use of energy. States that subsidise diesel prices, so that they are less than half the world market rate, emit about twice as much per capita as other countries with similar income levels, which do not offer such subsidisation.

Conversely, countries with long-standing fuel taxes, such as the United Kingdom, have evolved more energy-efficient transport and land use. It is thus being argued that reduction in government support in this regard will encourage energy efficiency, increase the attractiveness of renewable energy, and allow more resources to flow to poor people and even to investments in cleaner power.

On the other hand, end-user energy efficiency is being identified to have great potential for reducing emissions as well, which becomes increasingly attractive as the costs of constructing and fuelling power plants rise. Again it is the World Bank which is very keen to support supply-side energy efficiency and help overcome biases that favour electricity supply over efficiency, inadequate investments in learning, and inattention to energy systems in the wake of power sector reform.

It was the record levels of energy prices worldwide which provided an impetus for the World Bank to finally decide to promote more sustainable long-term trajectories of growth. To help developing countries cope with the burden of these prices, and take advantage of the signals they send for sustainability, the World Bank has finally made promotion of energy efficiency a priority. It wants to encourage efficiency investments and policies to adjust to higher prices and to facilitate the construction of more resilient economies.

While trying to assist countries to dismantle subsidies, the World Bank now seems keen to finance programmes that will protect the poor as well as other productive sectors of the economy to adjust to higher prices.

However, past attempts to promote efficiency have had limited success particularly because institutions like the World Bank have primarily chosen to engage with power utilities, which obviously have limited incentives to restrict electricity sales. Even internal World Bank compulsions have tended to neglect energy efficiency efforts given that such small-scale projects implying behavioural changes demand much staff effort and persistent engagement with a diverse number of stakeholders over years.

The World Bank has now decided to promote policies that catalyse private sector investments in renewable energy and energy efficiency. Whether profit-driven private sector interventions, which have an imperative to scale up very quickly in order to maximise profits, be able to secure sustainable, equitable and efficient energy use remains to be seen.

It is encouraging at least to see that national governments in developing countries themselves have begun to rethink their traditional positions with recent moves by China to drastically reduce its energy intensity.

Pakistan had also set up an Energy Conservation Centre within the Ministry of Environment. However, the Centre has received little policy attention, and resultantly its impact on relevant sectors like transport, industry and agriculture has thus remained miniscule. The huge energy crisis facing the country provides another opportunity for policy makers to rethink the long-term energy policy of the country based on principles of sustainable use and conservation instead of relying on the usual knee-jerk reactions of offering temporary solutions.

While trying to make energy use more efficient and more cost effective, it is vital that the issue of equitable access not be ignored. There is no significant trade-off between climate change mitigation and energy access for the poorest. Providing basic electricity services for the world’s unconnected households will add only a third of a percent to global emissions, and much less if renewable energy and efficient light bulbs are deployed. There is thus no excuse to keep denying the poor the basic benefits of energy production, which the well off have tended to over-consume, even if policy makers finally get serious about sustainable energy use.

 

[Neo]

Shipbuilding industry to be developed on grand scale: Gilani launches 'tanker-cum-utility' ship project ​

KARACHI (January 13 2009): Prime Minister Yousuf Raza Gilani has said that the government has adopted a 'vision' for new shipyards and development of shipbuilding industry on a grand scale. He said that the government would move in this direction at a very fast pace, and added: "Together, we will ensure that Pakistan becomes a leading shipbuilding country in the region, in line with its true potential and ideal location".

He was speaking here on Monday at the launching ceremony of Stus No 1--first small 'Tanker-cum-Utility' ship, being built by Karachi Shipyard and Engineering Works (KSEW) for Pakistan Navy. Federal Minister for Defence Production Abdul Qayyum Jatoi, Naval Chief Admiral Noman Bashir, Sindh Governor Ishrat-ul Ibad Khan, Chief Minister Qaim Ali Shah and high officials of Pakistan Navy and KSEW were also present on this occasion.

The Prime Minister said that the shipbuilding is an industry which can act as a catalyst for overall industrial development, leading to economic development, large-scale employment generation and poverty alleviation. "This is a labour-intensive industry, and is best suited for developing countries like Pakistan," he added.

He said that Pakistan has a great commercially strategic location at the mouth of the Persian Gulf and abundance of hardworking manpower, best suited for shipbuilding industry. "We need to take advantage of these strengths", he said, and added that all people involved in the shipbuilding industry "have a great future and prospects" ahead of them.

He urged each and every individual, working in KSEW, or related with these activities, to work with dedication for the progress of KSEW and the shipbuilding industry in the country. The Prime Minister said that the KSEW is a national asset and is contributing tremendously in fulfilling the country's naval defence requirements as well as requirements of the country's maritime sector.

