Pakistan Economy - News & Updates - Archive

[RabzonKhan]

Country Partnership Strategy 2009-13: ADB announces $4.4 billion support for Pakistan

By Sajid Chaudhry
March 12, 2009

ISLAMABAD: Asian Development Bank (ADB) here on Wednesday announced $4.4 billion Country Partnership Strategy 2009-13 to support Pakistan’s efforts to produce sustained economic growth and reduce poverty.

Financial assistance for Diamer Basha dam and National Trade Corridor Programmeme would be over and above the assistance of $4.4 billion to be made available to Pakistan under CPS 2009-13.

Rune Stroem, Country Director of ADB Pakistan, and Safdar Parvez, country economist in a media briefing outlined the strategic priorities agreed between Pakistan and ADB in five-year plan.

Rune Stroem said that ADB and GoP have designed a major new strategic partnership aimed at promoting inclusive and sustainable economic growth through structural reforms and investment in energy and infrastructure sectors. He informed that the proposed lending programme over the initial CPS period 2009-11 totals at $4.4 billion constituting an annual average lending of about $1.5 billion with technical assistance at $2.4 million per year.

The main strategic areas under future CPS have been identified as development of energy, Infrastructure, reforms, urban services. Investments to increase energy security and efficiency, investments to improve transport mainly the National Trade Corridor Programme and irrigation facilities, assistance to bring down market distortions and institutional bottlenecks, improve public financial resource management, develop the private sector and bring about structural transformation. Under the urban services, pivotal interventions in cities and secondary towns to be made to improve basic services such as water, wastewater, wastewater management and urban transport facilities, he explained.

The objective of the CPS is to support Pakistan’s efforts to achieve sustained economic growth and reduce poverty. To catalyse structural change and transformation that is vital to guaranteeing Pakistan’s long-term economic and social development. ADB’s support is geared to helping consolidating the growth and reduction in poverty gains in recent years and prevent reversal in reforms, Safdar Parvez, Country Economist ADB explained.

“The CPS will support Pakistan’s fight against poverty and its pursuit of prosperity by tackling binding constraints to inclusive economic growth.”

“Supporting the government’s reform agenda and improving the energy, transport, and urban infrastructure will help reduce the cost of doing business and strengthen the underlying competitiveness of the economy.”

The CPS outlines a second generation of economic reforms aimed at reducing distortions, accelerating market creation, eliminating governance and institutional bottlenecks, and strengthening public financial management reform. These reforms will help enhance private sector investment, support diversification of the economy, create jobs, and improve the efficiency of government functioning, added Rune Stroem.

In a country where crippling power outages increase the cost and challenges of doing business, the CPS aims to strengthen Pakistan’s energy supply chain. Measures include augmenting and expanding transmission stations and lines, strengthening distribution companies, and developing power generation facilities using renewable sources. These and other improvements aim to contribute to reducing electricity outages by a further 30 percent by 2012 and increasing the number of grid-connected electricity consumers from 60 percent in 2008 to 70 percent by 2013.

Pakistan’s transport infrastructure is another area of the CPS’s strategic focus. Financial and technical assistance will be supplied to improve connectivity along the National Trade Corridor and other major highways. This will enable export firms to be more competitive by reducing transportation costs and travel time.

Improving the quality of lives of citizens in cities and towns receives a major emphasis in the CPS. Strengthening water supply and sanitation services and urban transportation systems will not only lead to enhanced economic competitiveness but will also yield health and environment improvement dividends for the benefit of urban citizens.

Pakistan has received about $19.8 billion in loans since joining ADB in 1966, with about $14 billion disbursed as of the end of 2008. The lending programme in 2008 was a record that included $1.87 billion disbursement and $1.2 billion in newly approved assistance.

 

[Omar1984]

^ That's great news. The money will certainly help Pakistan's economy and I hope Pakistani government is intelligent enough to use this money to help boost up the economy of Pakistan.

 

[Omar1984]

Tourist plunge exacerbates Pakistan woes


KARACHI (AFP) — Fida Hussain, 52, was once a frequent visitor to Pakistan's scenic northwest, driving north into the mountains every time he flew over from the United States. But not any more.

"I won't go to Swat or any other place in the area as the Taliban rule there now and no one is guaranteed safety," Hussain said.

Thousands of fighters loyal to firebrand Taliban commander Maulana Fazlullah have waged a blistering campaign to enforce sharia, or traditional religious law in Swat valley, once affectionately known as the Switzerland of Pakistan.

"I last went three years ago -- it was heaven on earth, with a beauty beyond imagination. Now all is doomed," Hussain said on a recent visit to relatives in Pakistan's financial capital of Karachi.

He is just one among many thousands who have scratched Pakistani resorts from their holiday wish-lists -- and in doing so ensuring that the tourism sector adds to the country's growing economic woes.

