Pakistan Economy - News & Updates - Archive

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Pakistan should switch from stabilisation mode: poverty rate may be 40 percent by year-end, says Pasha​

AHMED MUKHTAR
ISLAMABAD (January 28 2009): Pakistan should switch from stabilisation mode to recovery mode in next few months to avoid a recession becoming a depression and poverty level hitting so high that it starts creating law and order problems, says former finance minister Hafeez A Pasha.

Talking in Aaj TV's programme Islamabad Tonight, Pasha said that stabilisation and recovery need a subtle balance and the government should be very watchful on not focusing more on stabilisation than on recovery by cutting development spending and other measures.

Pakistan should take advantage of falling international commodity price, which has relieved its fuel and edible oil prices, that adjustment should start, visible in facts, post-March April.

As inflation falls, it should start cutting interest rates. He said that in last two years poverty incidence substantially increased and it is now around 36 percent because of very high food prices. Still higher inflation and growing unemployment are keeping fears alive to push poverty rate further high and the country may hit 40 percent of poverty by end of this fiscal year.

At that level poverty becomes a crisis point which can start creating a law and order situation, like people snatching eatables from others and suicide rates rising, because of hunger, becomes visible in society. Dr Pasha said that policymakers should liquidate inter-corporate debt by any means.

He said that the government has utilised only 16 percent of development budget, which casts very negative results on construction related sectors causing upsurge in unemployment and poverty. Development spending should be protected carefully. He remarked that negative balance of payment grew rapidly in last 6 years, without changing a point in tax to GDP ratio at 10.5 percent which merits a careful policy watch.

Pasha invoked policymakers' focus on banking sector saying that in first quarter increase in non-performing loans is 15 percent, which shows real estate sector has started showing problems when its growth rate has already gone into negative in first five months of this fiscal year.

Moreover, spread of banking sector increased from 4.5 percent to 7 percent in last 10-15 years, which has artificially increased cost of capital and thus industrial growth. Saqib Sheerani Lead Economist of RBS Bank said that many loans were misused and would be cleared in next one-and-half years and keep showing in banking balance sheets.

Sheerani said that reserve level is very difficult to maintain as no inflows are expected in next two years. He said that there are few black holes in the stock market and this is in the form of costs created as loans taken for other sectors and used in asset markets. He said that millennium development goals (MDGs) should have a very clear focus for the government.

 

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Allowing resident Pakistani companies to invest abroad: SBP governor explains position​

MUSHTAQ GHUMMAN
ISLAMABAD (January 28 2009): Governor State Bank of Pakistan (SBP) Saleem Raza on Tuesday failed to satisfy the Economic Co-ordination Committee (ECC) of the cabinet regarding selection of resident Pakistani companies being allowed for investment outside Pakistan, well-informed sources told Business Recorder.

When a summary of the SBP on equity based investment by the private companies in fourth quarter of 2008-09 came under discussion , some of the ECC members reportedly termed the approved cases as ' flight of capital', sources said. SBP has allowed eight private sector companies for equity based investment abroad in fourth quarter of 2008-09 in accordance with approved policy of the federal government.

The sources said, SBP granted the permission to M/s Zafa Pharmaceutical Laboratories (Pvt) Limited (ZPL), M/s Jaffer Brothers (Pvt) Limited, M/s Fauji Foundation, M/s Azgard Nine Limited, M/s Wavetech (Pvt) Limited, M/s BP Pakistan Exploration and Production Inc, M/s Roche Pakistan Limited and M/s Deutsche Bank AG, Pakistan. The total amount remitted to the companies was $48,595,939.

According to the details obtained by Business Recorder, M/s ZPL was earlier allowed to undertake investment in M/s Balsam Pharmaceutical Laboratories Co Limited, Sudan (BPL) in June 2004 and August 2005. Under these permissions, ZPL acquired equity stake to the tune of 55 per cent in BPL against remittances of $1 million and $454,525 respectively.

Resultantly, ZPL holds 77 per cent shares in BPL. M/s ZPL approached SBP seeking approval to remit Euro 318,104 (approximately $502,649) or equivalent in UAE Dirhams on account of equity based investment in M/s Balsam Pharmaceutical Laboratories Co Limited, Sudan. ZPL had stated that at the time of acquisition, financial institutions in Sudan had assured them to provide financial facilities/ assistance for capital expenditure and working capital needs once the company is in operations.

Initially the banks provided them facilities on very higher rates (up to a maximum 48 per cent per annum) and then later on they turned down most of their request due to the fact that the policies of the Central Bank of Sudan were not consistent and frequent changes were continuously being introduced in prudential regulations whereby financial facilities to foreign companies holding majority shares was discouraged/denied.

ZPL had also stated that since they have acquired the company, $1.4 million have been invested and according to a valuation of land and building carried out in June 2006, the value of land and building is approximately $2.4 million. The valuation of plant and machinery carried out by Tadamon Real Estate Company was approximately $6 million.

As reported by ZPL, the prime objective of ZPL is to bring the name of Pakistan in the Sudan, at the top of all the countries in the pharmaceutical and health care related products. The secondary objective is to promote exports of Pakistan origin pharmaceutical and health care related products. ZPL's exports for the year, 2007 were $600,000- approximately amongst which 26 per cent ($156,000) were exported to Sudan.