"It is a very important component of the Ministry of Defence Production and, with every event like the one today, the government feels ever more confident." Gilani, much impressed by the turnout of Karachi Shipyard in such a short span of time, said: "Today, the entire yard is buzzing with activity, and it proves that with will and dedication, challenging tasks can easily be achieved."

He congratulated Karachi Shipyard management for early achievement of launching milestone, and appreciated the efforts of its architects, engineers and workers involved to accomplish the prestigious task. He noted that the project was progressing ahead of planned schedule.

He said that this is a remarkable achievement and speaks volumes of the new vigour and zeal in KSEW. He expressed hope that with this speedy pace of construction, these new ships would join Pakistan Navy fleet earlier than the scheduled time and thus contribute in enhancing PN Fleet's capabilities. He said that it would go a long way in establishing credibility of Karachi Shipyard as a reliable builder with assured timely deliveries of cost-effective and quality ships.

The Prime Minister also appreciated Pakistan Navy in supporting and reposing trust in indigenous construction of ships and submarines at Karachi Shipyard. He urged the country's maritime sector, including ports, to do the same and have their ships built here, as a matter of preference, and contribute in strengthening the country's shipbuilding sector, rather than seeking foreign options.

Karachi Shipyard and Engineering Works Managing Director Vice Admiral Iftikhar Ahmed Rao briefed the Prime Minister about the significance of the first Small Tanker Cum Utility ship.

He said that two ships of this type were being built by KSEW for Pakistan Navy at a cost of $11 million each. The first ship of this series was launched on Monday, while both ships would be completed by February, 2010. It was the first shipbuilding project at KSEW after 1993, when Prime Minister Benazir Bhutto inaugurated a ship built by KSEW for China.

Adm Iftikhar said that the KSEW was becoming a sick industry. "However, this important shipbuilding organisation is once again reviving, and its performance is increasing to play its due role in the shipbuilding sector".

He said that replenishment to ships at anchor and in the harbour, logistic support and transfer of personnel to and from coastal stations, act as an attendant vessel during diving operations, towed array transportation, mine laying, mine recovery and torpedo recovery are the primary roles of these ships.

About secondary roles of these ships, he said that these are target towing vessels for surface practice by ships, and salvage operations. These are attendant vessels and for training, search and rescue, and port operations.

The KSEW is the only heavy engineering industry of the country that is catering for shipbuilding, ship repairing and heavy/general engineering requirements. It has played a historical role in transferring of technology and broadening the industrial base of the country. KSEW was established in mid-fifties as a project of PIDC, and was incorporated as a public limited company in 1957.

This company is entirely owned by the government of Pakistan, and is managed by a Board of Directors, headed by Chief of the Naval Staff. Situated on West Wharf, Karachi, and spread over an area of 29 hectares (71 acres,. KSEW has large shipbuilding halls, three shipbuilding berths, two dry docks, fabrication shop, a well-equipped machine shop, and other supporting facilities like carpentry, pipe fitting and light steel fabrication, etc. KSEW is working as an autonomous commercial organisation under the Ministry of Defence Production.

 

[Neo]

More fertiliser plants to be established, says Wattoo ​

ISLAMABAD (January 13 2009): Federal Minister for Industries and Production, Mian Manzoor Ahmed Wattoo has said that more fertiliser plants would be established to meet the requirement of fertiliser and in this regard foreign investment will be welcomed.

He was talking with the members of German trade delegation headed by Dr Olaf Berlien, Chairman, Thyssen Krupp Technology met him in Islamabad today. Secretary Industries and Production, Shahab Khawaja was also present in the meeting. Minister said government will encourage foreign and local investment in setting up of fertiliser plants.

He said our Agro base industries are also very beneficial for investment. Government will encourage public and private partnership and joint ventures in setting up of Agro base industries in Pakistan. He said Pakistan is interested in setting up of wind turbine industries in joint venture with Germany for which negotiation with German government is under process.

He said wind turbine technology is need of our farmers and our rural areas in which German government is rich and shown its interest. On the occasion, minister disclosed that expansion plan for Pakistan Steel Mills is under consideration of the government due to the demand of steel. He said our steel sector is needed special attention of the government as this is need of the hours. Government will provide all possible help to this sector for its development.