The bloody attack on touring Sri Lankan cricketers in Lahore this month was just the latest high-profile militant attack in an avalanche of violence that has killed more than 1,600 people since July 2007.

The World Economic Forum's Travel and Tourism Competitiveness Report 2009 put Pakistan at 113 out of 130 countries.

The decline has been slow but steady since the September 11, 2001 attacks on the United States but reached a crescendo last September when the Marriott hotel in Islamabad was bombed, with 60 people killed.

"Terrorism halved our receipts from tourism last year," tourism minister Ataur Rehman told AFP.

Pakistan earned 16 billion rupees (200 million dollars) from 800,000 visitors in 2007. Fewer than 400,000 visitors came in 2008, bringing in just eight billion rupees.

"People are not coming from the rest of the world as they have been advised by their governments not to go to Pakistan," Rehman said.

"Terrorism has affected investment in the country, made our beautiful places short of tourists and now forced sportsmen out of Pakistan."

Pakistan has diverse culture, a rich archeological heritage, ruins from the ancient Gandhara and Indus civilisations, serene valleys, pristine coastline and vast deserts.

K-2, the world's second highest mountain after Everest, sits atop a region of 120 other peaks that soar above 7,000 metres (22,950 feet).

But buffeted by bombings, insurgency and global financial turmoil, Pakistan was hit last year by 25 percent inflation and saw 10 billion dollars wiped off its international reserves in the year to October 2008.

The country only managed to stave off a looming balance-of-payments crisis when the International Monetary Fund approved a stand-by loan of 7.6 billion dollars and released an initial 3.1 billion dollars in November.

Hotel industry and tour operators have been hard hit. Global recession and militant attacks have forced investors to abandon projects.

"Plans for many new hotels have been shelved until the tourism industry improves," said Mustansar Zakir, chairman of Pakistan's Hotels Association.

He said nationwide hotel occupancy fell to 35 percent from 50 percent after the attack on the Sri Lankans, down from 70 percent before the Marriott blast.

Many Western countries have issued advisories against travel to Pakistan and European airlines such as British Airways and Lufthansa have suspended routes to the nuclear-armed Muslim nation.

There were hundreds of hotels and guest houses in Swat before Fazlullah rose up in July 2007. What few remain are deserted.

"Thousands of people associated with hotels and tourism in that area have lost their jobs," said Zahir Khan, head of the Swat hotels association.

Rehman believes that Sri Lanka, which has a healthy tourism market despite the civil war with Tamil separatists, could be the most pragmatic example.

"Is it the fault of our rivers, mountains, deserts and blossoming flowers that we are victims of terrorism? We should not stop attracting tourists and follow what Sri Lanka did," he said.

"Being a tourist in the 21st century requires some courage," he said.


AFP: Tourist plunge exacerbates Pakistan woes



Pakistan is blessed with so much beauty. Too bad the world wont get to experience Pakistan's scenic valleys in the north , Pakistan's beautiful coasts of the Arabian Sea in the south, or Pakistan's archeological sites of thousands of years old history.

 

[Neo]

US may ease trade with Pakistan, Russia and Georgia ​

Thursday, March 12, 2009

WASHINGTON: Congress could act on legislation this year to establish “permanent normal trade relations” with both Russia and Kazakhstan and to eliminate tariffs on goods from Pakistan, Afghanistan and Georgia, a senior Democratic lawmaker said on Tuesday.

“As you know, the administration has signaled that they want to try to review our relationship with Russia. Now exactly what that means isn’t clear and it’s a controversial exercise,” said Representative Sander Levin, chairman of the House of Representatives Ways and Means trade subcommittee.

Levin spoke at a meeting with other lawmakers to lay out the committee’s agenda for 2009. Congress has wrestled for years over whether to lift a mostly symbolic Cold War-era restriction on trade with Russia known as the Jackson-Vanik amendment.

The measure tied normal trade relations with the Soviet Union and other centrally planned economies to the rights of Jews and other religious minorities to emigrate freely.

Russia has been in compliance since 1994, but most US lawmakers have insisted Moscow finish negotiations to join the World Trade Organisation before Congress votes to lift the measure and establish permanent normal trade relations.

The United States and Russia intensified efforts in early 2008 to finish Moscow’s 15-year bid to join the WTO. But the political fallout from Russia’s short war with Georgia last year set those talks back. It also sparked interest in boosting US trade benefits for Georgia to help that country recover. Congress could act on that this year, Levin said.

Kazakhstan, a former Soviet republic in Central Asia, also has been negotiating to join the WTO and could finish in 2009. It also remains subject to the Jackson-Vanik amendment.