In current year, ZPL foresees an increase of 40 per cent over the last year's exports and ZPL's yearly exports to Sudan will go up to $350,000. Keeping in view the above and to provide financial resources to save the already made investment and seeing potential growth in exports, M/s ZAFA Pharmaceutical was allowed to remit Euro 318,104 to Sudan to acquire additional 17.5 per cent shares in M/s. Balsam Pharmaceutical Laboratories Co Ltd Sudan.

The sources said, M/s Jaffar Brothers (Pvt) Limited had approached SBP seeking its approval to allow them to remit $650,000 as set up cost to establish their branch office in Tokyo, Japan.

The principal activity of the M/s Jaffar Brothers (Pvt) Limited (JBL) is trading, indenting and performing services in the areas of information technology projects and heavy machinery, fertilisers, agriculture and household hygiene and decorative. The goods and services provided by JBL have led to improve productivity in the agro sector, information management field, transportation, telecommunication, power generation and transmission projects.

JBL intended to expand its business activities related to Japan's Overseas Development Assistance (ODA) by opening its branch office in Tokyo, Japan. This initiation not only allows JBL to expand its base to foreign countries, but will also bring recognition in many countries of a Pakistani organisation executing project aimed for poverty alleviation through Japanese Grant Aid Projects. JBL, through the co-operation of its Japanese partners, has successfully taken on numerous ODA projects in Pakistan as their local agent.

In the past, Japanese authorities restricted the participation in its tenders to companies based in Japan and the origin of the goods to be supplies were also tied to Japan. However, in recent years in order to enhance the competition in the tenders the rules have been relaxed allowing organisations having their parent company in a foreign country and a local representative office in Japan to participate in its tenders.

To facilitate JBL to participate in tenders, they were allowed to remit $650,000 by SBP to Japan to set up a branch office in Tokyo. The sources said, Fauji Foundation (FF) has commenced constructing a 175 MW gas based electrical power complex at Dharki, Sindh.

The said project is being implemented through Foundation Power Company (Dharki) Limited (FPCDL), a Pakistani company pursuant to and in accordance with the requirements of the Power Generation Policy-2002. The Dharki project has been licenced by Nepra, which has also provided a tariff determination approving the financial structure under the Nepra legal regime.

The tariff determination requires the project sponsors to invest at least 25 per cent of project cost (estimated at approximately $200 million) by way of equity ie $50 million to be invested by project sponsors. Fauji Foundation has agreed to jointly invest in the Dharki project with the ADB such that 80 per cent of equity investment will be made by FF and the remaining 20 per cent equity investment will be made by ADB. ADB's participation and the transaction structure have been approved by the Economic Affairs Division (EAD.

Fauji Foundation and ADB intended to route their equity investment for the Dharki project through an offshore company (Special Purpose Vehicle), which in turn, will hold 100 per cent of the shares of FPDCL. The equity structure of the offshore company will be as Fauji Foundation, up to $12.00 million and ADB up to $2.75 million.

M/s Fauji Foundation (FE) had approached SBP seeking approval to allow them to remit US $12 million to set up an offshore company in British Virgin Island. This equity investment in an offshore company will be invested back in FPDCL. The proposal of Fauji Foundation was approved by ECC in its meeting held on April 22, 2008.

According to sources, M/s Azgard Nine Limited (ANL) had approached SBP seeking approval to allow them to remit Euro 23.758 million to (approximately equiv. $34.421 million) set up a 'Special Purpose Vehicle/ holding company namely Farital AB, Slagthuset, Carlagatan 12 A, 211 2- Malmo to be incorporated in Sweden. Farital AB will acquire 100 per cent stake of Montebello New Company (target company), a company incorporated under the laws of Italy with their offices located in Verona, Italy.

The information provided by ANL reveals that the company is business adventure of the Bonazzi Group founded in 1956. In early 60's, the group entered into textile industry and focused on nylon clothes dyeing and finishing activities. The group started denim production within Montebello S.r.l. in 1973.

As per ANL, the target company is a specialist in the global denim space supplying different types of special denim such as dobby deni, over dyed denim, blumako and stretch denim. The target company has a global distribution network through own sales force and brand with 85 per cent of the sales are in the PAN European market.

The rationale given by ANL to incorporate a company in Sweden is the liberal tax policies of Sweden for foreign controlled companies. The Swedish tax laws offer complete exemption from tax on dividends, capital gains, withholding deductions from remittances on account of dividends, royalties etc. The proposal was approved by ECC in its meeting held on April 22, 2008. The sources said M/s Wavetech (Pvt) Limited had approached SBP seeking approval to allow them to remit $46,800 as set up cost to establish their branch office in China.

Giving rationale for opening of branch office in China, Wavetech (Pvt) Limited (WPL) had stated that with respect to latest technology and timely delivery. It is subcontracting most of its display and queue management system hardware in China. As the business is increasing, this set up required more follow up and quality assurance. Therefore, they need to open their branch office in China to make sure the hardware manufactured by the subcontractor are according to their standard and the quality control according to their need.