Olaf Berlien said that Germany is keen to investment in Pakistan in various sectors and wants to establish industries in joint ventures in many field especially in Agro base industries, automobile industry and steel sector. He said in next visit to Pakistan we will visit rural areas to review the possibility of investment in this field.-PR

 

[ejaz007]

Pak gets $673.50m remittances in Dec
Source: Our staff reporter submitted 9 hours 16 minutes ago


KARACHI - Pakistani overseas workers sent the highest-ever amount of dollars 673.50 million as remittances in December 2008, beating the previous record of dollars 660.35 million received in September 2008.

A statement issued by State Bank of Pakistan here on Tuesday said the amount of dollars 673.50 million received in December 2008 showed an increase of $ 194.24 million, or 40.53 percent, when compared with $ 479.26 million received in Dec 2007.


Pak gets $673.50m remittances in Dec | Pakistan | News | Newspaper | Daily | English | Online

 

[ejaz007]

Pakistan's foreign exchange reserves rise
RECORDER REPORT

ISLAMABAD (January 14 2009): Foreign exchange reserves rose by $3.6 billion on January 9, 2009 as compared to November 25, 2008. At present, reserves are estimated at $10 billion. The additional amount can be mainly attributed to the $3.1 billion first tranche released by IMF on November 26. The remaining $500m are referred to as 'other positive inflows' in the ECC summary.


Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Integrated energy plan in the offing ​

Aims at increasing share of coal, hydro and renewable resources; self-reliance in energy supplies by 2022​

Wednesday, January 14, 2009

KARACHI: Work on Pakistan’s first Integrated Energy Plan is in final stages amid the worst power crisis which has sparked violent protests in recent months, leader of the Economic Advisory Committee’s energy task force told The News.

The long overdue plan is being prepared with feedback from experts belonging to different energy sectors, said Farooq Rehmatullah.

“It will be a broad outline for the government to form future energy policies,” he said, adding “suggestions have been incorporated with a view to making the country self-sufficient in energy supplies by year 2022.”

The plan, he said, seeks to increase the share of coal, hydro and renewable sources in the future energy mix, which at present is heavily relied on natural gas and oil.

Share of hydro, coal and renewable sources has been envisioned at 20 per cent, 13pc and 14pc respectively. “There is a lot of potential for coal and renewable energy resources like wind power,” Rehmatullah said.

All efforts to use proven coal reserves in Sindh have been bogged down by inter-governmental differences over priorities. The country produces not a single megawatt of wind power while the issue of feasible electricity tariff persists.

The projected share of oil and gas at 20pc and 21pc in the energy mix in the next 13 years entails the desire to increase dependence on indigenous production of hydrocarbons.

It is assumed that 7pc energy needs will be met from imported gas while nuclear power plants and liquefied petroleum gas (LPG) will have share of 2pc and 3pc respectively.

Experts have long called for a concrete energy plan which can work as a guideline for all energy policies and initiatives of the government. Misplaced priorities of the past like allowing CNG in vehicles and not increasing gas production has led to the present crisis, they opine.

Still some members of the committee, which is working on the energy plan, are skeptical about it making any significant impact. “I won’t even call it a plan. It is more like a roadmap for the government,” said one member. “A thorough plan includes cost evaluation of all the projects and determines if they are feasible.”

Nevertheless, a senior Planning Commission official said database will be established to ascertain energy supply and demand projections in light of the given plan.

Vital suggestions: Farooq Rehmatullah said the plan also includes suggestions pertaining to gas pricing issues and steps needed to bring stability in prospective areas of Balochistan.

“We have asked the government to link gas prices to at least 70pc cost of imported crude oil,” he said, recalling that the 1997 Petroleum Policy was the most successful because it gave similar incentives.

He said the government has also been made to realise that people of Balochistan must be shareholders in energy production from there.

“Balochistan has been a no-go area for exploration companies,” he said, “we are saying make locals stakeholders, let them enjoy the benefit of taxes, royalties and profits.”

In the present energy mix, gas has a 49pc share, oil 29pc, hydro 13pc, coal 7pc and nuclear 1pc.

 

[Neo]

December remittances up 40pc ​

Wednesday, January 14, 2009

KARACHI: Pakistan’s overseas workers sent home the highest-ever amount of $673.50 million as remittances in December 2008, beating the previous record of $660.35 million received in September 2008.

The amount received in December 2008 showed an increase of $194.24 million or 40.53 per cent when compared with $479.26 million in the same month of 2007, said State Bank of Pakistan (SBP) on Tuesday.

Overall, in the first half (July-December 2008) of the current 2008-09 fiscal year, the country received $3.64 billion as workers’ remittances as against $3 billion during the same period of the previous fiscal year, showing an increase of 18.71 per cent.

The amount of $3.6 billion includes $0.37 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

The monthly average of remittances for July to December 2008 period comes to $606.67 million, up 18.71 per cent when compared with the corresponding period of the previous year.