If either Russia or Kazakhstan were to finish their WTO bids, the United States would be required under the rules of that organisation to establish permanent normal trade relations to share in the benefits of either country’s accession.

Levin’s agenda also included a bill to waive US import duties on goods made in special zones in Afghanistan and Pakistan in an effort to combat extremism there.

That measure is sponsored in the House by Representative Chris Van Hollen, who told fellow lawmakers on Tuesday that the Obama administration strongly supported it.

 

[Neo]

No further heavy investment in telecom likely ​

PTA focusing on value-added services​

Thursday, March 12, 2009

KARACHI: Chairman of Pakistan Telecommunication Authority (PTA) Dr Muhammad Yaseen has said that the telecom industry has received a tremendous foreign direct investment of $2 to $3 billion per annum, but expects no further heavy investment in the near future as infrastructure has already been put in place, and now only the services need to be improved and expanded.

Speaking at Mobile Commerce 2009, the second international conference on mobile banking, here on Wednesday, Yaseen said that PTA was concentrating on value added services rather than only on mobile calls as these services were the real market for mobile operators and innovation in the sector was pivotal.

He said that Pakistan had 90 million telecom subscribers, while 95 per cent of the population had signal coverage by all telecom operators and data transfer had also reached 12.5 gigabits.

Dr Aamir Malik, Director of PTA highlighted that in 2009, global mobile commerce (m-commerce) revenue had reached up to US$88 billion. He shared results of a recent survey which showed that 11 per cent of the population has a bank account whereas 56 per cent has mobile phone penetration in Pakistan.

He said that 87 per cent use m-services for location based search, 44 per cent use it for banking, whilst 61 per cent use it for shopping. Malik said that the survey proved that local consumers were ready for m-commerce in the country and therefore there was a lucrative market open for concerned stakeholders.

President of MCB Bank Limited, Atif Aslam Bajwa commented that the basic infrastructure for mobile banking was available. However, the willingness of financial institutions and mobile service providers to work together was a challenge in Pakistan.

Bajwa voiced that it is essential for both the financial institutions and mobile service operators to carry out collaborated efforts as mobile banking would only be successful that way and not in exclusivity. He further stated “PTA has fuelled growth by fostering healthy competition while also concentrating on quality which is the core reason for the telecom sector’s success.”

Speaking to The News, Bajwa also commented that since KIBOR rates had declined, and inflation was also coming down, interest rates in Pakistan would also feel the pressure and banking spread would also reduce significantly in the coming months.

The President of MCB Ltd held that m-commerce was yet in its initial stages in the country and it was too soon to comment on whether it would be a success, but added that there was great potential for it.

Executive Director of State Bank of Pakistan (SBP), Jameel Ahmad welcomed the introduction of branchless banking in Pakistan and said that SBP had set regulators for it to operate successfully in the country.

Providing a detailed presentation of SBP regulations for mobile commerce, he said that SBP has attempted to incorporate products and services of international level into the emerging Pakistani market.

He said that banks would be at the forefront of all m-commerce activities and would hold all concerns and responsibilities of any transactions being carried out. Ahmad voiced that so far banks have shown a very enthusiastic and positive response towards mobile commerce.

The executive director of SBP also pointed out that even though India has four ATMs for every branch of a bank and Pakistan has only one ATM against 2.6 bank branches, in the past five years, the nation has succeeded in gradually transforming from a paper-based banking system to electronic banking.

He stated that five years ago, banks in the country operated 90 per cent on paper-based facilities and 10 per cent on electronic. Nevertheless, now one-third of the economy is based on electronic transactions and two-thirds on paper and yet, it is rapidly changing into an electronic based economy.

President and CEO of Telenor Pakistan, Jon Eddy Abdullah said, “I am sure that with the support of regulators and collaboration between telecoms and banks, the industry will be able to provide consumers with what they need: easy, affordable access to financial services.”

He commented that mobile banking brings with it facilities such as paper/plastic-free money transactions, bank account maintenance, money transfer, mobile sales, auctions, brokerage and much more.

He said that Pakistan has enormous potential for m-banking with over 80 million mobile users for the lack of a sound banking structure reaching out to only a selected class widens the play area for the mobile sector to explore.

Jon shared that by acquiring Tameer Microfinance Bank in the current economic crunch; Telenor Pakistan not only reassured its commitment to Pakistan and the industry but also projected its intentions to remain ahead of competition when it comes to product innovation.

CEO of A2Z E-payments, Shakir Ullah highlighted the problems in Pakistan due to which m-commerce had not gained popularity as rapidly as it should have. He said that there was no proper legal and regulatory framework for e-commerce and e-payments in Pakistan.

He articulated that social, bureaucratic and political issues had also discouraged the acceptance of e-commerce such as resistance to change, fear of risk and lack of awareness in the local community. He added that most Pakistanis were content with the existing systems and were resistant to new payment methods.