The mandate of branch office includes (i) quality assurance (ii) timely delivery (iii) research for new subcontractor and (iv) help in bringing new business. The SBP allowed the company to remit $46,800 to China to set up their branch office.

BP Pakistan Exploration & Production Inc, (BP Pakistan) was allowed to remit GBP 228,069.00 (+/5%) approximately $453,016 from FE 25 account for participation in share option plan ie Employees Share Match Scheme -2008 on behalf of their 507 employees. Roche Pakistan Limited was allowed to remit Rs 30,349,926 (approximately $451,044) for the period from June, 2008 to May, 2009 on behalf of its employees to Roche Holding AG under "Roche Connect" Plan viz. Global Share Purchase Scheme.

Deutsche Bank AG (DB) was allowed to remit Rs 4,789,761 (approximately $71,430/-) on account of shares allocated to the eligible employees under the Deutsche Bank AG's Global Share Plan-2006. Consequently, SBP allowed a total remittance approximately equivalent to $975,490 under above plans. However, actual remittances will be made in future as and when options are exercised by employees.

 

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Zardari for increasing Pak-China trade​

RECORDER REPORT
ISLAMABAD (January 28 2009): There is a urgent need to translate Pak-China strategic partnership into robust trade and investment relationship, said President Asif Ali Zardari, here Tuesday. He expressed these remarks during a briefing on Pak-China relations at the Presidency to review the progress made on various co-operative projects between the two countries and ways and means to speed up the process.

The Chinese Ambassador in Islamabad, Lue Zhaohui also attended the meeting by special invitation. The President said that the present level of trade which stood between five to six billion dollars did not fully reflect the deep ties between Pakistan and China and that there was a need to quadruple it in the next few years.

He said that the joint statement issued at the end of his visit to China in October had rightly stressed the need for economic co-operation as an integral part of the strategic partnership between the two countries and advised the government to take steps to translate the joint statement into practice.

Giving briefing on the subject Pakistan's Ambassador to China, Masood Ahmad dilated upon the wide range of strategic and existing economic co-operation and relationship between Pakistan and China in security and defence, agriculture, power generation and finance and banking fields.

The meeting was informed that China Coal Technology and Engineering Corporation Group (CCTEC) was positively interested in Thar Coal Project and that a team of the Group was ready to visit Pakistan for this purpose soon. The ambassador said that areas in agricultural co-operation had been identified and the two sides were moving towards formalising co-operative agreements.

 

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IDA to provide $25 million for Trade, Transport Facilitation Project​

KHALID ABBAS SAIF
FAISALABAD (January 28 2009): International Development Association (IDA) will provide US $25 million for "Trade and Transport Facilitation Project - II" to improve performance of trade and transport logistics by facilitating the implementation of the NTCIP; and the simplification and modernisation of Pakistan's international trade procedures and practices.

In a project update report, Jean Noel Guillossou, Senior Transport. Economist of World Bank said that Pakistan has faced both external and internal shocks during the past 12 months resulting in a deteriorating macro-economic situation. The government is now determined to regain and maintain macroeconomic stability and has been discussing with the IMF and the World Bank measures to put the economy back to a path of high sustainable growth.

Jean Noel Guillossou mentioned that the economic growth accelerated from the average of 4.6 percent during the 1990's to an average of 7.2 percent during the five years preceding the recent crisis, driven by solid performances in the services and industrial sectors, with contribution from agriculture. With the support of the community of development partners and implementation of measures to improve macro-economic performance which is underway showing positive results, the GOP aims to realise its goal of sustained 7 to 8 percent economic growth to achieve middle income country status by 2030.

WB report observed that the Pakistan Government recognises that transport and trade logistics efficiencies are necessary for economic stabilisation, sustained growth and international competitiveness. Supportive transport infrastructure remains one of the pre-requisites for sustained high economic growth. This was identified by the Government as a priority in the 2003-06 Poverty Reduction Strategy Paper (PRSP-I) and confirmed in the PRSP-II for 2008-11 under preparation by the Government where the objective of removing infrastructure bottlenecks through public-private partnership is one of the seven pillars of the Government's strategy. The Government intends to achieve this objective by continuing implementing the National Trade Corridor Improvement Program (NTCIP) adopted in 2005.

WB report pointed out that the main weaknesses of the Pakistan transport system in relation to what might be termed "international norms" can be summarised as follows:

-- High port costs and high port profits, resulting in higher charges to users than might be considered as desirable in terms of overall economic policy, increasing openness to the world economy and stimulating trade.

-- Long dwell times for inbound containers, resulting in congested terminals and the need to construct additional facilities. Ports with relatively shallow draft, which will increasingly limit shipping connections as the size of container vessels on direct service increase.

-- A fragmented approach towards trade facilitation with improvements to be made in the National Trade and Transport Facilitation Committee (NTTFC), the public private forum on trade facilitation issues. A weak, fragmented and relatively under-developed freight forwarding/ logistics sector, which has yet to provide the breadth of services and levels of vertical integration which are increasingly found elsewhere.

-- A rail system with the haul distances and engineering standards which should provide the potential for rail to take a substantial share of the long distance freight market but carries insignificant levels of freight traffic and has been largely abandoned by the private sector.