The inflow of remittances in the July-December 2008 period from USA, Saudi Arabia, UAE, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $903.49 million, $714.90 million, $699.43 million, $596.54 million, $239.82 million and $111.41 million respectively as compared to $874.21 million, $563.06 million, $500.33 million, $457.21 million, $227.23 million and $88.99 million respectively in the July-December, 2007 period.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the first half of the current fiscal year 2008-09 amounted to $374.05 million as against $354.18 million in the same period last year.

 

[Neo]

Pakistan seeks Canadian investment in water, power ​

Wednesday, January 14, 2009

ISLAMABAD: Canadian High Commissioner to Pakistan, Randolph Mank on Tuesday called on Federal Minister for Water and Power, Raja Pervez Ashraf in his office and discussed bilateral relations, economic collaboration and investment opportunities in water and power sector of Pakistan.

The minister said that Pakistan has close relations with Canada and is desirous of expanding bilateral ties in all sectors, says a press release. He said the power sector has immense potential and investors are getting elevated returns due to an incentive-based liberal policy. He invited Canadian investment in the sector and guaranteed his full support and backing to the investors.

The minister said the government attached high precedence to foreign investment and an investor-friendly environment is being provided to the investors. He also briefed him on the existing power situation and said the government is taking obligatory measures to generate power to viaduct the demand and supply gap through fast track and rental power projects by December 2009. The government has intended to generate additional 35,000 megawatts by year 2016 and required steps are being taken in this regard, he added.

The high commissioner said Canadian companies are working in Pakistan on different projects and are devoted to enlarge their investments. Canada has expertise in hydel power generation and he said that Canadian companies are willing to invest in this sector. He said that Canada has always supported Pakistan and will prolong its assistance for the people of Pakistan. A large number of Pakistanis are visiting Canada every year for education, business and tourism purposes. He remained with the Minister for some time and also discussed other matters of mutual interests.

 

[Neo]

Undocumented sector exacerbates economic woes ​

Wednesday, January 14, 2009

LAHORE: Current economic crisis has persisted because most of the business activities are controlled by the undocumented sector and the government’s failure to establish its writ has compounded the problem.

A study by The News reveals the trade and industry has not played its due role in guiding the economy towards a sustainable growth path. Credible global institutions in fact praise the previous regime for introducing economic reforms that were staunchly resisted by the private sector. This resistance resulted in lopsided implementation of reforms. In contrast, the same institutions point out, reforms in India were led by the private sector and its willingness to improve the system facilitated the government.

This difference in the mindset of businessmen of Pakistan and India reflects the leap taken by the Indian economy outpacing that of Pakistan. Indian tax collectors, for instance, have the authority to search even residences of businessmen to find out any hidden wealth. However, Pakistan’s tax authorities cannot even dare to prepare a list of stocks displayed openly by shopkeepers. Indian regulators could confiscate any smuggled item found in markets while Pakistani regulators ignore it as almost all its markets are flooded with smuggled goods.

Under-invoicing in India is not possible as the local industry jealously protects its interests and frustrates all such efforts. Indian customs authorities have no option but to confiscate under-invoiced goods. In Pakistan even after proven under-invoicing of over 200 per cent the importer is let off by paying the duty according to actual assessed value. He thus is not a loser even if caught.

The government has been trying to impose general sales tax on traders since 1987 and all attempts by Nawaz Sharif, Benazir Bhutto and Pervez Musharraf since then have failed as traders strongly oppose it. The Indian government introduced value added tax in most of its states last year and compliance by traders has been remarkable.

All the four provincial governments under the Shops Act have approved a law under which shopping centres should close after sunset. If this law is implemented, the nation would save 200 megawatts of electricity during peak demand period, which would reduce the impact of loadshedding. Shops in India close according to the schedule mentioned in the law.

The import of banned items in India is not possible and if any such item is imported it is seized by the government. However, import of banned items is possible in Pakistan. Used auto-parts are a glaring example whose import has been banned since 1950. These parts are imported dirt cheap from foreign junkyards and are cleared after payment of a penalty up to 150 per cent (which is practically nominal in view of very low import prices). The rules here allow this practice. Brand new engines are imported under the garb of being used by immersing them in dirty diesel and oil. These are then cleaned after clearance and sold at very high rates.

The only industries that are flourishing in Pakistan are those which are based on local raw material but they are limited in number and operated by a few individuals or families. Cement and sugar industries are two examples in this regard. Now even edible oil manufacturers have started operating with some collective understanding that helps them keep prices unreasonably high.