 

[Neo]

Tariff bids for 970MW fast-track IPPs opened ​

Thursday, March 12, 2009

ISLAMABAD: Financial proposals for fast-track independent power producers (IPPs), which will be commissioned in 2010 and 2011, were opened on Wednesday in a meeting held at the Private Power and Infrastructure Board (PPIB).

PPIB Managing Director Fayyaz Elahi chaired the meeting, which was attended by all PPIB directors, bidders and members of evaluation committee as per 2005 tariff guidelines of the government.

The bid evaluation committee had earlier declared three bids ie 627-megawatt Engro Power Gen (Pvt) Limited, 171MW Saba Generation (Pvt) Ltd and 172MW Reshma Power Generation, as ‘responsive’ after their evaluation with technical and financial qualification.

The proposed tariffs of Engro Power Gen, Reshma Power Gen and Saba Gen are $14.7 per kilowatt hour (kWh), $16.26/kWh and $15.13/kWh respectively. The bid evaluation committee will now inspect the tariffs and successful bidders will be notified after approval of tariffs by government.

In order to meet instantaneous power shortfall in the country, the government has launched the fast-track private power project initiative, which was advertised on September 26, 2008 on the basis of international competitive bidding. Three bids for establishing fast-track IPP projects having 970MW cumulative power generation capacity were received within the bid submission deadline and technical and financial qualification envelopes were opened on January 26 in the presence of all stakeholders and senior officials of PPIB.

During the meeting, Elahi said the government is taking all measures to bridge demand-supply gap in generation capacity and assured that all assistance would be provided to investors for establishing power plants in the country. He hoped investors would ensure completion of projects as per required deadlines.

 

[Neo]

Pakistan to display hunting arms at German exhibition ​

Thursday, March 12, 2009

PESHAWAR: Pakistan Hunting and Sporting Arms Development Company (PHSADC) has finalised all arrangements for the display of locally manufactured small arms at an international exhibition (IWA) in Germany from March 13 to 16.

According to a press release issued here on Wednesday, Chairman PHSADC Nauman Wazir said they had planned to avail the opportunity of exhibiting locally manufactured hunting and sporting arms at the exhibition.

He said the PHSADC has collected artifacts prepared by the gunsmith of Darra Adam Khel, Peshawar, Wazirabad and Sialkot for displaying them in the show.

He went on to say that the company has already booked stalls in the exhibition and sent a team of its officials to Germany for proper arrangements for displaying the products.

Wazir said it was for the first time that PHSADC was taking an initiative to display the craft and skills of Pakistani gunsmith in the international exhibition.

He further said the artifacts including wall hangers, replicas and old vintage weapons made by artifacts of Darra Adam Khel have great demand in the international market.

“The small arms industry has great potential and the country can earn millions of dollars by making way for the export of the product abroad,” he added.

The IWA exhibition, he added, is the second largest event and representatives of international companies visit to get information on latest technology in sporting arms.

 

[Neo]

Inflation spikes by 21.07 percent​

KARACHI: The declining trend in Consumer Price Index (CPI) based inflation reversed in February as it surged by 21.07 percent year-on-year basis over the corresponding month of previous year.

The month-on-month increase in CPI was also substantially higher and increased by 0.95 percent in February over the preceding month of January this year, Federal Bureau of Statistics (FBR) reported on Wednesday.

The increase in CPI inflation offset the gains made in the previous months when month-on-month inflation number was heading downward. Analysts attribute this surge attributed to price hike in food items as well as high electricity rates in the country.

During July-February 2008-09, CPI soared by 23.49 percent over the same period of previous year on the back of high growth in food inflation, which rose by almost 23 percent during these months. The MoM increase of .59 percent in inflation was also substantially higher. The price of onion increased by 253.9 percent, sugar 66.2 percent and milk 19.4 percent YoY.

The fuel and lighting cost also increased by 29.77 percent during the period under review. Transport and communication cost was up by 21.47 percent, house rent 18.53 percent and education and medicare cost increased by 17.97 and 14.18 percent, respectively. Though, the decreasing trend in the inflation stopped during February, however the future outlook is not so bleak and it is expected to decline during the coming months, analyst

Mohammad Imran Ahmed at First Capital Equities Limited (FCEL) believed. When asked about the affect of expected increase in the electricity rates in April and May, Imran pointed out that nonetheless, it would contribute to higher inflation, however, the base affect would help the inflation to come down.

Government is attempting to bring down inflation to single-digit in June this year, which according to analyst is very much possible.

On the loosening of tight monetary policy stance of central bank in view of decreasing inflation, Imran said that still the core inflation is higher and the future trends in it would determine the change in monetary policy.