-- A main road infrastructure which requires major investment to provide the accessibility, capacity and quality required for rapid and reliable road services.

-- A trucking sector, operating old and technologically outdated trucks, which offers low freight rates but long transit times and unreliable service quality unless shippers are prepared to introduce additional and costly measures. Import regulations and tariff structures that inhibit the modernisation of the trucking fleet. A trucking sector which has low private costs but high external costs in terms of vehicle overloading, leading to road damage and high accident rates, and congestion.

World Bank report revealed that the development objectives of the NTCIP are to reduce the cost of trade and transport logistics and bring services' quality to international standards in order to reduce the cost of doing business in Pakistan and ultimately enhance export competitiveness and accelerate industrialisation.

The NTCIP is a holistic and integrated approach which encompasses the public and the private sector, services and infrastructure, reforms and investments, and the various sectors which are responsible for the level of performance of the National Trade Corridor (NTC).

The sectors include highways, road transport, ports and shipping, civil aviation, railways, and customs and trade logistics. NTC serves domestic needs and links the main industrial centres in Punjab and neighbouring countries in the north-west (Afghanistan) and north (China) with international markets through the southern Karachi area ports and the Gwadar port.

Most of Pakistan's external and internal trade transits through NTC - together the ports, roads and railways along the NTC handle 95% of external trade, 65% of total land freight and serve the regions of the country which contribute 80 to 85 percent of GDP. With a strong reform agenda supplemented by a comprehensive investment program, NTCIP has become essentially the medium term transport master plan for the country.

WB projected report mentioned that the strategic thrust of the program involves an extensive consultation and consensus building process with all public and private sector stakeholders, focusing on: (i) quick results through policy interventions, systemic and procedural improvements; and (ii) deep rooted institutional reforms to ensure sustainability.

The key policy areas targeted by NTCIP include policies that would: (a) lead to modern and streamlined trade and transport logistics practices; (b) improve port efficiency, reduce the costs for port users and enhance port management accountability; (c) create a commercial and accountable environment in Pakistan Railways and increase private sector participation in operation of rail services; (d) modernise the trucking industry and reduce the cost of externalities for the country; (e) sustain delivery of an efficient, safe and reliable National Highways system; and (f) promote and ensure safe, secure, economical and efficient civil aviation operations and boost air trade.

The proposed operation is fully consistent with the strategic objective of the FY 06-09 Country Assistance Strategy (CAS) to remove infrastructure bottlenecks supports sustained economic growth and improves competitiveness.

The CAS identifies the need for significant investment in Pakistan's infrastructure, in particular for the modernisation of the National Trade Corridor, to support Pakistan's growth and service delivery goals. The second Poverty Reduction Strategy Paper under preparation by the Government of Pakistan for the period 2009-2011 is based on ten pillars with pillar 7 "Removing Infrastructure Bottlenecks through Public-Private Partnerships" providing the objective to which the transport sector is expected to contribute

 

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Over Rs 42 billion loans written off during last five years: Tarin​

FIDA HUSSAIN
ISLAMABAD (January 28 2009): Advisor to the Prime Minister on Finance Shaukat Tarin has disclosed here on Tuesday that loans worth over Rs 42 billion had been written off during the last five years. The advisor told the Senate that the government was ready for any probe into this issue by finance committee of the Senate or the National Assembly.

The advisor fell short of saying in clear terms that loans were written off in transparent manner according to the State Bank of Pakistan's laid down procedure. This he said during the question hour as the house proceedings witnessed some heated debate between the opposition and parliamentary affairs minister Dr Babar Awan over the appointment of advisors without having expertise in the relevant fields.

Leader of the House in the Senate Mian Raza Rabbani defended the appointment of the advisors in an indirect manner and said that under the 17th Amendment, the Prime Minister's consultation or advice is not binding on the President. "Everybody knows here who had supported the 17th Amendment and who had opposed it. The PPP is against this amendment even today," Rabbani said.

The details of the loans, which were written off, were placed on the table of one senator. The library was closed that hindered the ascertainment of details as to who were the real beneficiaries. There was no detail that the previous government used any influence to get the loans written off benefiting specific segment of the society.

Replying to a question, Tarin said that all the loans were written off under the State Bank of Pakistan (SBP) circular 29. This was between the banks and their customers, he added. Tarin's observation, forced the JI senator Professor Khurshid Ahmad to disclose that he personally knew some cases when the Bank of Khyber was under tremendous pressure to write off the loans of certain people.

He also enquired that is there any amount which has been written off under any rule of SBP other than circular 29. Tarin replied he would check it and reply to the house within due course of time.

On a question of Senator Wasim Sajjad regarding loans advanced to the textile industry, Tarin said the textile industry had been given one-year moratorium. Meanwhile, Babar Awan defended the appointment of the advisors saying that the constitutional provisions do not bar any person from being appointed as an advisor due to lack of expertise in the concerned field.

The constitution says that any qualified person can be appointed and he can remain in the service with the pleasure of the Prime Minister/President, he added.

 

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Cabinet approves MTBF 2009-2012​

SOHAIL SARFRAZ
ISLAMABAD (January 29 2009): Federal Cabinet has approved Medium Term Budgetary Framework (MTBF) 2009-2012 for all the federal ministries under which ministries would be required to bid for allocation of funds for their projects by convincing Cabinet or Prime Minister on usefulness/viability of the project for Pakistan.

This was stated by Dr Waqar Masood Khan, Secretary Finance during meeting of the Senate Standing Committee on Finance and Revenue on Wednesday held in the chairmanship of Senator Ahmed Ali. Salim Raza, Governor State Bank of Pakistan (SBP) was also present in the meeting.

Secretary Finance said that due to limited fiscal space, ministries would have to convince government for obtaining funds for their respective projects under the MTBF.

He said that the debt path has increased and under the MTBF the government has debt reforms under which debt burden to be reduced from 53 percent of the Gross Domestic Product (GDP) in 2008-2009 to 50 percent of the GDP by 2011-12, he added.

He said that the "Pakistan is loosing fiscal space for carrying out development projects and there would be Rs 40 billion available with the federal government for development in next fiscal 2009-10," he added. Pakistan would be able create fiscal space up to Rs 250 billion by third fiscal year 2011-12 for development projects under MTBF.

The cabinet has also approved top to down ceilings for the current expenditures of the federal ministries for the next three years under MTBF to limit such expenditures to a sustainable level.

According to him, government has not placed any cut on Public Sector Development Programme till date, however, releases for the development projects have been witnessed slowdown due to fiscal difficulties in first half of the current fiscal year, he opined.

He also informed the committee that public sector entities of the federal government were holding in banks Rs 255 billion PSDP allocations that were made to them in last few years. Now they have started utilising these funds for their development projects.

Dr Waqar said that the government has increased the revenue target from Rs 1.250 trillion to Rs 1.360 trillion to meet budgetary obligations. The Federal Board of Revenue has achieved 95 percent of the revenue collection target fixed for July-December (2008-2009) period by collecting Rs 560 billion against the upward revised target of Rs 581 billion.

Budget deficit would remain at the projected level of 4.2 percent of the GDP and other main projections to remain at the same level as approved by the parliament except inflation projection, he added.

In his first interaction with Parliamentarians, Salim Raza, Governor SBP said that presently foreign exchange reserves stand at $10.6 billion, which include $7.3 billion with SBP and $3.3 billion in bank deposits. He said that foreign exchange reserves with SBP would be increased to $10 billion and overall reserves to increase to over $13 billion by June 30, 2009.

He was of the view that National Saving Schemes (NSS), apart from schemes for widows and pensioners, could be converted into tradable bonds. Explaining this proposal, he said that it would help the government to develop bond market with good risk-free interest for the investors. These bonds would be reliable source of government financing as well as beneficial for the investors.

The government should allocate from the budget subsidy for the saving schemes for pensioners and widows for better return to them and curtail undue benefit taken by other investors through these markets, Governor also proposed.

He seemed to be agreed with the viewpoint of Senator Haroon Akhter Khan who was of the view that core inflation is not coming down as the government is not reducing POL prices and increasing gas and power tariff giving less benefit of decrease in oil prices to the consumers. Senator Haroon Akhter was of the view that aggregated demand in the economy has came down to a level where monetary stance should be changed and interest rates should be brought down to help revive the manufacturing sector.

Governor SBP assured the banks should not afraid of lending to private sector. The SBP would relax its regulations and would provide regulatory space to banks to lend private sector. He said that presently profit rates of the banks are on the higher side and the central bank is also keeping watch on this phenomenon.

He said that SBP has announced relief package for the textile sector and is examining similar packages for the other sectors like manufacturing sector for revival of economy.

He said that being Governor, he would help manufacturing sector to revive and help supplement government''''s agenda of enhancing exports and job opportunities. He assured the committee that SBP would extend full help to the government and private sector for revival of economy and meeting challenges due to the economic slowdown in developed countries.

 

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Prime Minister for equitable economic rules for developing countries​

DAVOS (January 29 2009): Prime Minister Yousuf Raza Gilani has called upon the world leaders to renew their commitment to introduce equitable global rules and ensure participation of developing countries including Pakistan in economic decision-making.

In his message on the World Economic Forum's (WEF) annual meeting, the Prime Minister said at Davos 2009 that " we should renew our commitment to equitable global rules and institutions, and participation of all developing countries in international economic decision-making and norm setting."

Prime Minister Gilani said the case for a regulated world economy and multilateral governance is made forcefully by the financial crisis, adding that countries like Pakistan, because of their strategic location, size and trained manpower can make significant contributions to restart the global economy.

He stressed the need for linking the regions for a catalysed growth, and said Pakistan had the full potential of becoming regional hub of economic activity. "Doing business in Pakistan allows doing business with a region with immense economic potential, " the Prime Minister said.

On Wednesday morning, the Prime Minister gave interviews to leading media organisations including CNN and Reuters, where he focused upon various issues including Pakistan's role in the global community and the government's efforts to promote peace in the region.

Prime Minister Gilani will on Thursday address an important session dubbed 'Pakistan and its neighbours' where he will highlight Pakistan's pivotal role for security, stability and co-operation in the region. The Prime Minister is also expected to hold bilateral meetings with British Prime Minister Gordon Brown, Russian Prime Minister Vladimir Putin and President Klaus of the Czech Republic on the sidelines of WEF meeting.