Imran predicted that the full year inflation number is likely to be around 18 percent. “Primary contributor has been house rent which increased by 18.5 percent year-on-year, 6 percent (MOM) gas price, third is the food items,” said Sayem Ali, economist at the standard chartered bank.

Wholesale Price Index (WPI) and Sensitive Price Index (SPI) rose by 15.03 and 2.42 percent, respectively in February this year over the same month of previous year.

 

[Neo]

Horticulture sector: $5bn investment from China, ME likely: ASF​

KARACHI: China and the Middle East countries will invest in horticulture sector of Pakistan to the tune of $5 billion during the current year 2009, an official of Agribusiness Support Fund (ASF) said Wednesday.

“Saudi Arabia and China are interested to acquire land on lease besides to join hands with the private sector stakeholders in order to grow soft crops and vegetables,” Chairman Sindh ASF, Mateen Siddiqui said. China and Middle East will be the key players of investment in horticulture sector as they are interested in rice, wheat and vegetable crops of the country, he added.

He said it was expected that after investment the country could save most of exports of agricultural produce as it was hampered by lack of modern storage facilities. High post harvest losses, insufficient packing and grading and cold storage facilities along with absence of refrigerated transport and containers can be eliminated through foreign investment.

He said due to the most liberal investment policy in the region, Pakistan is most suitable for investors. He said the exporters need a full-fledged packaging house, ripening chambers and blast chillers. He said the government was providing a number of incentives and facilitating measures were being taken for promoting business activities in Pakistan. Most of our economic sectors are open to FDI where the foreign investors can hold 100 percent equity. Safety of investment is assured and Pakistan has signed Bilateral Investment Treaties (BIT) with many countries worldwide.

A high percentage of horticulture produce is wasted due to ineffective post-harvest practices and around 25-30 percent of total production of fruits and vegetables is wasted due to lack of proper post-harvest handling.

These include the network of industrial estates and export processing zones, economic zones with tax holidays, concessional customs duty on import of plant and machinery and the unrestricted outward remittances of capital, profits, royalty, technical and franchise fees etc. Special Economic Zones have been proposed for set up in different parts of the country. Chief Executive Officer PHDEB, Shamoon Sadiq said Pakistan horticulture sector possesses a great potential for development. However, the growth of the sector is inhibited by a multitude of constraints.

Per hectare yields are very low as compared with international benchmarks. The product is perishable by nature and therefore requires proper handling after harvesting to keep it in good condition till it reaches the consumer and export destinations. He said Ministry of Commerce in consultation with PHDEB, prepared proposals under National Trade Corridor Improvement Programme (NTCIP) for enhancing annual export of fruit and vegetables, and floriculture from existing $160 million to $500 million in the next 5 years. He said Pakistan is successfully involved in biotechnology, tissue culture, cutting of floriculture, and as a result we are now in a position to export flowers to the developed world.

 

[Neo]

Cellular subscriber base grows again​

KARACHI: The growth rate of cellular subscribers’ has been returning to upward trend after witnessing two-month contraction in overall users’ base. According to the Pakistan Telecommunication Authority’s (PTA) latest figures made available to Daily Times, the five cellular operators have posted a modest increase of 0.38 percent users in February this year despite the introduction of the new SIM verification system last month. The overall subscriber base has increased by 1.547 million in February 2009 as compared with 1.541 million growth in February 2008. However, the subscribers’ growth has witnessed 0.9 percent increase in January 2009.

According to PTA’s data, the overall base has crossed 90 million subscribers during the last two months. Subscriber’s growth has been witnessing negative growth during November and December 2008 with 0.1 and 0.6 percent, respectively. The cellular firms have added only 0.581 million connections on their network in the 1HFY09 against massive subscriber growth of 1.12 million in 1HFY08.

Industry analysts were of the view that users addition on various networks of cell firms became visible as the cellular operators reduced their rates last month to attract customers. They added subscribers who lost their connections on non-registration and non-verification of SIMs. On the other hand, the number of users has been growing modestly in the rural areas of the country as the operators have been running their sales campaign in these areas. Last year, around 11.25 million connections were abandoned from the companies’ network.

 

[Neo]

Zardari puts up proposals for economic growth ​

TEHRAN (March 12 2009): President Asif Ali Zardari on Wednesday called for a regional approach to deal with the menace of terrorism and militancy, while taking into account the interests, capacity and aspirations of sovereign states and their peoples.

"A regional approach has to take into account the interest, the capacity and the aspirations of sovereign states and their people and has to build solid stakes in lasting peace", the President said while addressing the 10th ECO Summit, being held here. The President said that as terrorism does not have any faith and frontiers, it was important to focus on addressing and eliminating its root causes, which include injustice, deprivation, and dispossession.

"Terrorism knows neither faith, nor frontiers. It breeds on injustice, deprivation and dispossession. Terrorism has roots across the region and its root causes have to be addressed", he stressed.

He said that "the democratic government in Pakistan has made a promising beginning" with Afghanistan, and the two other brotherly countries are making steady progress in building a relationship of deeper trust and understanding. "We have revived the Jirga process and set the directions of future co-operation", he remarked. The President said the ECO family bears a special responsibility towards Afghanistan, and added that Pakistan has been at the forefront of ECOs efforts for the reconstruction of this brotherly country. "Let us give these efforts a strong impetus", Zardari said, and announced that Pakistan would shortly be remitting an additional $1 million to the ECO fund for Afghanistan.

The President said that, with the important strides being made across the world, the ECO has yet to realise its potential to the fullest measure. "We have to fashion ECO to the specifications of our region and the demands of our times", he said.

The President in this respect made some vital proposals which included the creation of ECO free trade area, development of an ECO energy ring of pipelines and electricity grids, solid win-win trans-regional economic partnership, greater connectivity through road, rail, air and sea links, and forging of closer links with adjoining regions, particularly SCO and Saarc. He called for increased co-operation and deeper integration among the ECO states for mutual benefit as well as for the global economic growth. "By ensuring deeper integration, and leveraging our economic complementarities, the ECO can become the engine of growth for the world," he added. The President said that with ECOs vast resource base and positive fundamentals, the region could contribute significantly to a global economic upsurge.

To realise this goal, he proposed various measures including activation of the ECO central bank to co-ordinate monetary policies and consider the development of a stimulus package for the region. "Trade barriers must be lowered, on priority. Currency swap arrangements be put in place", he suggested.

The President further said that mega projects of regional significance, such as IP and TAP gas pipeline projects, should be launched to stimulate demand, create jobs and generate momentum for growth and prosperity. He said that Pakistan welcomes the proposal of commissioning an experts panel to study the financial crisis and would make substantial contribution to the study. Highlighting the importance of connectivity as a cornerstone of the ECO agenda, President Zardari said the rich tapestry of this regions history and heritage was woven around the fabled Silk Route. "And, its future is premised on modern highways, physical and virtual, that create common space", he added.

 

[Neo]

Global economic downturn affecting exports of Pakistan ​

KARACHI (March 12 2009): Chief Executive of Trade Development Authority of Pakistan (TDAP) Syed Mohibullah Shah on Wednesday said that the country is likely to miss the fiscal exports target of the current fiscal year, however overall exports may surpass the last fiscal years exports by two percent.

The global economic downturn is affecting the exports of Pakistan, although they have remained less affected as compared to the economies of the western world, he told newsmen at the inauguration ceremony of the Third Food Agri and Livestock Asia Exhibition 2009 being held at Expo Centre from March 11 to 13.

He said that keeping in view the exports statistics of the first eight months it could be predicted that the country is likely to surpass the exports of the last fiscal year. He pointed out that at present the countrys economic growth rate has declined by three percent and Indian economic recession shows a slump of six percent while other countries are faced with more severe economic recession.

Shah outlined that TDAP is along with textile making efforts to boost the exports of other and new products to new world markets. He added that the continued food agriculture and livestock exhibition is part of the overall export increase strategy. He vowed to increase the countrys share of halal food in the world market and aim to reach new markets of the world. TDAP is financing the stalls of women entrepreneurs in the exhibition to help them increase their share in the countrys overall economy, he said.

 

[Neo]

Pakistan may use Jordan as springboard for exporting products ​

KARACHI (March 12 2009): Pakistan can use Jordan as springboard for exporting Pakistani products in general and textile products in particular to USA and other European countries, said Ambassador of Jordan Dr Saleh Ahmed Al-Jawarned. Addressing members of Karachi Chamber of Commerce and Industry (KCCI) on Wednesday, he said that there is no restriction on export of goods from Jordan to USA and other EU countries.

He said that Pakistan could export textile products, Halal food, surgical goods, sports goods etc to EU countries and USA through Jordan. The ambassador advised business community to survey Jordanian market for increasing two way trade. He said that Jordan is negotiation a Free Trade Agreement (FTA) with USA and hoped that the agreement would be signed in near future.

Referring to investment and businesses opportunities in Jordan, he said Jordan offer two type of business activities for foreign investors: First where foreign investors can invest in QIZ. In this sector there is no tax and foreign investors can establish industrial units in collaboration with locals.

The other area is operations in Jordan market. However in this area they have to pay all the taxes. The Ambassador invited Pakistan investors to establish fertiliser units in Jordan in joint venture with Jordanian counter parts. He said that Jordan has signed an agreement to import mangoes from Pakistan.