The Prime Minister will host a working lunch for selected business leaders, and will brief them on the trade and investment opportunities available in Pakistan. The WEF annual meeting will provide Prime Minister Gilani an opportunity, not only to interact with a host of world leaders bilaterally but also to seek assistance from international business community for enhanced investment in Pakistan.

 

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Pakistani among six selected to attend WEF at Davos​

KARACHI (January 29 2009): Six young community activists including one from Pakistan has been selected to attend a panel with Kofi Annan at the 39th World Economic Forum (WEF) Annual Meeting in Davos, Switzerland, which has started in Davos.

A British Council statement issued here on Wednesday said that the six youngest panel members at the WEF comprise of Meeran Karim (18) from Pakistan, James Chatepa (16) from Malawi, Charlie Young (16) from the UK, Sarah Nkhoma (19), from Malawi, Ohm Gore (19) from the USA, and Elsabe van Vuuren (17) from Namibia.

It said that as part of the British Council's pioneering initiative, Global Changemakers, will represent the voice of their generation in a major panel debate on January 29 where they will share the floor with Kofi Annan, the President of the Global Humanitarian Forum, Geneva, and former Secretary-General of the United Nations.

On the panel 'Shaping the Post-Crisis World: Views from the Next Generation' they will discuss the challenges that their communities face on issues such as climate change, education, intercultural conflict and poverty.

Last week, sixty Global Changemakers from more than thirty countries, including Pakistan, Afghanistan, Iraq and Burma, met in Guildford, UK, for a week of intensive workshops to shape their call to action to world leaders at the World Economic Forum.

Following a democratic selection process, the Changemakers elected six of their peers who will now take their message to the highest level at Davos. These Global Changemakers are young people aged between 16 and 19, who are active in their communities working on projects ranging from community work and environmental campaigns to education initiatives and political engagement.

Upon their return to their home countries, they will continue to be supported by the British Council in the community action projects they will work on with their peers. Using this strategy, Global Changemakers multiplies its potential for change, not only involving the direct participants but many more through the participants' networks.

 

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Tarin assures early payment of R&D claims to exporters​

By Parvaiz Ishfaq Rana
KARACHI: Adviser to Prime Minister on Finance Shaukat Tarin said on Wednesday that instructions had already been issued to the State Bank to pay research and development (R&D) support claims for shipments made up to June 30, 2008.

In a meeting with the leaders of the apparel industry in Islamabad the adviser assured the exporters that he would follow up the matter with the State Bank for early payment of such claims. Minister for Textile Industry Rana Farooq Saeed Khan was also present in the meeting.The details of the meeting were provided to Dawn on telephone by M Naqi Bari, chairman Pakistan Apparel Forum.

He informed the meeting that the then minister for finance Syed Naveed Qamar had assured the continuation of R&D support to the apparel sector up to June 30, 2009. Upon this assurance the exporters made their export commitments by taking into consideration the R&D support but are still waiting for payment of their claims.

Mr Bari pointed out that as a result a large number of export houses have suffered huge losses and are now unable to meet their export commitments due to liquidity crunch.

Mr Tarin assured to look into the issue and find out as to what could be done to save such exporters from huge financial losses. Regarding multiple collection of taxes from apparel exporters the prime minister adviser on finance told the representatives of member associations of apparel forum that he would be holding a meeting with all the stakeholders of the textile sector, including spinning, weaving, processing, home textile and apparels in the first week of next month in Karachi and after consultation a decision will be taken there.

Shaukat Tarin agreed with the exporters that the higher cost of export financing up to 7.5 per cent was rendering products uncompetitive in the world market.

He said that the value-added textile exporters, who are not defaulters of short-term export refinance for the last three years should be rewarded.

He further said that such exporters should be entitled for long-term financing equal to the extent of the amount of export refinance Part-II at the rate of 3 per cent per annum to enable them to upgrade their manufacturing facilities on the pattern of technology upgrading programme of India.

However, he said all these issues are already under consideration of the government, which may also include used machinery to be financed against Long Term Finance facility. The government, he said, will also consider special arrangements for the apparel sector with trickle down benefits to the whole chain of textile.

The adviser assured the apparel leaders that the textile industry would be given priority while considering reduction in gas and power charges in future and will be provided gas and power at competitive rates.

Mr Tarin said that the government had given the highest priority to the duty-free market access to US, EU and Canada and these efforts will surely pay dividend.

 

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Multinationals keen on investing amid security concerns​

LONDON (January 29 2009): Experts at a seminar on investment opportunities in Pakistan have said that irrespective of security conditions in the country, multinationals continue to take their business to this part of the world. The speakers included former Attorney General of Pakistan Makhdoom Ali Khan and risk management specialist John Higgs.

The title of the event was 'Investment in Pakistan' managing the risks-due diligence and the litigation landscape organised on Tuesday evening by the leading UK legal and financial company SJ Berwin on behalf of the Pakistan Private Equity and Venture Capital Association of Europe (PVCAE).