He invited Pakistan business community to visit Jordan to see the market and investment climate. A trade delegation of Jordan will visit Pakistan in next two months, he added President KCCI, Anjum Nisar said that Pakistan produces best quality of rice in the world and Jordan can import rice from Pakistan to meet its requirements.

 

[ejaz007]

Remittances rise over 19pc to $4.919b in 8 months
Published: March 13, 2009


KARACHI - Remittances sent home by overseas Pakistanis continued to show a rising trend as an amount of $4,918.63 million was received in the first eight months (July-February) of the current fiscal year 2008-09, showing an increase of $792.47 million or 19.21 percent over the same period of the last fiscal year. The amount of $4,918.63 million includes $0.41 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).
In February 2009, an amount of $641.32 million was sent home by overseas Pakistanis, up 27.56 percent or $138.56 million, when compared with $502.76 million received in the same month last year.

The inflow of remittances in the July-February, 2009 period from USA, UAE, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $1,156.51 million, $1,035.55 million, $962.30 million, $783.39 million, $344.08 million and $150.05 million respectively as compared to $1,160.39 million, $681.88 million, $761.84 million, $618.83 million, $292.87 million and $116.12 million respectively in the July-February, 2008 period. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the first eight months of the current fiscal year 2008-09 amounted to $486.34 million as against $492.22 million in the same period last year.

The monthly average remittances for the period July-February 2008-09 comes out to $614.83 million as compared to $515.77 million during the same corresponding period of the last fiscal year, registering an increase of 19.21 percent.

During last month i.e. February 2009 remittances from UAE, USA, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $166.62 million, $127.48 million, $123.64 million, $93.09 million, $54.12 million and $18.31 million respectively as compared to $88.31 million, $134.68 million, $98.17 million, $78.95 million, $29.99 million and $12.94 million in February 2008. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during February 2009 amounted to $58.04 million.

Remittances rise over 19pc to $4.919b in 8 months | Pakistan | News | Newspaper | Daily | English | Online

 

[Neo]

New foreign exchange reserves target fixed for June to be achieved: SBP chief​

ISLAMABAD (March 13 2009): State Bank of Pakistan Governor Saleem Raza said on Thursday that Pakistan would achieve the new target of foreign exchange reserves set by International Monetary Fund (IMF) for June 30. He told the reporters after attending the national round table workshop on the "State of microfinance in Pakistan and recommendations for the future" in Planning Commission here.

He said that increase in foreign exchange reserves was the prime target under the IMF programme, adding that after the first review, Pakistans foreign exchange reserves stood at 1.5 billion dollars over and above the target fixed by the IMF for end March.

He noted that Pakistans foreign exchange reserves were half million less than the target fixed for end June. "Pakistan is expected to receive 850 million dollars IMFs second tranche by end of March and finance flow from the World Bank and Asian Development Bank (ADB) is also in pipeline," he said, adding after release of the IMF tranche, Pakistans reserves position would further improve and surpass the IMF target.

He also hoped that Pakistan would achieve around 2.5 percent gross domestic product (GDP) growth during the current fiscal year of 2008-09 as per revised macro-economic targets agreed with the IMF. He said that inflation, based on Sensitive Price Index (SPI), Consumer Price Index (CPI) and Wholesale Price Index (WPI), had declined to a considerable level during last three to four months.

This month the CPI-based inflation had increased a little bit, but it would come down, he said, adding that overall inflation was witnessing downward trend in the country. On revision about discount rate, he said that the policy rate would be reviewed in a month or two, keeping in view the movement in core inflation rate.

He said that discount rate was for the banks and rate applicable to the borrowers was declining over the last few months. The SBP Governor noted that lending rate, based on Karachi Interbank Offered Rate (KIBOR), had recorded declined by 2.5 to three percent in the last two months and actually, the KIBOR-based borrowing cost for the borrowers had declined.

"Cost of borrowing has come down and KIBOR may witness further reduction in coming months that would benefit the economy," he said. About banking spreads rate, he said that this was determined on the losses and banks charged 0.5 to one percent form their prime borrowers where minimum risk was involved. Banks charged more on loans where lending risk was more like consumer financing and credit card, he added.

The SBP Governor ruled out that Pakistan would seek rescheduling of Euro Bonds in coming months, and said that it had met its Euro Bond debt obligation with full interest payment in February this year.

He highlighted the liquidity position of the banks, and said that banks reserves with State Bank were worth Rs 400 billion that were surplus and above the capital advocacy ratio and there was no issue of liquidity. He acknowledged that banks were facing pressure due to the bad loans mainly of textile and electronic sectors, but the operations of the banking sector were still smooth. He mentioned that ratio of non-performing loans ranged between 2.75 to three percent, which was not alarming.

He ruled out undue intervention of the Finance Ministry in determining interest rates, and said that the SBP and MoF worked together so that the interest rates were kept at reasonable level for the benefit of economy. He said that State Bank had increased the financing for machinery and export re-finance based on performance of exporters. Exporters performing well, would be getting more, he added.

He categorically rejected the reports of 50 percent decline in private sector lending. He also denied the reports that IMF authorities had shown concern on his appointment as Governor of State Bank of Pakistan, and asked the reporter concerned to produce the document where it had been mentioned.

Earlier speaking at the workshop, he assured full support of State Bank of Pakistan for development of microfinance sector, and informed the participants that during a meeting with micro-finance group, the SBP had recently approved foreign exchange risk cover for foreign lenders.

He stressed the need for helping borrowers to attain status of SMEs so that they were brought out of normal social safety net, and said that micro-finance sector was making a dent on poverty and it should continue playing its due role in the economy with diversification. He also emphasised the importance of sustainability as it led to innovation and ingenuity.

He underscored the need to focus on tapping deposits, leveraging technology and providing training. The SBP Governor also met several borrowers from the Bahawalpur rural areas, who were forced into near bankruptcy and distress, selling of their assets to meet repayment schedules.

He promised to look into the matter, and pointed out that a code of conduct must be brought in to protect the borrowers. He also suggested that the infrastructure of large banks might be used to set up micro-finance counters as these would reduce operating overheads.

Parc Chairman Dr Zafar Altaf said that impact of Rs 10,000 to Rs 15,000 per household micro credit by microfinance institutions was not economically useable for farmers due to high cost of inputs in agriculture sector. He said that credit agencies must provide technical assistance and cooperate with farmers for setting up markets.

He also raised the question on the role of Planning Commission, and requested to remove the hidden gaps for the improvement of farmers in rural areas. He said that according to survey conducted by the Parc in Bahawalpur and Khushab, micro credit schemes had not benefited the farmers.

Several key issues were identified as result of the deliberation. First, there is an inherent contradiction between "sustainability" of Micro Finance Institutions, which basically means profitability, and issues of social welfare and poverty reduction.

There was consensus that microfinance providers needed to offer products (such as technology), which would enable the borrowers to improve their income and hence move up from the poverty trap. It was also felt that if the MFIs were going work on purely commercial lines, then their funding should not be from public funds.

Special Assistant to the Prime Minister on Social Sectors Shehnaz Wazir Ali appreciated the presentation, and pointed out that a lot of misunderstanding existed about the role of micro credits between the microfinance institutions and the borrowers.

She further said that the borrowers must be informed before hand clearly about the difference between interest rates announced and interest rates that would actually be effective and that the gap needed to be reduced though allowing reasonable profit margins.

She also emphasised that indepth study of the issues at the level of policy making was essential to remove any ambiguity and misunderstanding about micro credit, and suggested that the Planning Commission should hold further meetings in smaller groups to develop a national microfinance policy. She said that capacity to utilise and repay micro credit might be limited in some cases landing some people land into problems.

Shehnaz Wazir Ali said that large scale financing by multinational agencies had not benefited Pakistan. "Mircofinance is the single tool for poverty reduction," she said, adding that a tradition must be set to re-examine and revisit the current microfinance policy to establish markets for agriculture sector.

She was surprised to know during the workshop that all the microfinance institutions had clutched the farmers in debts and there was no sharing data about the borrowers.

Some aggrieved farmers from Bahawalpur said that all the microfinance institutions had exploited them and due to high interest rates, they were not able to repay the loans. She said that a system must be put in place to address the problems of borrowers. She asked the aggrieved people to submit their suggestions to the Planning Commission for consideration, and added that ownership of assets was critical.

She directed the Planning Commission to form a team of researchers to review the microfinance policy that could help boost the local economy. President of Khushali Bank Ghalib Nishtar said that the bank had not the facility to provide loan for infrastructure. "The bank provides loan at maximum level of Rs 30,000," he added.

He said that credit bureau would be opened by July in Lahore to share the information about the borrowers. He remarked that microfianace sector had performed well for the last eight years. However, there was lack of clarity on policy level and there was a need to strengthen the safety net. Benazir Income Support Programme (BISP) was an alternative that would have pressure on the microfinance institutions, he added.

Earlier Dr Kaiser Bengali emphasised the difference between microfinance for households (ie poverty reduction and hence survival) and that for micro enterprises that would be for business expansion and hence employment generation.

THE FOLLOWING ARE PARTICIPANTS RECOMMENDATIONS:

-- Microfinance and development finance should be incorporated and there should be no different policy on these two sectors.

-- Credit borrowers in Pakistan should share the data.

-- Code of conduct should be implemented.

-- The interest rates should be changed and lowered to bring sustainability to encourage the competition.

-- The institutions should be set up for training of human resource.