The experts examined the particular challenges faced by the investors in Pakistan and the way of managing the risks. They noted that the country attracted a growing amount of investor interest over the past decade and continues to show resilience as an emerging market.

Higgs said the past year saw great challenges in the form of political change and economic turbulence as well as more recent tensions with its neighbours as it deals with continuing security threats both inside and outside its borders.

The subjects he covered during the course of his talk included investigative due diligence, political and security analysis, fraud investigations, problem solving, crisis management and business continuity planning and security support.

He said the current energy crisis and deficiencies in the supporting infrastructure were also a hindrance to investment. Nevertheless, according to Higgs multinationals were not pulling out of Pakistan and continued to have faith in the long-term future of the country, which offer better returns on their investments.

 

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Pakistan appears to have met initial targets: IMF​

By Anwar Iqbal
Thursday, 29 Jan, 2009 | 11:47 PM PST |
WASHINGTON: The International Monetary Fund said on Thursday that data indicates Pakistan has met its end-December targets under its 23-month IMF funding programme, suggesting the government is making some headway in its balance of payments crisis.
‘Initial developments under the program have been positive,’ IMF spokesman David Hawley told a regular news briefing.

‘The foreign exchange rate has appreciated somewhat and preliminary information suggests that end-December targets for net international reserves and net domestic assets at the State Bank of Pakistan were met,’ he added.

Earlier Thursday, the State Bank of Pakistan announced that its foreign exchange reserves rose $260 million to $10.21 billion in the week ending Jan. 24. This, however, includes $500 million from China to help rebuild reserves, which had declined to dangerously low levels last year.

Responding to another question, the IMF spokesman said no date had yet been fixed for sending an IMF mission to Pakistan for reviewing the programme. ‘The next assessment will take place in the first programme review which is scheduled to be completed by March,’ he added.

Earlier media reports, however, suggested that IMF and Pakistan officials may meet in Dubai between Feb. 14 and 24.

Pakistan and the IMF agreed on a $7.6 billion loan deal in November to steady the country's finances and stave off a balance of payments crisis and possible default on its foreign debt.

At the time, the Pakistani rupee had fallen sharply against the dollar and the country's stock market dived after foreign investors took flight amid a global credit crisis that had heightened Pakistan's economic woes.

The next talks with the IMF will focus on the second tranche of $775 million. Pakistan has already received $3.1 billion from the IMF bailout package.

The spokesman’s assessment that Pakistan has met its end-December targets indicates that Pakistan will qualify for the next tranche.

The final decision, however, will be taken by the IMF executive board, which is expected to meet in March.

The third tranche of $750 million will be released in June but to qualify Pakistan has to raise the power tariff by about 22 percent. This would strengthen the fiscal health of Pakistan Electric Power Company.

For the fourth tranche, the government will have to end the subsidy of Rs 77 billion it gives to the power sector.

The elimination of the subsidy will lead to an increase in power tariff, which may cause violent protests by the consumers already agitated by long power blackouts known as the load-shedding.

 

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Forex reserves cross $10bn mark

KARACHI: The country’s liquid foreign exchange reserves appreciated by $259 million during the last week.

The State Bank of Pakistan statistics on Thursday showed that overall foreign exchange reserves registered an increase of $259 million during the week ended on January 24, 2009. The country’s foreign exchange reserves have crossed $10 billion mark to reach $10.207 billion on 24 January. The reserves held by the central bank showed an increase of $288 million during the last week. The central bank reserves reached to $6.872 billion as compared to $6.584 billion last week. Reserves held by banks (other than SBP), however, witnessed a decline of $29 million to reach $3.335 as compared to $3.364 during the last week. staff report

Daily Times - Leading News Resource of Pakistan

 

[Pk_Thunder]

Tarin hints at special industrial package for NWFP soon​

ISLAMABAD (January 30 2009): Prime Minister's Advisor on Finance, Shaukat Tarin on Thursday indicated that the government would shortly introduce a special industrial package for war-ravaged areas of NWFP, which might also include moratorium where needed. He said this while talking to a delegation of Sarhad Chamber of Commerce and Industry (SCCI), led by its President Sharafat Ali met the Adviser in his office here.

The delegation discussed with the Adviser multiple problems, confronting the trade and industry of NWFP in the wake of global war on terrorism in tribal areas. The delegates suggested that the Federal government, in view of geo-strategic importance of NWFP, should utilise foreign non-military assistance to bail out NWFP industry, focusing on speedy industrialisation to maximise the development process in the province.

The delegation briefed the Adviser about recent cases of exodus from various parts of the province to the provincial capital, exerting immense pressure on the infrastructure of Peshawar city. The business community of the province was facing liquidity problems and the banks were reluctant to provide credit line for the working capital, said the delegation.

The demanded that to boost exports to Afghanistan and minimise refund claims, the tariff structure on finished products should be modified and exports from the export processing zone (EPZ) areas be encouraged through providing security and related-infrastructure support.

It said the pharmaceutical industry was an upcoming industry in the NWFP, and needed special fiscal encouragement package to upgrade production of domestic needs and export to regional states. The Adviser to Prime Minister assured the SCCI delegation that the government would take into consideration the NWFP's pharma industry's problems, concerning duties-related reforms/modification in a way that it contributed to widen the country's export base that finally would scale up the country's economy.

He said the Federal government would speed up its efforts to get international market access via NWFP and Balochistan, enabling the country's industrial areas to develop into a wider industrial base to the benefit of investors and entrepreneurs.

Both the sides agreed that all stakeholders would put in their best efforts to transform existing economic adversity into future prosperity. The government currently was working on establishing a National Business Council (NBC), comprising 40 plus enterprising entrepreneurs, to contribute to the nation-wide economic regeneration, he concluded.-PR

 

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'Efforts on to move toward focused economic direction'​

RECORDER REPORT
ISLAMABAD (January 30 2009): Advisor to Prime Minister on Finance Shaukat Tarin has said that the government was making all-out efforts to move towards a focused economic direction by developing human resources. The advisor expressed these views at a meeting with UN Assistant Secretary on Political Affairs, Jean Arnult.

Both the sides discussed global economic crisis, its impact on UN member states and Friends of Pakistan's efforts to help support government of Pakistan in tackling domestic economic reforms agenda.

Shaukat Tarin briefed the UN Assistant Secretary General on GOP's ongoing efforts to restore peace in Federally Administered Tribal Areas (Fata) region that is supported by infrastructural development, social sector development, establishment of ROZs, poverty alleviation through BISP and a package of all-embracing development to bring undeveloped areas at par with urban centers.

Jean Arnault briefed the adviser on current global political scene and UN peace efforts to help various nationalities and states to create environment of peace and security for their citizens. Jean assured the adviser of UN support in GOP's efforts to reintroduce peace in Fata region, support FOPs' efforts to pick up development projects from GOP, and build an economy that ensures maximum economic opportunities to the people of Pakistan.

He appreciated GOP's 9-Point Economic Reforms Agenda that takes along all stakeholders on board for a long-term economic progress. GOP has placed special emphasis on getting its development projects audited by the companies of international repute to ensure transparency and fruition of objectives. Tarin explained to the visiting UN Assistant Secretary General that present coalition-based democratic government in Pakistan is making all-out efforts to move into a focused economic direction that fairly is targeted to develop the human resources, dovetail them into financial resources and move to an economic turn around. Present economic managers' team is doing its best to implement GOP's Economic Stabilisation Programme that foresees putting macroeconomic indicators on a track of stability.

Jean Aranult assured Shaukat Tarin that UN looks forward to Pakistan's all-encompassing political and economic success in its efforts to restore peace and economic stability. UN world continue to support Government of Pakistan in all sectors of development that finally lead to peace and political stability in the region, Arnault added.

 

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Tremendous investment opportunities exist in Pakistan: Soomro​

ISLAMABAD (January 30 2009): Chairman Senate, Mohammadmian Soomro on Thursday said Pakistan offers tremendous investment opportunities to foreign businessmen and entrepreneurs as the country has the potential to emerge as a major regional hub of transit trade.

Talking to High Commissioner of Canada and Ambassador of Japan, who called on him separately here, he said Pakistan is a country of nearly 170 million people with a strategic location having advantages of easy availability of hardworking and inexpensive labour. The middle class is expanding and purchasing power increasing, he said and added, similarly the banking sector is strong and robust to support expanding business operations.

He said power generation, infrastructure development, oil and gas exploration, housing and real estate are some of the areas, which hold great promise for any prospective investors. The Canadian High Commissioner said his country could help Pakistan in Hydro-Electric power generation as it has significant expertise in this field.

He also informed that the number of Canadians of Pakistani origin is increasing steadily and added "we attach great importance to our relations with Pakistan, which are expected to grow further in a number of areas." He hoped that Canadian assistance for social sector, which is presently about $10 million per annum would be increased gradually.

Matters relating to enhancing parliamentary linkage and exchanges also came under discussion and it was observed that the training of legislators is very essential to enable them undertake legislation. The Chairman said Senate is a very important national institution, which ensures equal representation to all the federating units. The purpose of the Upper House is to provide a second or Revision Chamber and its atmosphere is sober and solemn.

He said state institutions will have to be strong and stable to deliver and thanked the High Commissioner for valuable Canadian assistance for social sector development in Pakistan and its support for rehabilitation of affectees of October 2005 earthquake.

During the meeting with Japanese Ambassador, Chihiro Atsumi, the Chairman emphasised the need to further expand and consolidate business and economic relations. He said these relations are based on solid foundation and there is a need to build them further. The Chairman said lately a global slowdown is being witnessed, which is also affecting Pakistan, but it is hoped that things would improve within a reasonable time.

He also expressed the resolve that the country would continue its efforts for combating the scourge of terrorism and called for more technical support to knock out the insurgents.

The Chairman while renewing the resolve to take on the terrorists, called for addressing the root causes of terrorism and extremism, principally poverty and injustice. "The world community must appreciate the country's firm resolve and commitment to contain and eradicate terror despite heavy odds it is facing," the Chairman observed.

The Japanese Ambassador called for activating the Pak-Japan business forum urgently to the mutual advantage of both the countries. He said the Japanese businessmen are keen to work with their Pakistani counterparts and commended the efforts being made for economic development of the country.